“To boldly go where no one has gone before.” That famous line from Star Trek about venturing into new territory happens to be a fitting description of the changes moving through the construction industry, particularly when it comes to construction management trends as it relates to the overall landscape and construction management software.
We’re nearly a fifth of the way into the 21st century, and though we haven’t reached a Star Trek future yet, the speed of technology and software development feels like it could outpace the U.S.S. Enterprise.
For a long time, construction lagged behind as tech trends exploded in other industries. While that’s still partially true, a shift is happening. More and more construction organizations are entering the technology-driven world, and advances have become as common as safety helmets at a worksite.
Given this period of transformation, what trends are in store? What does the future of construction management hold?
We turned to a handful of industry experts to find out.
- Tech adoption is still a challenge
- Software vendors need to more effectively bridge the gap between their products and the end user
- Vendors need to help customers understand the benefits of using technology
- The use of increasingly greater volumes of data requires improved data management
- Digitization has arrived and will continue to grow
- Integration will be vital
- The industry will consolidate, with a few software providers rising to the top
Top Challenges Facing the Construction Industry
Lots of Jobs, Not Enough Workers
Where have the workers gone? That’s a common theme in the construction industry today. And not because there aren’t jobs to be had. Just the opposite.
Tyler Riddell, Vice President of Marketing at eSUB Construction Software, cites a statistic that there are around 290,000 job openings in the construction industry. The problem, he says, is the low unemployment rate, which lets workers “bounce from company to company.”
Spencer Padgett, Director, Builder-in-Residence at CoConstruct, also sees scarcity as a top concern. “Everyone talks about labor availability. We’ve got the jobs, we’ve got the contracts, but it’s taking us longer because we can’t find enough labor. Or if we can aggregate enough labor we have to pay so much more for it.”
A joint report between USG and the Chamber of Commerce drives this point home. Ninety-four percent of commercial construction companies expect to have a moderate to difficult time finding skilled laborers.
In response, companies have turned to technology to accomplish more with fewer resources. In a world where Millennials are the largest generation in the workforce, Riddell explains that companies also use technology to help retain the employees they do have:
“If you’re a Millennial and you go work at a company, and they’re using some real archaic methods, chances are, you’re going to get bored and not be there very long. So you’re going to move to a company that’s using the latest and greatest technology and has thorough training processes. It really helps Millennials and other generations thrive.”
Hesitation to Join the Tech Revolution
Not everyone has jumped on the bandwagon. Despite growing acceptance, the industry still has veterans who have been around for two or three decades, Riddell says. For them, switching from the pen-and-paper approach to a digitized world full of iPads isn’t as simple as flipping a switch.
Dustin Anderson, Vice President at Sage Construction and Real Estate, acknowledges that getting construction companies to embrace technology still isn’t easy. “A lot of times, [contractors] look at it and say, ‘All right, I have $100,000 to spend. Should I buy a new piece of equipment or should I invest in technology?’ So it’s a difficult battle to win.”
In fact, construction companies on average spend a mere one percent of their revenue on IT, compared to other industries like banking where the IT budget can rise higher than seven percent. Anderson explains that the profit margins aren’t as high in construction, but the industry’s tech investment still falls short.
According to Frederic Guitton, Chief Strategy Officer at RedTeam Software, the level of adoption depends on the company size. Most of the sub $100 million companies are still in the process of adopting new technology, while large enterprises — like those listed in the ENR Top 400 — are looking for ways to increase automation through the use of tools like AI and drones.
Despite lingering hesitance, change is afoot, and that’s part of the issue, according to Padgett. “Transitioning the industry from a place where there was a bunch of great individual efforts by individual contractors … to one that’s more tied together using a broader best practice is a challenge.”
He recognizes that the shift from the days of “legal pads and scribbled notes on the dashboard of your truck to one where tens of millions of dollars worth of project information” is stored on phones isn’t easy. But it’s necessary.
Software Providers Can Do Better
As Guitton sees it, there’s a fundamental lack of understanding on the part of some vendors. “A lot of software companies take the stance, without saying it explicitly, that somehow construction guys don’t really know how to run their business and they need the vendor’s software to do that.”
From what he’s seen, “The biggest challenge right now is software guys who are out there implying, ‘You don’t know what you’re doing, Mr. Constructor.’”
The industry boasts a lot of financial potential and draws a lot of interest from investors, but that has come at a cost in his estimation: technology overload. “We’re seeing a technology hangover starting to form in the industry,” he says, where companies are tired of getting called and sold to every day.
“Many vendors push for new sales and don’t assess whether they solve a real problem for the clients they target,” Guitton continues. “It gets overwhelming for construction professionals to get dozens of poorly-targeted emails.”
Software companies have to be careful developing “solutions” and then thrusting them into the market. They need to don their thinking caps (ideally in the form of safety helmets), find out the problems construction companies face, understand where there are opportunities to improve workflows or capture meaningful data and then use that knowledge as the basis for the software they create.
Still Searching for Greater Productivity and Efficiency
It’s no secret: the construction industry struggles with productivity. According to McKinsey, the industry’s annual productivity levels have only increased by one percent in the past two decades.
Companies recognize this, Riddell says, and are pushing to boost productivity across their businesses, from the office to the job site.
Part of the problem is the lack of a digitized workflow that connects the field with the back office. “Ninety-five percent of any construction project is related to labor,” Riddell explains. “And a lot of companies don’t even have a standard project delivery. They have project managers that are utilizing different tactics to build projects, so what they need is a standardized project.”
Without consistent workflows, it’s hard for companies to escape the productivity rut.
Padgett adds that the main enemy home builders and remodelers face is a lack of time. There are so many moving parts to a construction project that organizing all the information into an actionable list to create efficiency is a constant struggle.
He elaborates, “Our customers are so busy doing what they normally do to build or remodel homes that they have difficulty even turning on the software or logging in, just because their jobs keep them so busy.”
How Vendors Can Help Customers Solve Challenges
Despite the challenges, our experts remain optimistic that vendors can play a central support role. The key? It comes down to understanding customers at a deep level. Let’s look at five specific things vendors can do.
1. Provide User-Friendly Tech and Education
First, the software should be user-friendly. Obvious, I know. But it makes a difference. If tracking everything on paper or in an Excel spreadsheet is the standard, it’s no surprise new software can seem daunting and therefore not worth using.
Vendors need to understand this and refrain from pumping their products full of every feature known to humankind. Instead, they should design apps and software with the end user in mind.
“Our product is very simple, “Riddell says. “So once you get it into the hands of someone who’s not used to a tablet, it’s amazing to see how they adapt.”
Another way vendors can pave a clear road toward construction success is to take an interest in education.
One action step, Guitton says, is to put out meaningful content that’s customer-centric. Not content about software, features or anything else related to the vendor, but content that shares best practices from other construction companies.
Using his company as an example, he explains, “We just rolled out a program called Builder-Chat. So every two weeks we release a 10 – 20-minute video interview with a construction professional that talks about things that don’t have anything to do with our software. They talk about things that have to do with their day-to-day business.”
Guitton sees excellent potential for vendors and construction companies to collaborate to produce meaningful content worth sharing.
Outside of creating valuable content, vendors also need to provide top-notch training. According to Riddell, there needs to be “Thorough training and implementation to make sure the individuals that aren’t used to technology are able to adopt it.” That, combined with a product that isn’t complicated is the key to going from deployment for one project to use on additional projects.
2. Explain the Benefits of Tech Adoption
When it comes to embracing technology, Riddell admits there’ll always be naysayers. But that doesn’t mean vendors are powerless to change the tide.
The best way to overcome the barrier? Be specific about how technology can transform a company’s process and operations.
“When they’re contacting us, it’s usually someone at the company who’s used the technology at another company and seen the type of success it can bring,” Riddell says. “What we’re seeing is there are multiple stakeholders that are involved in the buying decision, so you have to overcome their objections by pointing out the benefits of migrating to technology and what it can do for productivity and profitability.”
One way vendors can encourage tech adoption, according to Anderson, is to do ROI analysis:
“We need to help people understand the value of their investment and where it can help. Sometimes, people buy technology out of necessity — they feel problems but don’t necessarily quantify them. If we can help them understand for every dollar invested in technology the return on it from productivity gains to the quality of work or a safer workforce, we’re going to be able to help them.”
Vendors need to take a proactive approach to showing customers why their business will benefit from using technology. And as Anderson points out:
“It takes study. It takes going back to customers and evaluating how their tasks have changed since they started using that technology. We need to look at the hard and soft savings and quantify that for customers so they see that a dollar spent on technology is every bit as efficient and beneficial to their business as a dollar spent on a piece of equipment.”
3. Understand the Software’s Purpose
Software is just a tool to accomplish tasks more efficiently. Guitton says, “What has to be done hasn’t changed, but how you do it is evolving.
“In reality, what the software does isn’t all that different from a crane. I could hire 20 people to manage information and document everything, or I can select the software to do that and help me streamline the process, just like I could hire 100 guys to move concrete blocks up a 10-story building or I could rent a crane for two days.”
Padgett thinks one way vendors can help is to focus on the outcomes the software provides rather than the individual features. The danger of focusing on features is that customers can get tripped up by the details — it’s not organized the same way they’re used to, they don’t like the dropdown box and so on.
When vendors focus on the business benefits, it helps overcome the typical roadblocks. To illustrate, he says that instead of talking about your tool for scheduling projects, tell them that using the software will make them more efficient and allow them to earn an extra $500,000 this year.
“If we’re focusing on the outcomes,” he concludes, “our customers will understand the pain they’re feeling and understand where we can get them to with our software. That makes them stay and gives them the big picture.”
4. Help Companies Make Sense of Their Data
Equipment and technology are drawing closer together via the Internet of Things (IoT), creating a wealth of information such as temperature, vibration, whether a piece of equipment is being used or not and more.
Helping customers figure out how to use that data effectively is a crucial gap vendors can fill, Anderson believes. Bringing the most critical info to the top will facilitate good decisions and prevent companies from getting overwhelmed by the sheer amount of data in their systems.
The answer to sorting all this information? Using AI and machine learning to handle big data analysis allows companies to make decisions proactively rather than reacting once a problem happens.
In addition to structured data (numbers), Anderson points out that construction contains a lot of unstructured data in the form of words. For example, an RFI (Request for Information), where communication goes back and forth between two contractors. “How do we help understand the tone of those words, the meaning of those words, the impact of it?” Anderson says.
He sees an opportunity in construction to “use unstructured data to augment the structured data and make even more informed decisions.”
5. Make Data Management Easy: Hello Integration and Migration
With so much information flowing through businesses these days, enabling efficient data management is a critical role vendors can play.
Riddell calls attention to the fact that many software companies are app-driven and develop point solutions that address specific issues. Sounds great, but there’s a catch. Without integration capabilities, such solutions create data silos.
“What construction companies need,” Riddell says, “are platforms with open APIs to interface to point solutions like time cards, design and accounting.” While point solutions are a great answer for solving problems, in the long run, the resulting data silos end up causing infrastructure issues.
Guitton agrees with the need for integration. “The problem you run into is you’ve got someone who has a good idea notionally. But if you’re not integrated into the overall workflow of the enterprise, it’s just one more moving part [contractors] have to manage.”
“I think the best-in-class platforms will find ways to collaborate and work together,” he continues. The goal should be to make it easier for contractors to do their jobs.
Another area of data management appears when vendors help their customers move off legacy systems and onto a modern platform. Many consider data to be the new oil, Anderson says, and companies need to figure out how to mine it.
Old systems house loads of valuable historical data that needs to be migrated. But to Anderson, that means more than merely supporting the process. The question vendors should ask is, “How can we do that efficiently?”
He explains, “We don’t want to make the new system do everything the old system did. We want to allow them to improve their efficiency.” And he thinks focusing on professional services offerings is a way vendors can enable their customers to make that transition.
Construction Management Trends: What Does the Future Hold?
Greater Technology Adoption
Surprise, surprise. One trend you can expect to see is that technology will continue to become more ingrained in how construction companies operate.
“Most [trends] are a carryover from 2018,” Riddell says. There’s not going to be some big lightbulb that’s going to go off. It’s just greater adoption of technology.”
In fact, three out of every four contractors plan to adopt advanced tools like drones, wearable tech and automated equipment or robotics in the next three years. And a recent survey done by AGC of America and Sage revealed that 42 percent of firms plan on expanding their IT investment this year alone.
“It’s a foregone conclusion,” Padgett agrees. “We’re climbing the tech adoption bell curve and it’s a freight train that keeps doubling down.” As more companies embrace technology, the holdouts will look around and see everyone else using tech-enabled tools and realize they need to join the trend or get left behind.
“I talk every week with builders who build magnificent homes, have great companies, and either have competitors who are using technology and they see it, or clients who are asking them why they aren’t using it or what they do use,” he says. “It’s absolutely what’s happening.”
Guitton adds that a digitized industry is well on its way. Managing and capturing critical information from the jobsite is a daunting task that digitization can help with. Other technical progress is happening in things like modular construction and the continued expansion of prefab models.
The adoption of new technology and construction methods will continue to make the construction process more efficient and will help companies overcome the resource issues caused by the labor deficit.
Integration or Bust
We live in an increasingly complex world and construction is no exception. Because of that, integration has become an essential consideration when talking about tech adoption.
“It’s the integrated platforms that will win in the long run,” Riddell says, “because there are so many areas of a construction company that need to be improved. And for them to be successful, they need an integrated strategy, whether it’s best-of-breed or a single platform.”
To Anderson, the industry is coming full circle: “I think where we’re going today is back to [a] best-of-breed environment. With cloud tools and the ease of integration with open APIs, what we’re seeing is that customers are picking the right tool for the right problem.”
This is thanks to how fast technology has evolved, ushering in a world where tools are open. Anderson goes on to say, “There’s development and little pieces of functionality that are very focused and very deep in what they do, and they’re great at it. Well, it’s hard for one vendor to go that deep and with that much expertise across all these functionality areas. So the concept of customer choice and best-of-breed solutions is on its way back.”
A Tale of Two Market Themes
When looking at the broad landscape of the construction industry market, two primary themes emerge: growth and consolidation.
It’s a hot market, with growth projected at a Compound Annual Growth Rate (CAGR) of 9.19 percent through 2022. So it’s no surprise software companies are looking to take advantage of the potential. Start-ups keep cropping up and there are a lot of dynamic companies in the industry.
However, Guitton thinks this will change. “The dust is going to settle over the next three to five years, and then you’ll see a more defined marketplace. A few market leaders will emerge while many start-ups will likely struggle to make it. It’s a natural process.”
He expects to see acquisitions of the vendors that solve real problems, with point solutions acquired by companies looking to bring those isolated tools under a single umbrella to offer bundled options.
From Anderson’s point of view, the situation is the same. “I think we’re going to see a couple vendors, from a construction management and accounting perspective, that become the platforms that all these other tools are integrating and plugging into.”
Thanks to things like drone technology, AI, Microsoft HoloLens, Google Glasses and more, Anderson believes there will be room for hundreds of vendors to serve specific functions. “Those will be niche pieces that people create apps for that ultimately need to feed into a single platform.”
More Efficiency, Please
One common theme was enhanced efficiency. Companies see the need and are seeking it. According to our experts, technology can help by:
- Streamlining stakeholder interactions and communication to lower friction and increase control, Guitton says.
- Providing a single source of truth that’s connected to mobile devices, which lets workers cut down on time spent filling out daily reports, Riddell says.
- Automating scheduling, messaging and other tasks to reduce the chaos builders face every day, Padgett says.
- Giving project managers access to real-time data so they can reallocate resources as needed to maintain the project schedule, keeping it on budget and on time, Riddell says.
Technology is not only helpful; it’s vital to success, according to Padgett. “The [companies] who are going to survive and thrive any future downturn are the ones who are efficient because they’re using [technology].”
Despite Tech’s Presence, Some Things Will Never Change
Padgett says, “We’re never going to replace boots on a muddy piece of ground lifting a piece of lumber in some capacity or another. If you’re building panels in a factory, they still have to get to the field and be assembled.”
Guitton puts it this way: “Construction is still blocking and tackling. You have to get your contracts right. You have to get your daily reports right. You have to manage progress and cash flow. That’s part of the core elements of what a general contractor does.”
Technology impacts the way companies accomplish those tasks and will continue to do so as tech adoption increases. But no matter how many new tools enter the market, the fundamentals will never change.
Technology is no longer a fad used only by the most cutting-edge, innovative companies and no one else. It’s steadily become a cornerstone of construction, a trend that will only continue through 2019 and beyond.
If you’re looking to take advantage of the benefits of construction management software, there’re a lot of vendors to choose from. Get started on the right foot by grabbing our free requirements template.
What predictions do you have for the future of construction management this year and beyond? Share your thoughts in the comments!
Contributing Thought Leaders
As Vice President of Marketing, Tyler heads up eSUB Construction Software’s marketing and business development organization and is responsible for driving market leadership, global awareness, demand generation, and strategic event programming. He was previously the Marketing Director at Tiburon and TriTech Software Systems and held prior B2B product management and marketing leadership roles at Harte-Hanks (HSE) and Mitchell International.
Dustin Anderson is a dynamic construction software executive with more than 20 years of success in sales and operations. He’s keen about driving healthy change in construction and real estate through technology. Dustin currently leads Sage’s Construction and Real Estate practice in North America, where he’s responsible for establishing and achieving business goals through the coordinated management of the Construction and Real Estate business unit’s sales and operations teams.
Frederic Guitton serves as Chief Strategy Officer with RedTeam Software, a project management, construction financials and document control platform for small and mid-sized commercial general contractors. Seeing how hard his friends in the construction industry work has driven him to understand how the industry can use technology to ensure that information flows through the project constituents seamlessly to improve the overall performance of the project delivery.
Spencer Padgett is currently the Director of Customer Success and Builder-in-Residence for CoConstruct, a project management software for homebuilders and remodelers. Previously, he was the COO for a multi-million dollar design-build firm in Chicago. He also owned his own company and has built or remodeled over 100 homes throughout his 15-year career. Before entering the construction industry, he served in the Marine Corps as a Security Forces Company Commander.