In August of 2021, when construction tech startup Agora announced a $33M round of funding, all investor eyes were once again on the construction sector. A $10 trillion industry, investors see the potential for technology to disrupt one of the longest holdouts in the digital transformation era. It almost sounds too good to be true, says any cynic that doubled down on Katerra, the construction tech unicorn that filed for bankruptcy in June. On the other hand, the Procore IPO was considered a huge success and Agora is reporting triple digit growth.
While there are lots of variables that contribute to the success or failure of a startup, especially in construction tech, one factor that plagues the industry is labor productivity growth. According to McKinsey, it’s been stagnant since 1947.
What the traditional tech industry is currently facing in terms of the frenetic scramble to fill millions of open jobs has been going on in construction for decades. Anecdotally, the construction industry talks of a “lost generation” of workers caused by underinvestment in training and overdependence on low-cost labor.
There’s no sign of the construction labor shortage gap closing. In fact, it’s getting worse. According to Associated Builders and Contractors, construction businesses will need one million more workers over the next two years to keep up with construction demands. These problems take time to fix. This is where digital transformation and the massive investments in construction technology come into play.
Technology is the Answer. What’s the Question?
The easy and naive response to the talent shortage is to invest more in technology. There is merit to this idea. However, the majority of technology solutions today don’t address the issue – they are either high-end job site technologies or back office solutions.
The so-called sexier technologies used on job sites such as sensors, drones, and robots offer many benefits. For example, a drone accessing a rooftop or other hard to reach area, or a robotic carrier entering a hazardous site. Many of these products are expensive and aren’t used often enough (yet) to justify the investment for the majority of construction firms. This makes them costly for the small community of national, multi-national or global construction companies. Even for larger construction firms, measuring the ROI on these higher end technologies is difficult and often takes years.
The back office solutions primarily consist of subscriptions for accounting, engineering, finance, estimating, bidding, and workforce and jobsite management software. All of them are built by knowledge workers, for knowledge workers. Among them, project management solutions are closest to addressing productivity growth. After all, construction is a project business. Yet they are limited because project management solutions primarily focus on one of the following three features.
Estimating/planning. Using bidding templates, historical records, and estimating body of knowledge (BoK) and flowing them into project estimating solutions.
Resource loading. Resource loading tools are built to align skills with project needs. However, they don’t always accommodate variations on the job site. For example, a construction site’s workforce is often a highly complicated mix of salaried, hourly, part-time, and contract workers, both union and non-union, and speaking different languages. For many projects, most of the workforce will be subcontractors specializing in a discipline such as HVAC, metalwork or electrical. This is how a simple resource loading solution quickly becomes complex or ineffective.
Scheduling. From the ideal scenario developed in the office to the realities of the job site, there needs to be a better way to ensure the right people and materials arrive at the right place and time.
For these reasons, getting the most from a project management solution requires having the right staff on board. Finding certified project management professionals is not that easy, especially in today’s job climate.
According to the Construction Management Association of America, earning a Project Management Professional (PMP) certification requires a minimum of 36 months of project management experience, including 4,500 hours leading or directing projects. The distinction between leading and directing and being responsible-in-charge is critical. Additionally, the PMP requires 35 hours of classroom education.
Planning is mostly an intellectual job, whereas jobsite management is about managing people. Very often, particularly as project size grows, the role of project manager and jobsite supervisor diverge.
Any experienced project manager will tell you that planning may be difficult, but it’s easier than making the plan’s scope, cost and schedule to come true. Site supervision is mostly about people management, keeping them accountable and handling the innumerable variations that work against a good outcome for a project’s scope, cost and schedule.
Three Factors Driving Digital Transformation in Construction
Despite innovations and significant investments in construction technology, there are three factors that will impact the industry’s digital transformation.
- Construction still needs humans working on the job site. Whether it’s to manage projects and people, set up and manage a robot in action, interact with clients and site visitors, or a variety of other activities.
- If there aren’t enough workers to construct buildings, investing in technology doesn’t make a lot of sense.
- The construction jobsite, not the office, is where a construction company makes its money. Or loses it.
Construction productivity won’t take off until the workforce on the jobsite is brought into the digital era of construction daily log. Since construction tradespeople want to build, not enter, interpret or manipulate data, digital transformation will only happen if productivity-enhancing solutions are easy to use and improve productivity almost immediately.
This is likely to lead to a new sub category in construction tech: Site Management. Going beyond project management offerings, site management solutions will be developed for workers on job sites.
Since every worker is already carrying a smartphone, site management solutions will be app based. They won’t entirely solve the staffing issue, but they’ll help close the productivity gap by streamlining activities and functions that are time consuming or administrative in nature. Essentially, actions that detract from the actual building process. They’ll also connect to the back office, project manager and site supervisor without adding more work.
Opportunity awaits those that address the jobsite productivity growth issue through digital transformation and daily check in safety app. They aren’t easy problems to solve but we can use technology to shave minutes or hours previously spent on administrative activities on the jobsite.