Getting To The Bottom Of The Latest ConTech Report

ConTech is one of the fastest-growing subsectors in PropTech. After an eternity spent behind the innovation curve, the construction industry is starting to warm up to the benefits of technology. As investments in the space have boomed, there has also been a strong uptick in adoption by industry operators. An FMI industry report sponsored by ConTech unicorn Procore, published today, dives into this phenomenon. Here is an exclusive first look at its most salient findings.

For starters, it is worth noting that there is a strong anglophone bias in the report, probably stemming from the ease of access and communication. The 738 study participants – mostly contractors – hailed from the US, UK, Australia, New Zealand, and Canada. The EMEA market is pretty much excluded, except for the UK, therefore the findings of this study are not truly global. Because the US construction market is notoriously behind the curve with regards to tech adoption, it would have been worthwhile comparing it to a market such as China, for example.

Constructor’s Top Concerns

The construction industry is changing, with projects becoming ever more complex whilst delivery times speed up. At the same time, there is an inherent skills shortage in the sector – in 2017, 89% of firms stated they are facing talent shortages, up from 53% in 2013. The construction population is also aging and contracting, with young people increasingly choosing other career paths and the majority of baby boomers exiting the industry over the next 10 years.

Study respondents ranked their main concerns by the level of importance, and it emerged that the greatest worry is maintaining a safe job site, followed by attracting and retaining skilled labor and maximizing field productivity. According to the report, whilst “job site safety is being proactively managed, firms are making little headway in addressing field productivity or talent acquisition and retention”. This is definitely food for thought for the tech companies building solutions for the construction industry.

Tech innovation on the market

According to the study, the majority of firms surveyed have formal software programs in place for project financials, project management, and safety or risk management, but less than half have the tech for equipment management and field labor management. The latter is especially salient, in an industry plagued by rising labor costs, stagnating productivity and a dwindling workforce.

As mentioned, safety is not only the top concern but also the one that is most effectively managed through tech. “The right solution, with good mobile accessibility, empowers field teams to quickly report any potential safety issues they witness. The data collected can be used to understand trends, identify areas for improvement and address safety issues proactively.” On the other hand, less than half of firms surveyed are using tech to maximize productivity on the ground, and less than a quarter to better attract and retain skilled labor.

There are two probable causes for this lag. One is that the tech just isn’t available, or not known to the construction firms. The other is that construction firms have tiny tech and innovation budgets, and often don’t have a clear view of where to allocate them.

Another interesting point hinges on data. Firms believe that, by addressing their key concerns, they will be able to improve their margins, increase productivity or win more work thanks to a burnished reputation. Learning from data insights is what will ultimately make these goals achievable. At present, over 90% of data in construction remains unused, due to outdated processes or a backward corporate culture. However, as the industry experiences a generational shift and experiential knowledge from baby boomers starts to dwindle, data intelligence is becoming ever more critical. Extracting meaningful insights will only be possible if sources are integrated and the data in expertly managed.

What do construction companies want?

The report makes a distinction between what construction companies look for when they invest in tech as opposed to when they are buying a solution. In the former case, they value solutions that will enhance speed and efficiency the most, whilst in the latter, they look for a good fit to their functional requirements. In both instances, they want something that is easy to use and cost-effective.

Unsurprisingly, the biggest complaints from respondents were that the tech they work with is hard to use, doesn’t save them any time, doesn’t integrate with other software, and isn’t accessible on mobile. The probable cause of this is that “many firms are unsure of how to perform a holistic assessment of construction technology” and often make decisions based solely on price.

Construction firms struggle most with low user adoption of the tech they implement. The report argues that poor implementation processes stem from a mismatch of expectations relating to the roles and responsibilities of the buyer versus the provider. And, to a degree, this is true. You can buy tech, you can deploy tech, but you can’t expect those selling you the tech to have a transformative impact on your culture. Change ultimately comes from within and it is the responsibility of the construction firms’ leaders to align their corporate culture with innovation, both through training and their incentive structure. As the report puts it, people don’t know how to use the technology and aren’t motivated to use it, therefore “firms must fundamentally shift the way they think about and purchase construction software. It is not a commodity… rather it is a strategic investment with the potential to add long-term value across the entirety of the company”.

There is an entire fourth section in the report discussing the advantages of partnering with tech firms rather than buying from them. This is something we have looked at in the past, so I won’t delve into it here. It’s clear that companies will have a better experience if they embark on their tech journey hand in hand with a partner, as opposed to buying something off the shelf. The reality is, though, that most construction firms don’t have the time or money to invest in a partnership, and so this kind of interaction is reserved for the elite few that do, and they will reap the benefits. It would also be a bit disingenuous to think the report’s sponsor wasn’t pushing their own agenda with this section, although I fundamentally agree with what they are saying.

In conclusion, the 2020 FMI Industry Report shows that there is a clear gap in the market when it comes to field productivity or anything to do with talent acquisition and retention. ConTech companies should take note, as there are evident opportunities for them to add value in these areas. And, once again, data is king. its value can only be truly extracted through horizontal integration, which I believe to be the next frontier for ConTech. Today, we can find a plethora of useful but siloed solutions, and the market is ripe for a single provider which integrates horizontally across the value chain.