We’ve talked a lot about the digital revolution and how many construction companies are embracing the latest technological advances, implementing new devices and collaboration platforms, boosting productivity and reducing waste along the way.
But these are the outliers. Traditionally, the construction sector as a whole hasn’t been an early adopter when it comes to technology, and some studies point to that slow adoption as a reason for the industry’s poor gains in productivity since World War II.
A McKinsey report from earlier this year shows that while many sectors (retail, manufacturing, agriculture, etc.) have increased productivity by a factor of 10-15 since 1945, construction remains a laggard as one of the least productive and least digitized industries. According to the same report, if productivity in the construction sector caught up to the total economy, it would raise the sector’s value by approximately $1.6 trillion.
Construction remains a laggard as one of the least productive and least digitized industries.
The 4th Annual JBKnowledge Construction Technology Report quotes Gartner in saying that out of 19 industries looked at in the report, construction placed dead last in percentage of revenue allocated for technology, with 50 percent of companies spending just 2% or less. The report also noted that only 42% of construction companies have a dedicated IT staff.
“It means that technology is so unimportant to most contractors that they’re not even assigning a single person to be responsible for it,” James Benham, CEO of JBKnowledge told ForConstructionPros.
“But we all know that if you take something seriously in your company, at some point you have to have at least one or two people in the company dedicated to it,” he added.
Many industries are taking it seriously, and have completely transformed their businesses over the past few decades, employing technology experts to harness the full power of digital. At the same time, productivity in construction as a whole has remained stagnant, falling by half since the late 1960s, according to The Economist.
Contractors operate on small margins, in the bottom quartile compared with other sectors, according to McKinsey. Which could explain the industry’s relatively stingy IT spending. But the efficiencies realized by increasing technology spend could have a profound effect on productivity.
Productivity in construction as a whole has remained stagnant, falling by half since the late 1960s.
The last decade has seen the introduction of technologies that enable entirely new ways of doing things. It’s led to everything from enhanced worker safety to time and cost savings to improved quality and accuracy. That trend will only continue to accelerate as today’s notions become tomorrow’s realities.
The industry has seen many recent ups and downs. Construction has come back strong since the 2008 financial crisis, but today’s construction landscape is radically different. Companies are facing a rapidly drying talent pool as fewer young workers are entering the business. Add in the increasing complexity of projects, tighter deadlines and shrinking profit margins, and it paints a picture of a sector ripe for digital disruption. This puts pressure from all sides on contractors and project managers, who need to look to emerging technologies to keep their projects on-time and on-budget.
In construction, time has always been money.
In construction, time has always been money. If the industry stays mired in slow productivity growth and reluctant technology adoption, it will continue fall short of its full potential compared to other sectors that more readily invest.
If you liked this article here are a few eBooks you may enjoy:
How Construction Technology is Saving Time, Money, and Jobs
Leave a Reply