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The road to digitization and innovation is a tough one for construction companies

When it comes to the adoption of technology, the construction industry is known for being the one who’s late to the occasion. The reality is grim and people in construction often bear the brunt of it. The industry is averting technology as it runs on decades-old legacy methods. Such kind of characterizations might be true partially, but the overall scenario is complicated.

The construction industry hasn’t adopted technology the way it was supposed to

The construction industry did adopt technology but the legacy ones only. When computers were new that is when the industry adopted them. It has been using old machines and only updates when they update. Technology for accounting, ERP, estimation, project management, and scheduling has been utilized thankfully but there have been hiccups in adopting such tech.

Yet there are reasons for such a phenomenon. Project advisory professionals measured it as a percentage of revenue and statistics. It exhibited the fact that the percentage of money spent on technology and upgrades is the lowest in the construction industry at around 1.5%. 

That number is somehow misleading. Because the cost of the goods sold is based heavily on construction materials representing more than 60% of all construction expenses.

Reasons why the construction industry got digitized slowly

Regardless of the way the low level of technology spend is being translated, a proper digitization strategy needs to happen in the construction industry. There are many reasons why the process is quite slow

There are complications and a feeling of disconnection is present

Digitizing the construction industry is not easy. It is also different from other industries as it involves a lot of moving parts, multiple parties are involved and construction projects are large-scale undertakings. 

Additionally speaking, each project is different from the other. The design, development, location, kind of materials used, and the like are different. No two projects have much in common in construction. Hence adoption of a systemic approach is hard.

The outcome? While construction companies have used technology to help with common and key business functions, they have been challenged to digitize where it matters the most: on the projects themselves!

Construction companies have been using project management systems for quite some time. But they have not necessarily been as effective as they should be. Cloud and mobile technologies are making strides and the construction industry is behind in this regard.

If the construction industry really desires to be ahead and reach operational efficiencies right at the project level, then cloud and mobile technologies should be used. 

Without these technologies, construction sites are disconnected from their main office. Teams at construction sites are loosely managed and hardly adhere to the protocols the company has set. Then there is a lack of accountability to get the project done on time and within the set expenses. This happens less than 30% of the time.

Profit margins are thin

Advancements made in cloud, internet, and mobile technologies have made it possible to bring the needed change in the construction industry. 

Quantum Analysis professionals explain that even if the cost of materials is removed from consideration, companies still invest in IT less than average in comparison to all other industries. This is most likely driven by the world of competitive bidding the construction industry serves.

Construction is also known to have some of the lowest profit margins of any industry. This is often due to concessions made in pricing during the bidding process. The outcome is an industry with a reactive approach instead of a proactive approach. That can cause a lot of problems.

What does this cause? It leads to a low level of investment in technology. Why? Because it is challenging to develop robust budgets for it. So the industry is beginning to see a lot of value obtained through innovative and new technologies. Slowly the pendulum is swinging and we hope to see the industry revolutionize itself.

Yet one thing should be kept in mind. Construction companies should be selective when it comes to decisions regarding investment in technology. They usually seek out things with surety and this has made innovation a difficult task.

Change management is difficult

Even though technology is becoming available increasingly, and companies are becoming tech-friendly; investment in technology is still a challenge because implementation is blocked due to difficulty in change management.

Construction companies refuse to adopt technology easily. The industry itself has unique challenges when it comes to obtaining acceptance for investment in technology. For instance, each team at each construction site is different. Soccer stadiums have different teams with different skills; the same goes for teams making homes in suburbs, condos, etc.

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