It is no secret that with continual advancements in technology, the methods by which companies are improving their efficiency, effectiveness and productivity are becoming increasingly focused on technology. By definition, construction is the formation of something new by combining or arranging parts and elements by using suitable instruments under specified conditions. Accordingly, the construction industry in particular holds a unique opportunity to benefit from new developments in technology. With rising challenges such as the shortage of skilled labor, efficient work flow and design, sustainability with rising costs, and effective risk management, more and more construction companies are looking toward the implementation of new technology as a potential solution.
Investments in construction technology have doubled in the past decade, according to the McKinsey Global Institute, with an industry-wide investment of nearly $10 billion from 2011 to 2017. Recent results also point to a greater emphasis on technology invested in the preconstruction and back-office phases of construction. This trend is most likely the result of investors’ desire to focus investment on the stages of the construction cycle that hold the most project value. The increasing popularity of using prefabrication to assemble components off-site and Building Information Modeling (BIM) continues to yield new benefits to productivity and efficiency, including a greater ability to shelter components from adverse weather conditions, decreased influence of external factors, the opportunity to minimize waste, and ultimately, a better quality of production. The development and expansion of BIM capability also continues to provide possibilities for construction companies to more efficiently plan, design and manage infrastructure in the early stages of projects. Furthermore, the use of BIM has been shown to yield better collaboration and communication, more accurate job costs estimates, increased on-site productivity, and the mitigation of risk throughout the project sequence.
One of the single greatest challenges in the construction industry is the growing shortage of labor and availability of skilled workers. According to the U.S. Labor Bureau, as of April 2019 there were approximately 434,000 vacant construction jobs in the United States, forcing contractors to pay subcontractors higher wages, and causing delays in the timelines for completion of scheduled work. Moreover, construction costs increased an average of 4.84% in 2019, after an increase of nearly 5.86% in 2018, which can mainly be attributed to the shortage in availability of skilled labor, according to the Turner Building Cost Index. In an effort to combat the effects of labor shortage on productivity, contractors are beginning to explore new alternatives centered on technology, such as the use of robotics, automation, smart contracts and risk evaluation software, and real-time device monitoring. While still at an early stage of development, many of these new technologies hold the potential to rapidly evolve within the construction industry over the next several years.
Is technology worth the investment? According to the 2019 Construction Technology Report published by JBKnowledge, 46.7% of construction firms are still investing less than 1% of annual sales volume in technology, with the remaining 53.3% investing anywhere from 2%-7% of annual sales. On the contrary, venture capital firms invested a collective $3.1 billion in construction technology in 2018 alone, with the majority of the funds directed towards construction software, modular housing, process optimization, and improvements in project management. Even so, the challenges currently facing the industry are not likely to dissipate in the short term, and contractors will have to continue to adapt and embrace new ways of confronting these challenges in order to survive. The integration of new construction technology is merely one of the tools to be taken advantage of in an age of increasing demand and decreasing workforce.
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