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Construction Trends Toward Digitization

Looking out across a construction site with dozens of workers scurrying from place to place, a construction leader once said, we can’t see dramatic cost reductions and quality improvements without innovations. Thankfully, across the industry organizations from general contractors to subcontractors and suppliers are rapidly taking advantage of the influx of new technologies that are poised to bring the construction industry into the 21st century, which is a good thing since according to the McKinsey’s 2015 Global Institute Industry Digitization Index, construction as an industry is at the bottom of the stack of industries for digitization.construction industry trends

Innovation in a rising wage environment is essential, and with industry forecasts from economists at the Associated Builders and Contractors (ABC), American Institute of Architects (AIA), and National Association of Home Builders (NAHB) all predicting continued growth pressure for 2018, we are certainly heading into a market of increasing wages. In some markets, such as Denver and Washington, DC, finding labor if you don’t have it can be virtually impossible. As an example, a subcontractor had spent two million dollars on Per Diem alone in 2017. Finding talent is one problem and keeping talent is another. Recruiting and retention are high on nearly everyone’s priority list and this is true at the executive level as well. The economy is at historic low unemployment for leadership, professional, and executive staff. At the higher levels, the question about talent focuses squarely on executive ability, leadership qualities, and team fit. Hiring managers and top leadership often don’t know exactly what they need, but they know they need a higher level of ability and are scrambling to implement effective solutions without sacrificing quality. This plays a role in why the construction industry is relatively slow to implement new ideas and innovations. A new approach to construction that has a disastrous effect on a project can have nearly fatal consequences for the implementor, so all good construction leaders have learned to be cautious. However, success goes to the bold and business is changing faster than ever, and it is changing slower than it ever will again.

Thus, here are some current trends that are keeping CEO’s up at night.

  • All levels of leadership are valued at a premium. As change leaders become scarce, keeping the best becomes a priority. Consequently, listening to them, understanding their problems and concerns, and focusing on their happiness is more important than it ever has been. A company rating on Glassdoor and other employee engagement tools are becoming increasingly important to CEO’s. The loss of talent impacts a company’s prospects, and CEO’s are pressing their human capital leaders to deliver on actionable information and strategies to attract and retain talent as well as improve the alignment of business outcomes with the cultural norms in the business.
  • New tools from the Internet of Things (IoT) are allowing construction companies to collect information on the job site that they were much less precise in the past; equipment, employee tracking, production quantities, which allow the smart contractor to more efficiently allocate resources and streamline workflows.
  • Innovative technologies such as drones and virtual reality are rapidly making work safer, faster, and more flexible.
  • Fully Integrated BIM (Building Information Models) are becoming more thoroughly integrated across all subcontractors and the quality of the information continues to improve. What began as a 3D modeling system has now evolved into 6D modeling including schedule, cost, and product lifecycle. It is now possible to understand the success of a project before the first shovel touches the ground.
  • If a project is in jeopardy of failure, principals involved have time to make corrections and to figure out solutions. Owners and development can survey the project in detail and make practical decisions on elements that might improve project economics.
  • A focus on pre-fabricated systems and modular construction are becoming more popular than ever with large pieces of projects arriving on site ready for installation, saving dramatic amounts of labor and cutting costs as well as customers that are finding pre-fab products acceptable, appreciating the benefits of consistent quality, improved energy efficiency, and reduced cost. The Modular Building Institute estimates that by 2020, modular construction will hold 5 percent of the market share.
  • The migration of millennials to cites also plays a part in the current trends, driving demand for the modern urban lifestyle. Every city interested in competing for the future is adding convenient, safe, and attractive spaces to walk to restaurants, nightlife, and improved public transit. They don’t want to drive, they want to be close to the action.

The future looks bright for the construction industry with greater potential in infrastructure in the coming years if government and industry can work together to find the money. There is a clear need for nearly $4 trillion of infrastructure upgrades and improvements; roads, bridges, water, energy, and transit. If trends continue toward digitization and technology advancement within the construction industry, we just might see great things happen.

About the author

Chris Swan's picture

Chris is a Managing Director with TRANSEARCH International, co-founder of the Chicago office. Firms value Chris’ advice because of his understanding of the markets and what it takes to succeed in business. He attracts candidates when others cannot.

Chris is a runner, a father, and a chess coach. He has an MBA from the Liautaud School of Business at the University of Illinois-Chicago, and he earned his Bachelor’s degree from Drake University in Economics.
 

TRANSEARCH is one of BlueSteps' monthly blog contributors. Learn more about Chris Swan and TRANSEARCH USA at http://www.transearchusa.com/.

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