Technology

2020 Tech Trends

With an industry-wide labor shortage, contractors are rapidly adopting new technologies to streamline operations and work more efficiently—and venture capitalists are paying attention.
By Cybele Tamulonis
February 25, 2020
Topics
Technology

Less than two decades ago, the construction industry had a well-deserved reputation for being notoriously slow to adopt new technologies. As automotive, manufacturing and other industries were embracing robotics, just-in-time delivery and ERP software solutions, thousands of contracting businesses still didn’t own a PC.

Not any more. With an industry-wide labor shortage, contractors are rapidly adopting new technologies to streamline operations and work more efficiently—and venture capitalists are paying attention. Investors are pouring billions of dollars into construction technology vendors and providers at an unprecedented pace. In July, The Wall Street Journal reported that $4.3 billion had been invested in construction tech in the first half of 2019, putting the year on track to shatter all previous records.

"By 2025, analysts predict the construction industry will grow by more than 70% to $15 trillion," notes Dustin Anderson, vice president of Sage Construction and Real Estate. "That means 75% of the infrastructure that will exist in 2050, doesn’t exist today." It comes as no surprise that investors are piling on to fund new technologies designed to capitalize on this big market opportunity.

"In the midst of the construction industry’s growing workforce shortage, technology can be strategically applied to increase productivity of current staff," Anderson points out. "We will continue to see wider adoption of labor-saving drones, robotics, AI, machine learning, 3-D printers, lasers, GPS-guided equipment and other automation tools to help bridge the gap between an expanding market and a declining pool of skilled labor."

Today’s construction companies are seeking best-of-breed solutions to help them manage risk, people, payments and projects. Construction Executive asked a panel of experts to comment on the top tech trends and to share their thoughts on selection, implementation and avoiding common pitfalls.

TECH AND VENDOR SELECTION

With a multitude of solutions and vendors to choose from, it can be intimidating to determine which applications are most likely to positively impact your company’s bottom line. Contractors that are lagging behind the tech curve may feel pressure to get on board. Take time to perform due diligence and choose wisely. Implementation can be expensive and time-consuming, and a poor decision can damage a business.

"How practical the new technology is for your business needs is important. It doesn’t have to be easy to use right out of the box, but it needs to at least solve a real-world problem. If it’s not addressing a need or simplifying steps in a process—even if it takes some time to get trained on using everything the right way—there’s a risk that introducing new technology could do more harm than good," warns Fred Ode, CEO and chairman of Foundation Software.

It’s important to consult your team before making a decision. "With your business goals in mind, break down what you need from the technology to achieve those goals," advises Sage’s Anderson. "Involve end users, financial decision-makers, IT staff and other key personnel early in the process. They can provide valuable insight."

"At the end of the day, a construction firm chooses to invest in a new field solution because it expects to take on a greater number of projects and be able to consistently deliver them on budget, on time, on spec and profitably," says Mauricio Barberi, chief marketing officer of CMiC. "The more projects a firm takes on, the more critical it is to have the right field operations platform in place."

"I like to compare choosing technology to a prenup," says Frédéric Guitton, chief strategy officer for RedTeam Software. "You have found something you think is the right fit for you, that will help you. Now, think of all the things that can go wrong and start from there."

ONE SIZE DOES NOT FIT ALL

When considering a tech solution, make sure the application will accommodate your business needs as the company grows. "Too many companies, especially small- and medium-sized firms, still use spreadsheets and basic ‘horizontal’ solutions, to run their financial operations," Barberi says. "These rudimentary tools do not integrate well with other business applications, are error prone given the amount of manual data entry needed and, most importantly, do not scale well as a construction business expands beyond $25 million in annual revenue."

"A company-wide knowledge management platform is pivotal. Many organizations have something in place but it is not managed well," says Matthew Sprague, product marketing manager for Trimble. "I have heard, ‘Yes, we use X but I have no idea how to find anything in it’ or ‘We use Y but that is where information goes to die.’ Whatever you use, it needs to fit your needs, be maintained and have the proper leadership to gain adoption."

"Today there are several solutions that are tailor-made for construction; that handle all aspects of a firm’s financial operations; that integrate well with project management and other mission-critical systems; that can be deployed in the cloud, eliminating the need for setting up hardware and software in-house; and that are cost-effective given the flexibility of SaaS to enable—and pay for—only what’s needed at each stage of a company’s growth lifecycle," Barberi notes.

Larger firms lead the way when it comes to early adoption of construction tech, but there’s no reason that small- and mid-sized firms can’t figure out what’s right for them. For firms without an IT staff and no idea where to begin, Carol Hagen, president of Hagen Business Systems, a consulting firm, has some solid advice. "I tell my clients to join associations in your field. It may mean attending meetings, but that’s where you are going to find out what tech is working for your competitors. If you don’t, the only way you are going to find out you are lagging is when your business is suffering."

For contractors that find themselves constantly switching among multiple applications, relief may be coming as 2020 appears poised to bring greater compatibility and integration between construction technology vendors. "We’re going to see more compatibility with other software in the industry," predicts Foundation’s Fred Ode. "Contractors are looking for the easiest ways to update their data in one place and have it flow to anywhere else it should. I think we’ll see more software companies playing nice with each other so contractors can use all of their favorite programs together."

TRAINING IS CRITICAl

Training remains the biggest logjam to successful implementation of a new solution. "Slowness to adopt doesn’t come from buying the technology but from implementing it. Companies need to get the proper training to ensure their people are fully utilizing the technology that’s been provided to them" says RedTeam’s Guitton.

"As you evaluate technology vendors, consider whether they have regional consultants available to help guide your team through the implementation process and provide them with the training they need to adopt the new solution and maximize its potential," says Sage’s Anderson. "How field project managers adopt and utilize technology is critical. Technology shouldn’t impede productivity but rather improve it and make it easier for information to be exchanged, and processes to be more efficiently practiced,"adds Mike Milligan, head of marketing for GCPay. "Too often, technology adoption is disruptive, so it defeats its intended purpose."

Training is the key to realizing the productivity gains expected from your company’s investment in new technology. Be sure to factor those costs into your planning.

MOBILE TECH REVOLUTION AND THE NEXT-GEN WORKFORCe

"When the iPhone came out in 2007, it was the first thing contractors picked up to connect the jobsite. They were documenting projects, tracking progress and keeping in contact with the back office with real- time updates," Guitton says. "There is this narrative that construction is behind the times in technology. I’d say the opposite."

"The major innovation in the field happened when one could interact with a plan on an iPad. That really changed the game," says Trimble’s Sprague. "Since that time there has been an explosion of field applications. We’ve seen contractors making huge investments in apps for daily reports, progress photos and safety compliance."

Getting older workers to embrace new technology is no small feat, but that’s changing thanks to the rise of a new generation that can’t live without mobile technology and expects their employers to have these tools available. "Having mobile tech helps attract and retain young professionals entering the field while helping them do their jobs better," Guitton says.

The U.S. Bureau of Labor Statistics estimates employment of construction managers will grow 10% by 2028, faster than the average for all occupations combined. Contractors will need to hire talent from a less experienced pool of applicants to remain competitive and should not underestimate the importance of mobile tech in attracting younger workers. 93% of millennials own smartphones, according to a 2019 Pew Research Center study.

"It’s been interesting to see how mobile tech has evolved," says Jim Campbell, VP of construction sales, AvidXchange. "Things that required more bandwidth or even fundamental access to wireless technology didn’t take off. The mobile infrastructure and hardware tech wasn’t there to support them." As Wi-Ficoverage has expanded along with advances in bandwidth, adoption of mobile tech has increased exponentially. When 5G rolls out nationwide, it will be a factor of hundreds in terms of speed and bandwidth over 4G."

It’s incredible what people can do now," Campbell says. "They can access any information they need such as digital plans, AP invoice approval, payment automation and daily reports. The digital device truly is today’s most essential tool on the jobsite."

"Anything that helps to increase communication across necessary channels is what our clients are looking for," says Mike Ode, CEO of Payroll4Construction.com. "It’s great if supervisors are updating job notes and field logs in their software, but the accounting team also needs that information to manage the budget and if they don’t have access to it, those notes aren’t helping them out. Getting the data where it needs to go to keep those lines of communication open is essential."

Data captured using mobile field technology can be valuable in the courtroom, too. "Everything on the jobsite should be documented and cataloged so that if there is a disagreement down the road you are able to protect yourself," points out Guitton. "We’ve had many clients successfully win or prevent litigation simply by being able to produce documented evidence."

PAYMENT AUTOMATION

With subcontractors and suppliers in greater demand than ever, prompt payment goes a long way toward maintaining a healthy relationship with key project partners.

"General contractors are increasingly looking for solutions to improve the process to pay subcontractors," says GCPay’s Milligan. "Manual processes and information exchanges between GCs and their subcontractors not only take significant time and energy; they often result in late payment of subcontractors which greatly increases risk. The trend toward more effective management of subcontractor payments is growing exponentially."

"Construction is a ‘pay when paid’ environment," notes AvidXchange’s Campbell. "Prompt pay laws combined with the worker shortage make having good vendor relationships top priority. There’s no better way to have a good relationship with your subcontractor and suppliers than to pay them when you should. AP automation is integral in approving an invoice. Field employees should be able to initiate a vendor inquiry from the field, and authorize and execute a payment wherever they are."

Campbell points out that digital transactions speed payment while reducing the likelihood of fraud. "We gladly sign a traditional check and then let it sit in an outdoor mailbox, unattended. There’s a false sense of security surrounding what is the most insecure way of executing a payment, yet 80% of small to mid-market B2B payments and 60% of total B2B payments are still made with paper checks."

Paying field workers has become easier, too, thanks to the advent of mobile time and labor tracking solutions. "Mobile timecards have helped a lot of our clients shift from tracking hours on paper. Being able to punch the numbers in for everyone, sync it back to the office and automatically having payroll ready to go saves a lot of time," Mike Ode says.

CUE THE DRONES

The U.S. Chamber of Commerce’s Commercial Construction Index report for Q4 2019 revealed that equipment tagging and drones were the year’s leading jobsite technologies. Despite some hiccups—the soured relationship between Caterpillar and the now defunct Airware, and GoPro Karma models that stopped flying in early 2020 due to a glitch—drones have seen the largest adoption rate in the industry.

Camera drones, used to document the timeline of both interior and exterior project work and avoid potential safety issues, are the most sought after in the industry right now according to Jono Millin, chief customer officer at DroneDeploy, Inc.

Construction projects have many moving parts, involve multitudes of contractors and subcontractors, and are prone to miscommunications, mis-measurements and disputes. Whether it’s related to physical safety, compliance or finances, risk is everywhere in construction," explains Millin. "Drones provide a level of oversight and documentation that a human cannot match, and can navigate dangerous situations without the potential for human injury."

RFID ASSET TRACKING

Radio Frequency Identification (RFID) has been a boon for contractors seeking to keep track of valuable assets at the jobsite. Chipping equipment and valuable building materials allow construction firms to easily retrieve associated information using a handheld reader or drone. This simplifies inventory of materials, tools and equipment at the project site and can be used to ensure equipment is being maintained in a timely manner. The latest trend toward chipping hardhats makes it easier for managers to know who is going in and out of the jobsite. In an emergency, RFID-tagged hardhats can be used to ensure every employee has been evacuated.

AR/VR

"As technology adoption grows and 5G connectivity helps reduce latency, we’ll continue to see more firms add technology and innovation services like VR/AR, drone capture and laser scanning to their list of in-house capabilities as these become standard practices," says Allison Scott, director and head of construction thought leadership for Autodesk Construction Solutions.

"The top mobile trends we see are around Augmented Reality," says Trimble’s Sprague. "The applications that allow users to overlay a model onto the physical world are mind blowing."

DIGITAL TWINS

Digital twin technology, first used by NASA to repair and monitor equipment in space, is a promising new tool for construction. "The industry has been toying with the notion of digital twins for a long time," says Autodesk’s Scott. "So much so, that last year it became a huge buzzword."

A digital twin of a building could be used by a facility manager to gauge performance in real time. The resulting data would be used to improve planning and design of future buildings. "Creating a digital twin of a piece of equipment, like an air handler, is real today but it is not yet fully functional for an entire facility," says Scott.

As BIM models become more sophisticated and the use of integrated smart sensors (IoT) and AI grows, Scott believes the industry will heighten its attention on the digital twin concept and start to put some elements into deeper practice. "It will still be many years before a full digital twin is realized, but it will get exponentially closer in 2020."

BRAVE NEW CONNECTED WORLD

As the industry enters a new decade where critical business information is readily available on any connected device, the adoption of construction technology will continue to accelerate with the influx of a new generation of workers and continued innovation. Construction firms that are lagging behind should begin looking at the tech solutions that will help them remain competitive while reaching a new level of profitability and productivity.

Construction Executive will keep you up to date. It’s also a smart idea to join an association like ABC to network with your peers and learn what’s working for them.

by Cybele Tamulonis

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