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Construction technology is taking the Architecture, Engineering and Construction (AEC) industries by storm and is reshaping the way the Construction Industry as a whole does business.
But what is construction technology, what benefits do you get from adopting it and where is it taking Construction industry companies in the future?
Construction Technology involves a wide range of tools, machinery, robots, software and data that can be used by construction companies to streamline their operations, become more productive, simplify difficult tasks, cut costs in production and materials, and make the day-to-day tasks of construction much easier.
This technology can be used during every phase of a construction project from bidding to preconstruction, construction, and delivery.
Essentially, there are forms of construction technology available throughout every phase of construction from inception to completion. This technology works at many levels of a project from the micro level of a robot tying rebar; to the meta level of using construction management software to organize, schedule, and manage every aspect of a construction project.
This guide covers the essentials of construction technology and construction management technology. We will cover the basics and delve into how and why construction technology is reshaping the construction industry.
Then we’ll cover the trends and try to get a picture of where construction technology is headed.
Finally, we’ll discuss the different types of construction technology available as Software-as-a-Service (SaaS) and share the major players in each area.
What Is Construction Technology? And What Is The Difference Between It And Construction Management Technology?
The Construction Institute says: “Construction technology refers to the collection of innovative tools, machinery, modifications, software, etc. used during the construction phase of a project that enables advancement in field construction methods, including semi-automated and automated construction equipment.”
This covers a wide range of uses and scenarios but it mainly focuses on the doing of tasks and making those tasks more efficient and cost effective.
The difference between this and construction management technology is the latter allows you to strategize the entire scope of the project and manage it from start to finish.
This falls into the area of construction management and the construction manager.
Construction Management Technology then could be defined as the technologies construction managers use to plan, organize, schedule, orchestrate, monitor, inform, manage, and guide a project from inception to completion.
This means it has a massive scope, but it’s used to cut costs, speed up production and delivery, increase quality, increase safety and more.
What Is Happening In The Construction Industry That Is Driving The Need For Technology? Why Construction Technology Is Reshaping The Industry
Every industry progresses along certain foreseeable paths. The Construction Industry and the variety of related and ancillary businesses attached to it are seemingly no different at first glance.
The problem is, the construction industry as a whole is an underperformer.
Productivity hasn’t increased in the past 20 years … and neither have profits.
The average profit in the industry is about 5 percent. So, while it’s accurate to say there is more profit in certain areas of the value chain, it’s also accurate to say there is less profit in others – and even sometimes, in the case of labor, a significant loss.
That means there isn’t extra capital available to be used to reinvest into their companies.
Therefore the industry has been slow to innovate and digitize and standardize their processes and procedures.
Right now, however, there are many different market factors forcing the Construction Industry to change – and it’s becoming apparent the types of business they need to evolve into.
And we aren’t simply talking about the construction technology that helps you stay competitive. A failure to adapt to the coming market changes will most likely result in ceasing operations and closing their businesses.
McKinsey, a global management consulting firm who is actively watching, monitoring and consulting with the largest global players in the Construction Industry, have delved deep into this topic and identified the disruption that is coming in the next 5 years.
They have issued a warning with their report, “The Next Normal In Construction – How Disruption Is Reshaping the World’s Largest Ecosystem” that every construction industry business needs to absorb and use to strategize the future of their businesses with.
What Are The Forces Pushing The Construction Industry To Change?
McKinsey says there are nine shifts that will radically change the way construction is done and they urged the construction industry as a whole to adapt now:
“Companies that can adjust their business models stand to benefit handsomely, while others may struggle to survive.”
This is why you need to know where to focus your attention and what you need to change.
The different forces that are causing the poor performance of the construction industry can be boiled down to unfavorable market characteristics and industry dynamics.
McKinsey points to lagging productivity growth, slow innovation and digitalization, low profits and high risks despite strong growth, low customer satisfaction and budget overruns as the outcomes of a flawed business model.
They say that currently, the customer demand is strong, but it’s cyclical to unpredictable and caters to bespoke, or custom requirements from the customer.
This means it’s hard to maintain a regular workforce, and that makes it difficult to maintain a level of production and quality from project to project.
And the workforce required to build structures needs to be skilled at the job.
The problem is, there’s a shortage of workers, and the projects are getting more complex. If you try to increase productivity, there is a higher volume of work required and complex logistics needed to ensure all the materials arrive on time.
And on top of all of that, add in the environmental impact of construction, the complex and extensive regulations imposed on construction companies and construction projects, the local building codes, and the way construction companies are selected.
All of these different factors create an industry that is focused on projects, built on-site, that has a fragmented ecosystem with minimal collaboration and a systemic under-investment in planning and technology. It also has misaligned contractual structures that often end in lawsuits and a reliance on subcontractors and temporary staff.
In other words, the Construction Industry is a prime target for change.
But change into what?
The Future of Construction
There are certain construction technology trends that are obviously going to take place in the future – such as AI (Artificial Intelligence) – which we will discuss later. But when we look at the change that is happening today that construction businesses large and small need to adapt to in order to be profitable in the future, we must look to other industries for guidance.
Other industries, such as the car manufacturing industry, the airline manufacturing industry, the agriculture industry and ship building went through a similar disruption.
The patterns that emerged in each of these industries are clearly identical. And if reviewed, can inform construction industry businesses as they make decisions about the future of their companies.
When you look at what took place in each of these industries, it’s apparent that the companies who make significant investments into shifting their business models and adopting technology will come out on top.
For instance, McKinsey illustrates this with the commercial aircraft manufacturing industry. 30 years ago, each airplane was built from scratch, tailored to an end customer’s unique desires.
But as industrialization was adopted, it moved the manufacturing process toward an assembly-line style of manufacturing which later became highly automated.
Instead of customization, each industry shifted toward standardization, and then finally consolidated.
It’s apparent the Construction Industry will follow the same path and look completely different as a result. But this transformation will not take 30 years as was the case with airline manufacturing.
The technology available now can be utilized to increase profitability across the board, and McKinsey estimates that if adopted now could account for $256 Billion per year in new profit globally for the industry as a whole.
But to realize these profits, a company would have to move fast and radically outperform their competitors which is only possible by adopting new business models and investing heavily in technology.
The capital is there to fund these initiatives both within large construction firms and in the venture capital community.
These forces will push change on the industry and will create outward pressure to consolidate – thereby virtually eliminating the smaller companies who are slow to change creating a winner-take-most environment.
If you want to know the business model you need to adopt in order to outperform your competitors in the construction ecosystem of the future, I strongly suggest you read the McKinsey report.
But I will summarize it as a move away from individual projects and stages within the project being managed with a mostly manual process to a data-driven approach that optimizes each stage for cost, productivity, safety and a host of other factors.
The obvious change that needs to be made in the industry, which is true in every other business is, it’s hard to make money when you are doing custom work. Only when you are selling a product, or a “productized” service, are you able to build processes that allow you to take advantage of economies of scale and do more with less.
So, keep all of this in mind as we continue to discuss construction technology because this is the environment the technologies we will discuss below currently exist within.
Each technology performs, optimizes or enhances part of the entire value chain of taking a project from idea to completion and beyond.
Because of the urgency to adapt to market changes and the real cost of choosing the wrong tool, choosing the wrong technology partner, or making bad strategic decisions regarding your technology, it is imperative that you work directly with a technology partner who understands the special needs and unique situation of the construction industry.
Types of Construction Technology
There are many types of construction technology. They span across the preconstruction and construction lifecycle, and solutions are available for managing structures that have already been erected.
It’s important to understand the different types of construction technology because using the right one and pairing it with others directly influences your success in reducing costs, saving time, becoming more productive or whatever specific goal you have in mind.
Combining them makes them much more effective, but they have to work well together. If they don’t, and your team doesn’t want to use them, you not only lose the promised gains, you also take a productivity hit.
Also keep in mind that some tools span several categories and use cases. These types of construction technology tools will position themselves as all-in-one tools, or as a project management suite of tools.
In the Preconstruction Phase, there are several uses for construction technology. Construction Industry expert McKinsey has identified four major use cases:
- Estimating
- Developing and growing relationships with a CRM (Customer Relationship Manager / Construction Relationship Manager)
- Gathering market intelligence
- Utilizing marketplace tools that pair contractors with clients and give buyers a way to educate themselves, prequalify and select construction partners.
McKinsey has also identified the following use cases in the Construction Phase:
- Design Management
- Scheduling
- Materials Management
- Field Productivity
- Equipment Management
- Quality Control
- Contract Management
- Performance Dashboard
- Document Management
- Safety
As you can see, there are many areas technology could be used in construction. Combining technologies that work well together and developing a process that employees can follow to cut costs, speed up production and more is what you want to focus on.
When combined, these different, but compatible technologies are referred to as your technology stack.
Notice too, the benefit all-in-one tools give you. They cover multiple use cases and can make your technology stack smaller and work processes easier to follow.
On the other hand, technology development happens in cycles. So even if an all-in-one tool claims to help your company achieve better performance in a certain category, their software might be on version 1.0 and be missing important features.
If you are looking for tools in each category, we’ve highlighted the most popular ones below starting with the Preconstruction Phase.
Preconstruction SaaS Tools
There are a variety of different types of preconstruction software that range from estimating and take offs, all the way to Customer relationship management and more. Some are single focus tools, while others cover the entire preconstruction phase.
They are either installed directly on your computer, or they are Software-as-a-Service (SaaS) tools that are available 24/7 through your Internet browser.
Here are the most popular SaaS construction technology tools used in the preconstruction phase:
BuildingConnected – https://www.buildingconnected.com/ – BuildingConnected is an Autodesk company product with a focus on preconstruction. It’s goal is to allow you to tap into the largest “real-time” construction network” of owners, contractors and subcontractors. This allows you to streamline your bid and risk management process. You get three tools: BuildingConnected Pro, TradeTapp and Biz Board Pro which help you simplify preconstruction.
STACK – https://www.stackct.com/ – STACK helps trade subcontractors, home builders, general contractors and construction industry suppliers and manufacturers quickly deliver detailed cost estimating and proposals and develop quantity and material takeoffs in the cloud. All while coordinating plan, spec and document management with real-time collaboration and connectivity.
Square Takeoff – https://squaretakeoff.com/ – Square Takeoff is a takeoff and estimating solution built for construction professionals. It allows them to easily estimate project materials and complete takeoffs in seconds which saves time and money. Cloud based. Works on both Windows and Mac.
Buildxact – https://www.buildxact.com/ – Buildxact is easy to use construction estimating software for residential builders, remodelers and contractors. It provides accurate estimates 5x faster than normal and allows you to create project templates and connect to suppliers pricing in real-time. Buildxact is built to help you with bidding, takeoffs, quoting, cost tracking, scheduling, and account integration.
Foundation – https://www.foundationsoft.com/ – Foundation is accounting software built for contractors. It gives you all the back-office tools you need to perform job costing, make payroll easy, connect to CPAs, and sync data in real-time from the field to the office.
ProEst – https://proest.com/ – ProEst is everything cost estimators need in one place. It helps you create more competitive bids in about half the time – and as we know, time is money. ProEst is used by general contractors, subcontractors, civil construction, education, and non-profits to deliver estimating flexibility that meets your needs and wins more bids.
PlanSwift – https://www.planswift.com/ – PlanSwift is designed to be the fastest, easiest takeoff software available. It improves accuracy and increases profit in a point and click, drag and drop process. Built for general contractors and subcontractors, it may be the perfect tool to optimize your bidding process and win more construction jobs.
Kreo Takeoff – https://www.kreo.net/ – Kreo Takeoff is an AI-powered, affordable cloud based takeoff solution for construction estimating and bidding. Kreo’s artificial intelligence automatically measures CAD drawings and develops an exportable .pdf materials list.
General Construction All-In-One Tools and Enterprise Resource Planners (ERP)
Most construction technology tools qualify to be classified as all-in-one tools. These are either well-made behemoths that can help you streamline your entire construction process, grow your company, and increase profits, or they are ambitious projects that haven’t come into their own yet.
Enterprise Resource Planners (ERP) tools help you see your business at a glance so you can make better decisions in productivity and finance. ERP’s finally give you insight into your company’s day-to-day activities so you can identify the “constraints” or slow points that are limiting your company from being as efficient as it can.
The classic, enterprise-level ERPs have been developed by Sage, Epicor, Maestro, Dynamics, Penta and others. The uniquely developed ERP tools for the construction industry are very similar to all-in-one tools, but they go a little further into order, warehouse, construction, manufacturing and service management and go beyond just project management.
Either way, here are some of the most popular in both categories:
Procore – https://www.procore.com/ – Procore is the leader in the construction management industry all-in-one tools. Their solutions cover the entire preconstruction and construction phases with a complete platform. Procore has products for pre construction, project management, training management, resource management, financial management and analytics. Procore gives you a complete picture of your projects and business in real-time.
UDA ConstructionOnline – https://us.constructiononline.com/uda-constructiononline-construction-management-software – One of the most ambitions construction technology tools serving the entire construction industry: Residential, Industrial, Commercial, Specialty and AEC (Architecture, Engineering and Construction). Used by over 850,000 construction professionals, UDA ConstructionOnline is the only system to take care of every aspect of a construction project with “financial tools, schedules and calendars, dynamic takeoff, accounting integration, centralized communication and much more.”
InEight – https://ineight.com/ – InEight helps you build with certainty with their integrated project management platform. Built for contractors, InEight is field-tested construction project management software that spans project design and estimating all the way to field execution and turnover.
Buildertrend – https://buildertrend.com/ – Buildertrend helps homebuilders, remodelers, specialty contractors and commercial contractors with their pre-sales, project management, and customer management phases while giving you the financial tools you need to stay on top of your bottom line.
CoConstruct – https://www.coconstruct.com/ – CoConstruct construction management software is used by 100,000+ building pros and remodeling teams ready to take their businesses to the next level. You can easily manage projects, clients, and contractors with a simplified, cloud-based project management tool. All the features builders need with just one login.
Acumatica – https://www.acumatica.com/ – Acumatica is a cloud solution that helps rapidly growing construction companies thrive in the digital economy. With Acumatica, you can get real-time insight into your business from a single dashboard, see your processes and be able to simplify and streamline them. The Acumatica ERP delivers total visibility, which means you can drive better profitability and get a complete real-time view of your business at any time from anywhere.
Jonas Construction Software – https://www.jonasconstruction.com/ – Jonas has two different software offerings developed to help two different markets. Jonas Premier is for General Contractors, Design Builders, Home Builders, and Real Estate and Land Developers. Jonas Enterprise is a great fit for Mechanical Contractors, Electrical Contractors, Plumbing Contractors, Energy and Solar Contractors, HVAC Contractors, Specialty Contractors, Landscape and Maintenance Contractors and Fire and Sprinkler Contractors. Both are all-in-one tools covering many different phases of the construction and project lifecycle including accounting, service management, project management and operations.
ProjectTeam – https://www.projectteam.com/ – ProjectTeam is a fast, easy-to-use, highly customizable construction management solution built for general contractors, subcontractors and service based businesses. It helps you with field management and project finances with a plethora of features including RFI’s, Submittals, Field Reports, Punch Lists, File Management, Contracts, Change Orders and more.
Trimble Viewpoint – https://www.viewpoint.com/ – Trimble Viewpoint is an ERP that improves how you plan, construct, and manage your construction projects. Trimble Viewpoint helps you manage your projects, processes and people with construction management, job costing, project management, service management, employee management, and data & reporting tools.
SimPRO – https://www.simprogroup.com/ – SimPRO helps contractors improve their cash flow, increase efficiency and manage your business with a host of different tools including: scheduling and dispatch, mobile connection to remote workers, estimating and quoting, inventory management, invoicing and payments, and reporting. It’s touted as an all-in-one field service management solution that helps you manage your projects and jobs in the cloud.
ContractorForeman – https://contractorforeman.com/ – ContractorForeman is used by contractors in over 75 countries and helps them manage their projects in an affordable, all-in-one solution. It offers you project management, financials and accounting, scheduling and planning, safety and incident reporting, a contact manager and forms, checklists and reports to stay on top of everything.
Housecall Pro – https://www.housecallpro.com/ – Built for local service based businesses like HVAC, Plumbing, Electrical, Garage Door, Landscaping & Lawn, Appliance, Carpet cleaners, and more, Housecall Pro is an all-in-one tool that helps you run your business from end-to-end. Housecall Pro has features to help you streamline, scale, manage money, and provide an exceptional customer experience.
247pro – https://www.247pro.com/ – Built for remodelers, home builders and specialty contractors, 247pro is an all-in-one solution to manage every project. It helps you manage your daily tasks and collaborate with your team and subcontractors in an easy to use tool. It’s designed to help you complete your jobs and projects on-time and on-budget while aligning with your customer’s expectations and encouraging positive reviews.
Specialty Construction Software
There are a range of SaaS tools specific to local service based businesses that help them do their jobs more effectively. These are a selection of the hundreds available. This list should give you a good idea of the options available to you.
McCormick Systems – https://mccormicksys.com/ – McCormick Systems has developed estimating and project management software for Electricians, Plumbing and Mechanical, Transmission and Distribution and Low Voltage Automated Building Systems companies. This tool works across residential, commercial or industrial projects.
FieldEdge – https://fieldedge.com/ – Built specifically for HVAC, Plumbing, Electrical, Locksmith and Appliance Repair businesses, FieldEdge helps you complete jobs faster, streamline your operations, and increase profitability. With a focus on connecting your workforce, FieldEdge gives you valuable insight into how your business is doing from end-to-end.
Jobber – https://getjobber.com/ – For small service based businesses, remodelers and general contracting, Jobber is a all-in-wonder that has a lot of small businesses raving. Jobber helps with customer management, job tracking, quoting and invoicing. There are some additional features, and even though it’s perfect for some construction industry businesses, it isn’t a great fit for large scale construction.
ECI BuildTools – https://www.ecisolutions.com/ – ECI BuildTools consists of a suite of products that make it appear to be more of an all-in-one tool than a specialty construction tool. However, even though each tool in their suite works well with each other, they are also stand-alone. So, you could pick and choose the tools and technologies you want to use. Their website says, “Rather than a one-size-fits-all product, BuildTools is proven construction project management software for custom builders and remodelers. Now you can organize the chaos of construction, keeping all your project information—budgeting, scheduling, communication, and documents—in one place.”
BuildBook – https://buildbook.co/ – For custom home builders and remodelers, there is BuildBook. BuildBook is a project management tool which helps you manage the entire project lifecycle from start-to-finish. It helps you know what’s on your plate, and you can create, assign and manage punch lists, and tasks in a simple, fast, enjoyable way.
… And Remember, It’s All In Flux
You may recall that in the Future of Construction Technology section above I mentioned that there will be a consolidation of the construction industry and the tools that the construction industry uses to run their companies.
This is evidenced by the purchase of Esticom by Procore. Esticom was the premier cloud-based takeoff and electrical estimating software in the industry. As such, it was a prime target to be absorbed by the #1 construction management tool: Procore, and have it’s features enhance the Procore all-in-one system.
Remember, there are hundreds of construction technology tools available to you and not only are these just a small sample of them, there are other forms of technology available that cover different aspects of your business like Artificial Intelligence, Robotics, Market Intelligence and Marketplace tools that are just now popping up.
The Takeaway
The Construction Industry is changing rapidly. It’s obvious what is going to happen, and what is needed to ride the wave to success after success. It requires adopting and heavily investing in technology as you streamline your processes and restructure your business.
To paraphrase McKinsey, all signs point to a winner-take-most dynamic emerging. For those companies unwilling to risk their capital or unwilling to change fast enough, they will see their market share and margins erode until they eventually have to close their doors and shutter their companies.
There is $256 Billion dollars in profits available this year for construction companies who adopt technology and use it to increase productivity, cut bid times, connect remote workforces, and optimize their finances.
That $256 Billion dollars equates to a 1% – 2% profit on every project you win. In an industry where a 5% profit is the average, that 1% – 2% is a 20% to 40% increase in profit.
It may seem small, but it’s actually a huge difference!
You have the opportunity right now to get ahead of the curve, adopt construction technology, and take your company to the next level.
And if you need some help choosing the right construction technology for your business, reach out to us, we’ll be glad to help.
