(“Community Insights” are written by members of Techonomy’s community, contributing to the ongoing dialogue that is our raison d’être. Tracy Young will speak at Techonomy NYC on May 17.)
Construction is a 7,000-year-old industry that still keeps data locked in paper blueprints. McKinsey Global Institute found that when it comes to digitization, the $8-trillion-dollar construction industry is behind most sectors—even mining, oil, and gas. It spends less than 1% of revenues on information technology. Because construction has been historically underserved by software, it is one of the few industries that is less productive today than it was 60 years ago. But new tools pose the potential to finally make rapid progress and catch up to the rest of the economy.
When construction workers work from outdated blueprints, the median cost of rework due to poor document control equates to $4.2 billion per year in the U.S. After construction is complete, 30% of data is typically lost during turnover to facilities management, which also has huge cost and legal risk implications over the 30+ year lifespan of a building.
Given the industry’s gigantic size and social impact, even small improvements in performance could generate huge benefits globally and create a potent catalyst for incentivizing innovation.
For example, if Fluor—the world’s largest publicly-traded construction company—could increase overall productivity by just 1%, profit margin would increase from 1.64% to 2.64% —a 60% increase overall. If KBR—another industry giant—could do the same, it would increase overall profits by 55%. When you can build such big businesses by riding a razor’s edge of profit, even small efficiency improvements translate into huge amounts of money.
The traditional and near-ubiquitous tool of the industry—paper—is bad enough. But unfortunately, even the rudimentary digital tools that do exist fail to provide sufficient value or keep up with today’s technology standards. For instance, the PDF viewer on a given employee’s laptop may hold a lot of data, but that info typically doesn’t make it into the “as-built” specification that building owners receive when a project is completed. And these viewers are slow and require each user to invest lots of their own time into organizing documents. To make matters worse, legacy desktop-based project management software typically falls short because it’s not mobile-first, even though its users are. If such software providers do offer a mobile solution, it’s usually clunky, slow, and prone to errors that lead to frustration and wasted time on calls with support. Meanwhile, industry technologies that focus on administrative and office workflows tend to create more headaches for the field because construction workers’ pain points have not been prioritized.
Today, the rapid upswing in construction tech adoption—largely thanks to ubiquitous smartphones and tablets, along with easily-accessed cloud software—means mobile devices are finally being put to work on the jobsite. Thankfully, since most construction companies are organized into many independent project teams, it’s easy to run small experiments on individual projects before doubling down on any one solution. Rolling out experimental software company-wide may be too big of a risk, but piloting technologies on individual projects is achievable by construction companies of any size. Much like how individual US states test new, bold policies before the country opts to roll them out nationwide, construction companies can afford to—and should—take risks on individual projects in order to realize large benefits on their entire portfolio.
Maintaining a profitable business and arming employees with the best productivity tools available is paramount. PlanGrid, the company where I serve as CEO, created a mobile-first platform focused on construction software for the field that has been used on over 500,000 projects around the world. It’s where customers collect, manage, and collaborate in real-time on drawings, submittals, markups, photos, issues, and the widely used “requests for information” or RFIs. Today, our company stores over 50 million blueprints, making it the largest digital blueprint repository in the world—translating into over $85 million dollars saved on paper and printing. Saving and sharing all this information in one place means customers don’t waste time miscommunicating or tracking down answers. Ultimately, this helps customers keep labor costs low while getting paid for all the work they’ve completed.
The construction industry is poised for disruption, and with the widespread adoption of digital innovations, now is the time for every company to be more productive and to build better, faster.