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A Focus on Technology in the Construction Industry

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A joint survey conducted by the Association of General Contractors (AGC) and The Sage Group regarding construction hiring and business forecast for 2017 revealed high optimism for the industry.1 However, many respondents believe this overall optimism comes with a host of challenges and uncertainty. Topping the list of contractor concerns are shortages of skilled labor, tight margins, growing competition and increasing costs. Fortunately, a potential solution lies in the realm of technology. In an environment where adapting to the digital age is unavoidable, a thoughtful investment in new technology can help mitigate the risks associated with these challenges.

According to the survey, the construction industry invests the lowest amount of capital of all major industries, as a percentage of revenue, on investments in technology. Less than half of construction firms have a formal plan to integrate technology into their business objectives. Put into perspective, construction is a $8 trillion industry that spends $550 million of capital on infrastructure for technology while online dating, a $2 billion industry, spends $220 million. While one can argue the merits of comparing the operations in these industries, the fact remains that the world is becoming more automated and ignoring the demand for technology and progress can be detrimental to late adopters.

Technology as a whole encompasses many different aspects and applications, ranging from an app on a mobile device that improves communications, to 3D printing of physical building components. The broad scope of technology available emphasizes the importance of companies investing an appropriate amount of time into developing specific plans to integrate technology into business objectives and operations. A practical starting point for many contractors would be to identify applications that will assist with data capture and communication among team members.

A focus on improving data capture not only provides a company with the ability to analyze information and quickly respond to situations that arise on the job but also allows companies to efficiently process cost data and therefore provide more timely and accurate reporting on job status. A bank of high quality data also provides companies with the opportunity to improve the estimating process and become more proactive in identifying potential project pitfalls during planning. These benefits are not limited to only job costs, as reliable and accurate information can also be used to identify inefficiencies within a company’s operations and overhead structure, which heavily affect job-by-job performance.

The ability to share data and collaborate among team members in real time is becoming more critical to staying competitive in this evolving environment. Unsurprisingly, e-mail and file sharing sites, such as Dropbox, are the most common avenue for collaboration and communication among a project team. While these methods are effective, they are becoming outdated as technological advancements provide new, more efficient models for project collaboration. Companies are beginning to explore IT options that streamline communication abilities while also emphasizing IT security concerns and the protection of user data. As a result, the use of cloud-based tools are becoming more prevalent, and nearly half of the respondents in the survey have begun adopting such tools, an increase of 40% from the 2016 survey. With features ranging from faster approval of invoices and document imaging to 5D visualization of a building that allows for streamlined communication among the project team, the benefits of new technology adoption are evident.

As technology continues to advance, leaders in the construction industry must adapt and evolve to remain competitive. A combination of increasing costs and changes in customer demands make the need for accurate cost estimates and efficient project management vital to the long-term success of an organization. Implementing the right tech tools for your organization can reduce wasted time and increase efficiency in a competitive industry. Furthermore, the ability to capture and accurately interpret cost data can provide management with the opportunity to better estimate the true cost of performing a job through analyzing the applicable overhead burden. This knowledge can prove to be critical in negotiating favorable contract terms with a customer when every penny counts!

1 Expecting A Post-Election Bump: The 2017 Construction Hiring and Business Outlook (http://www.agc-nm.org/sites/default/files/2017_construction_hiring_and_business_outlook_report.pdf)