Digital Technology Revolution in the Construction Industry

FMI Quarterly

By Sabine Hoover

When the Internet was introduced in the early 1990s, no one really knew that complete industries, cultures, governments and businesses would be transformed by this innovative platform for sharing information, learning and transacting. Nevertheless, what started out as a novelty of sorts has since grown into a 3 billion-strong Web that’s accessible via the desktop computer to the 5-ounce mobile phone — and everything in between.

The digital revolution continues to evolve, with cloud, social and mobile technologies gaining ground as infrastructure components, such as wireless broadband, improve and help expand Internet access around the globe. To say that everything and everyone is now “connected” would almost be an understatement, based on the sheer prowess and strength of the global, interconnected Web.

This trend is also reshaping the engineering and construction (E&C) space, where the evolution of design and construction functions has taken a leap forward with the transition from electronic drafting to high-resolution digital modeling (also known as Building Information Modeling or “BIM”). Thanks to ubiquitous digital connectivity, cloud computing and “big data,” the E&C industry is undergoing a historic melding of engineering, architecture, fabrication, construction and other related disciplines, undoing 100 years of expansive industry fragmentation.

Notwithstanding these exciting industry changes, technology use and adoption are still relatively low in construction compared to other industries. Following are some key insights and recommendations on how construction firm leaders can take advantage of today’s incredible business opportunities and start paving the way for a new era.

Don’t Stay Stuck in Your Ways

The construction industry is notoriously slow to adapt and change and is still lagging behind other industries in technology adoption by a fairly wide margin. According to a recent study conducted by JBKnowledge (in partnership with CFMA and Texas A&M University), “over 30% of construction companies surveyed said that their 2014 IT budget as a percentage of 2013 corporate revenue (not building volume) is less than 1%.” Furthermore, company size did not affect IT budget allocation. In fact, “The majority of companies with the largest sales volumes (more than $500 million) still only allot less than 1% of corporate revenue to IT,” according to the survey.

Other research, including Garner’s 2014 IT Key Metrics Data, confirms these numbers. According to Gartner, the cross-industry average of IT spending is 3.3% while construction sits at 1%. That means the typical construction firm’s IT budget is one-third that of the average company – a scrimping that can get pretty costly when the need to adopt new on-site or back-office technologies surfaces.

James Benham, co-founder and CEO of JBKnowledge, stated, “40% of our survey respondents don’t even have an IT department. That’s like letting a high school student operate as your CFO. Deep down, most industry executives don’t take technology seriously because they don’t believe that it delivers real ROI.”

It’s important to point out that traditional contractors aren’t the only ones standing in the way of technology adoption in their industry. In fact, JBKnowledge’s survey found that more than 50% of the executives polled lack a new technology budget. Others blamed a lack of support staff, employee/manager hesitation (to try new tools and applications), technology maturity and high learning curves with keeping them out of the technology loop.

“CEOs in the construction industry need to get serious about IT budges and lead from the top in technology adoption. My recommendation is to treat technology like an investment, not an expense. You don’t have to be way ahead in technology investments; you just have to be a year ahead of your competition,” said Benham.

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