If there are any silver linings to emerge out of the current global pandemic, greater technology adoption across industries will be one of them. In fact, an October 2020 survey by McKinsey found that the global pandemic may have pushed tech adoption across industries ahead by as much as 6 years in the last year.
The construction industry will be one of the industries to gain some of the biggest benefits from embracing new technologies. While it has lagged in the past, contractors' tech adoption is showing more progress and promise. According to commercial real estate services firm JLL's recent The State of Construction Tech: 2020 report, in 2020, because of the pandemic, the construction industry adopted more technology in a year than what would have normally taken three. As construction was one of the first industries to get back to essential work after lockdowns, it was imperative for construction companies to adapt quickly to newer ways of working that required social distancing and other precautions. Technology provided very viable options.
The pandemic is not the only issue driving the need for greater tech adoption in construction. Consider that construction is the biggest industry in the world, representing 13 percent of the global gross domestic product. In the last 2 decades, however, it has shown only slim growth, approximately 1 percent, in productivity. That's compared to 2.8 percent productivity growth in the world economy or in comparison to another industry, like manufacturing, which has seen 3.6 percent growth in productivity.
Undoubtedly, construction is an inherently risky business. According to the Bureau of Labor Statistics, some 5,250 workers died on the job in 2018. That's 3.5 per 100,000 full-time equivalent workers. On average, more than 100 a week or more than 14 deaths every day. In addition to overall work safety issues, contractors have had to contend with labor shortages, aging workers, and new construction delivery methods. After the pandemic, many indicators suggest that labor shortages will worsen.
More businesses have looked at new technologies to become more productive and competitive. While the construction industry has lagged, there is growing interest among contractors to adopt technologies that can help them shorten schedules and use labor more efficiently to address their unique risks and give them a competitive advantage in a highly competitive marketplace. And, if they adopt the right technology, construction firms will have access to more data to help them make better decisions, boost productivity, improve jobsite safety, and reduce risks.
Even with the knowledge that tech adoption can be incremental along this spectrum, technology adoption in the construction industry meets some resistance. Up until now, overall tech adoption among contractors has remained low. A 2019 FMI-Procore study found that 70 percent of companies have not created a technology roadmap. The survey results indicated that many companies lag in tech adoption because they are not aware of viable technology solutions that address their top concerns in a manner congruent with their business goals. In McKinsey's recent study, when respondents were asked why their organizations didn't implement these changes before the pandemic, a little more than half said tech enhancements weren't a top business priority.
The construction industry has certainly been distracted by other priorities. In many instances, the tech adoption challenge comes down to limited resources—time, investment, and people. More specifically, their tech adoption hurdles include the following.
Fortunately, some contractors have been putting more emphasis on tech adoption and are working with their business partners, like their insurers, to find the best solutions. Construction insurers are interested in seeing greater tech adoption because new technology solutions are showing great potential in helping contractors manage enterprise risks. For instance, water damage in the final stages of construction projects all too often leads to costly insurance claims. If available technology could help contractors detect water leaks early, in real-time, costly damage and project delays could be averted, which is a big benefit for all involved.
Partnering with insurers, and even in some cases technology startups directly, many contractors are helping guide and define technology to better suit their needs. This is leading to greater adoption, especially among larger construction companies, and helping lay the groundwork for others to follow.
As a result, we are seeing some best practices emerge that can help in the adoption process. Here are some to consider.
Find the resources.
Make tech adoption part of your business strategy.
Pay close attention to implementation.
Technology is set to change the construction industry. New and emerging technologies are showing the potential to reduce risk, improve productivity, and increase profitability on construction projects. It's not going to happen overnight or without some work. It's a process, and we can all learn from each other.
Tech adoption is a feedback loop. Contractors must ingest technologies, test them, vet them, implement them, and support implementation with feedback from the users and their workers and incorporate that feedback into the process of continuous improvement for the next tech adopted.
Contractors need to be open to tech but not adopt tech for tech's sake. Technologies—from artificial intelligence to sensors to wearables—are offering contractors opportunities to pinpoint, understand, and manage risks on the jobsite and across their entire operation.
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