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Subcontractor Performance Risk

Construction Tech Adoption Trends

Cheri Hanes | January 26, 2024

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Orange and blue robots in a line

Construction is a tradition-based business. This industry perfects processes and repeats them with remarkable success. Those repeatable processes are firms' "secret sauce," so changing them to incorporate technology is challenging and even a little scary. However, the reasons to utilize technology keep stacking up.

Technology can improve construction risk and positively affect builders' bottom line. It can help build more safely, with better quality outcomes. It facilitates hiring the most qualified subcontractors and managing supply chains. And it can free our people to work to their highest and best capacity, rather than getting bogged down in nonproductive drudgery. It is impossible to ignore those benefits, and construction has made major strides in tech adoption as a result.

To get our arms around the industry's tech adoption, at AXA XL, we created our Tech Adoption Maturity Index (TAMI). Our goal in doing this was to help companies understand how they stack up in tech adoption against the rest of the industry and their peers.

The TAMI looks at four categories of technology and one focused on corporate commitment to get a picture of what tech has been adopted and how well it is implemented. We then produce a report with blinded peer comparisons and tips and tricks related to what we discovered and then identify logical next steps.

And we love to share the data that comes out of that effort. We've just concluded our 2023 TAMI Trends Analysis, and we have some interesting findings to share.

Index Scores

Looking at the index scores—which come from our respondents and industry research—no one is a 10, and no one is a 0. Firms must have a certain level of tech to run a company of any size: accounting software, customer relationship management (CRM), etc. So, there are no 0s. But there are also no 10s; no one is running fully functional digital twins 100 percent of the time or using robotics or artificial intelligence (AI) to their fullest extent. And that's probably very good because those techs aren't necessarily ready for full deployment either.

Through 2023, we have a theoretical high index score of 8.9 on a scale of 1–10, a theoretical low of 3.0, and an average of 6.6 going into 2024. These numbers continue to rise as adoption improves.

When we started the TAMI in 2020, our index high was set at 8.1, the low at 1.7, and the average at 4.9. The increases may not seem like large numbers, but they represent an approximate doubling of the increase each year: that means the pace of adoption is increasing rapidly. Based on that, our prediction of the average for this year is 8.4—which is very close to the current index high and above the original.

Overall Scores

If we look at it like T-shirt sizes, where small means firms with revenue under $500 million, medium between $500 million and $1.5 billion, large from $1.5 billion to $4 billion, and extra large over $4 billion, the results aren't surprising. Smaller companies score lower, while larger ones score higher. This makes sense because larger firms are more likely to have the budget and resources to make investments in tech. Where those large companies struggle is in getting to full implementation; it's easier to get to 100 percent adoption in a smaller company.

One more noteworthy thing to observe in this data is that the index average is about to surpass the all-time extra large company average, which says something about the increasing pace of adoption.

All Time Averages by Company Size

Tech Adoption Movers

Looking at overall movers in tech adoption, the following is what we saw in 2023.

  • Enterprise software. CRM adoption increased the most.
  • Field management. Alternative production methods and materials, supply chain and material management, worker management, and injury prevention were the movers.
  • Internet of Things (IoT). Sensors for equipment, tools, assets, and water mitigation went up, while other sensors remained relatively low. This seems to be a thoughtful choice, as the industry has many decisions to make about what is meaningful and useful to measure before adding all these sensors. It's not negative that IoT is coming up behind the strategy and infrastructure that will support it.
  • Reality capture.All data points increased. This means higher adoption of drones, augmented and virtual reality, imagery, digital twins, and all types of scanning.

Growing Financial Commitments

And finally, looking at tech and innovation commitments among firms, we have seen a strong increase in the establishment of dedicated budgets for tech and innovation. This is probably the driving force behind all the other upward movement.

Overall Movers

We also looked at what the most adopted, least adopted, and emerging tech categories have been. Our observations in 2023 reveal that the most adopted techs are enterprise resource planning, project management, cloud collaboration, CRM, bidding and estimating, quality management, and laser/light detection and ranging/ground-penetrating radar. This tells us that these techs are becoming table stakes technologies.

Lagging techs include fleet telematics and worker wearables. Fleet telematics is particularly surprising when you consider the size and number of losses caused by auto accidents. There is a compelling case to be made for the return on investment of this technology.

Digital twins (fully functional operations and maintenance models) are also in the lagging tech category. This is also not surprising, as they only make it into project requirements if the owner wants and pays for them. This technology does not provide as much value for the contractor as it does for building owners, so this makes sense.

The techs that are moving into adoption quickly—the top emerging techs—include all types of reality capture. This is positive, as these techs are useful in measuring and communicating progress and provide a detailed record of exactly what happened during a project. That means that, when something goes wrong, the need for destructive testing is limited, responsibility becomes easier to assign, and the magnitude of the problem is easier to assess. Proactively, some reality capture techs now use AI to identify problems before they are covered up—that is incredibly valuable.

Emerging quickly as well are alternative production means and methods, which include technologies like robotics along with building materials like mass timber, and worker protection and management techs.

And finally, supply chain management tech utilization is increasing. It's been a couple of rough years for supply chains, so these are getting lots of attention.

2023 Trends in Tech Adoption

Adoption Tips

If your firm is looking to better adopt technology, what can you do? The following are steps that may help.

  • Assign leadership and define your budget for technology and innovation. Without direction and budget, tech adoption will always suffer.
  • Solicit input from your leaders in the field. They know the real problems you face; empower them to escalate ideas.
  • Assess the techs you have and how well they are implemented. What has been tried and discarded and why? Then look further to determine what solutions are already used on specific projects but not across the enterprise.
  • Strategize. What do you not have but need right now? What are the nice to haves or seem likely to be useful in the future? What could give competitive advantage and how?
  • Lessons learned. As you go, collect lessons learned and fold them back into the process.

We're excited to see contractors' adoption activity picking up pace. We think this technological shift is much more than a trend; it's a necessary evolution to meet the growing demands and challenges in the construction sector.

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