Evaluating The State of Construction Tech Adoption in 2017

Construction is among the least-digitized industries, a shortcoming that has played a major role in the industry’s productivity gap. Fortunately, the tide may finally be turning.

As a $10 trillion global industry that employs around 7% of the world’s workforce, you might expect that construction would be leading the pack in terms of adopting new technologies. According to a recent report from McKinsey, however, it seems the opposite is true.

MGI’s Digitization Index classifies construction as a “low digitization sector,” while comparable industries like manufacturing are classified as “medium digitization sectors.” Largely because of its failure to digitize operations, the construction industry has struggled to reach even 1% labor-productivity growth, even as the global economy has experienced an annual productivity growth rate of 2.8% over the past two decades.

Additional McKinsey research suggests that by investing in digitization and other tech-forward solutions to achieve an average labor-productivity rating, the construction industry could increase its overall output by $1.6 trillion a year. With so much to gain through modernization, it really begs the question, what exactly is the hold up here??

The Road to Increased Productivity

Fortunately, we may be turning a corner in terms of AEC embracing forward-thinking technologies. Investment continues to pour into the industry — more than $10 billion between 2011 and 2017 — which is stimulating innovation and helping to make some of these emerging technologies more practical and affordable.

Moreover, governments across the globe are making regulatory adjustments to boost tech adoption among AEC firms. For example, the U.S. General Services Administration recently mandated that all new construction projects operating through its Public Buildings Service utilize BIM, specifically encouraging mature 3D, 4D, and 5D BIM deployment. (Side note: for one pilot program, the cost savings generated in a single year were enough to pay for the next nine!)

As more and more concrete data about the benefits of BIM continues to emerge, adoption is slowly but steadily increasing. Recent reports suggest that BIM’s global market value will increase from $3.56 billion in 2017 to over $7.64 billion in 2022 — a CAGR of 16.51% over the five-year period. And while the U.K. is currently leading the way in terms of BIM adoption, North America is expected to capture the largest share of the BIM market during the forecast period.

As the level of digitization in construction increases, it opens the door for more modernization. For example, better project coordination and on-site management has made prefabrication a more practical and impactful tactic for large-scale construction projects. Jonathan Woetzel, writing for MarketWatch, points out that the use of standardized, prefabricated components in China’s 10,000-kilometer high-speed-rail network project has helped keep the cost per kilometer about 65% lower than it would be in the U.S. (presumably based on current practices and tech adoption), and about 80% lower than it would be in the U.K. An August 2016 survey conducted by the Associated General Contractors found that only about 13% of firms are investing in off-site prefabrication.

A Cultural Shift

One of the biggest roadblocks to the widespread adoption of new technologies is an inability to generate meaningful and/or demonstrable value from them. Put simply, the problem is a lack of support, understanding, and infrastructure. Firms will adopt a new technology like BIM and expect it to be a game-changer in and of itself. Unfortunately, without the people and processes in place to utilize the software properly, its impact in terms of cost-savings and enhanced productivity will be minimal at best.

As a result, the perception lingers that emerging AEC software simply isn’t worth the investment — despite the fact that the majority of research suggests that firms who invest in BIM on an organizational level see an exponential increase in ROI. For example, a recent Dodge Data & Analytics SmartMarket Report on “The Business Value of BIM in China” found that 68% of Chinese firms who use BIM on 30% or more of their projects earn a positive ROI. Conversely, only 30% of firms using BIM on less than 15% of projects reported the same outcome.

The main takeaway here is that the demonstrated impact of such technologies shows that they’re capable of pulling the industry out of its longstanding productivity slump; however, their efficacy is dependent upon widespread adoption and proper utilization. The necessary tools to ensure the construction industry’s future are right there in front of us — so what’s the hold up?