Using information to solve business challenges across the supply chain.
Recently, Laura Black, editor, Constructech magazine, sat down with Patrick Allin, chairman and co-founder, Textura Corp., to discuss the evolution of collaboration technology in construction.
Let’s talk a little bit about the evolution of collaboration technology. Construction projects have always been collaborative undertakings involving a large number of organizations. Owner and architect, general contractor, subcontractor, material supplier, and so on. Given the number and diversity of participants, collaboration is a part of any construction project. What really has changed is that the Internet and some of today’s technologies have enabled project stakeholders to collaborate in ways that are much more efficient and effective than the ways they collaborated in the past.
Technology is really enabling much better interaction between the participants in a construction project. The technology is still relatively new, and while construction has always been a bit of a laggard or underinvested in technology, some of the technologies that have emerged in the last 10 years really can have a dramatic impact on the construction business. I think we are just at the beginning with regard to seeing some real efficiency benefits and some new ways of doing things in the construction space. I think construction is going to become a very heavy investor in technology in the next five, 10, 15 years.
Where do you see collaboration headed in the future? If you think about the construction industry, the way the industry has looked at and managed their business, it has really been project by project. Some of that is just an organizational model, where the person running the project is the project manager, they are on the project site, and that is really the organizational unit in construction. That means that a lot of decisions are not being made at the enterprise level; they take place more at the project level. So you do find contractors that are using within their own organization two or three different project management tools, two or three bid management tools, etc. For a lot of general contractors, the one piece of software that is common across all projects is their accounting system.
I think as the industry evolves, more organizations will start to think about their business differently. If you really think about construction, it is not a project-by-project business. Instead, it really can be thought of as more of a widget business. In other words, I have a manufacturing business and I am manufacturing a product, which means I am going to keep track of a lot of information around my manufacturing process. I am going to use it to make improvements. I am going to have various ways that I measure my suppliers. I am going to look at this not as a bunch of separate entities and projects, but as a continuous methodology around doing construction.
When you start to think not project-by-project but on a broader basis, you don’t make decisions around technology project-by-project. You think about them on an enterprisewide basis. You do that because you want to gather information about the activities on a project because it gives you better insight into managing your business—and direction as to how you should manage your business better in the future.
So I think the philosophy around using technology will evolve from getting people on a project to work together better to wanting to gather a lot of information on all of my projects, and to use that information to better run my business. I see that as an important change in how the construction world will think about themselves and manage their business as they move forward.
I think we are truly at the beginning of this shift. You are going to start seeing standardization around particular pieces of software. They are going to want to see more information gathering, dashboards and analytics. They are going to run their business with much better enterprise oversight than they do today when they have these projects all around the country or the world. That is what I see is going to play out.
That is a major change in how the construction world looks at itself, how it uses technology, how it uses information, how it interacts with subcontractors and materials suppliers. This might take 10, 15, 20 years, but I really believe this is the way construction is going to evolve.
What advice might you offer to construction companies looking to get started? I think construction companies need to recognize and acknowledge that they have underinvested in technology, so I think they need to be thinking about technology as a strategic differentiator. That means they should be looking at the various solutions that are available, thinking about what changes they need in their business, what they are trying to accomplish with technology—and start buying it and start using it. This will eventually evolve into a comprehensive technology strategy for their company.
It is a bit of a journey. It would be nice to say: “Buy X and that will solve all your problems for the next 20 years.” Sorry—it is not going to be like that. Technology is very evolutionary, especially right now in construction. And what might be the best solution today may not be the best solution long term. Some of that is they have to get in the game and start using technology and start evolving their business philosophy around what they want technology to do for them.
The other reason that is really important is, younger people entering the job market want to work for companies that are using technology in sophisticated ways. One of the big challenges of the next 10 years is going to be attracting the right kind of talent. There will be a war for talent within construction, and technology is going to be a key differentiator in attracting the best people. A lot of people think about technology as something that facilitates strategy, but technology is now evolving in most industries to become central to strategy. Construction needs to move in that direction.
How can construction companies develop best practices for how they are implementing the technology? I think they need have a way of assessing the impact the technology is having on their business. They have to get the users together and gather feedback about what is working, what isn’t working. Ultimately, some of the bigger organizations will build some these learnings into their own training programs. It is like anything else: You try something new, you assess and monitor, you get feedback, and then you evolve your implementation to reflect what seems to work best.
We have covered a lot of ground here, but is there anything else you would like to add that you think would be important to note for our readers? Well, our mission is not just to provide technology, it is to solve business problems using technology. The supply chain funding is a really big deal. It is a huge change in the industry. As time goes on, I think it will drive change in how construction projects really get financed and how the work in progress gets financed.
I don’t think the dynamics are widely understood yet, but the banking world, after the global financial crisis, is being told to bump up their capital, slim down their assets. They are disincented to lend to the subcontractor and material supplier world. So sources of capital for business growth and expansion, and funding your work in progress, your receivables, is shrinking around the world. As a result, finding ways to get better and lower cost financing to subcontractors is a really big deal. It is very prevalent over in Europe, where the banks have been a little bit more severely tied down, and that trend is increasingly likely to move to banks in the U.S. The world of how construction interacts with financial institutions and capital markets is going to change a lot.