The construction industry is the fabric of our country. It has proven that it has a notably resilient ecosystem. We have seen this time and time again. But without the right investment how long can we expect our productivity to have a positive impact on both our workforce and our infrastructure? How can we even consider rebuilding and making the necessary reinvestment in our roads, bridges, and waterways?
Smart companies immediately recognize the need to boost both productivity and workforce development and that requires making the necessary investments in the right technology. But there’s the rub. Construction margins are painfully thin; and many firms are very wary about making investments in technology that does not result in an immediate ROI (return on investment).
Yet, our research shows, much like McKinsey and Co., forward-thinking companies that do step up to the plate and make the necessary tech investments are seeing positive bottomline results. We see these first movers, growing very rapidly and staying very competitive in the months ahead. Taking a closer look at the numbers. McKinsey says the top construction firms generated $11 trillion in revenue of the 2018 GDP (gross domestic product).
To keep up with economic growth takes investment relative to technology. Companies need to build a roadmap to digitization. This digital roadmap must be driven by a digital strategy that is much larger than just investing in technology tools. Digital transformation requires the CEO to take a greater role and have a vision for the future.
Simply, forward-thinking firms are not just led by the IT department alone. The most successful construction firms understand that to be successful in today’s highly digital economy, a tech-driven company with a highly motivated and skilled workforce requires more than just a few people verbalizing an objective. It requires implementing positive disruption led by the people to incorporate the processes and the technology.
Ironically this is the realization that manufacturers came to when they saw their operations struggling to compete back in the late ‘80s. In fact, many of the same lessons about skills training and workforce development can be carried over to construction to improve processes and methodologies. The most effective and successful data-driven firms need to consider resource considerations in technology, people, training, and changing the processes.
Let’s look at some comparisons. Manufacturing saw the largest jobs market in 1979 at a record 19.5 million. It then witnessed a rapid decline in the late ‘80s and early ‘90s, while much of the manufacturing jobs and businesses moved away, signaling what was the rapid downturn in U.S. manufacturing.
By comparison the total monthly valuation for all construction put in place (public and private) peaked in March 2006 when it reached $1.2 trillion. As anyone in the industry knows, construction is a cyclical sector that tends to go through periodic robust expansions and very pronounced contractions. Thus, looking further into the numbers, the last big construction downturn of 1.5 million occurred during the December 2007- June 2009 recession when employment in the construction industry dipped its worst.
Much like the manufacturing industry, construction didn’t realize the decline was starting much earlier in 2006 and did not react to alter events. Understanding these facts, construction can learn from manufacturing and use digital technology for positive disruption. This includes improvements in modularization, improvements in prefabrication and fabrication, IoT and big data analytics, machine learning, and the ability to act upon the data from the office to the jobsite. It’s all about making realtime decisions anywhere, anyplace.
With a failing infrastructure ASCE (American Society of Civil Engineers) has reported so many times, and the need for a more experienced workforce, construction firms need to be looking to the future now. To be a tech-driven company with a highly trained workforce requires all of us to think about innovation today. Simply, that means thinking about how emerging technologies and digital disruption, can be built around the people and vision and how they can yield the experiences and efficiency for creating positive disruption as you create in construction.
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