Is construction tech worth the effort? Show me the money!

The construction industry is perceived as a traditional, old-fashioned industry, very far from advanced technology. This is based on the industry’s slow adoption rate of new tools, methods and technologies over the years. 

Why is the construction industry so slow in adopting new technologies?

As Roy Zwebner, CEO of Gav-Yam Negev Advanced Technologies Park in Be’er Sheva, Israel, one of Israel’s leading tech hubs. told us in a recent interview: The construction industry is one of the oldest industries out there and relies on extensive and specific engineering knowhow. When you take this into account, together with the fact that the building you build has to last for decades and while building it,and afterwards you have to deal with people’s safety, it becomes difficult to create huge leaps in innovation. Everything has to be pre-examined to make sure it is aligned with the accountability you have as a developer or builder. Take for example the car industry, despite all the new and exciting technologies out there, the biggest challenge is to integrate those technologies while ensuring the basic functionality of the vehicle, driving people and commodities safely from one place to the other is not jeopardized. This is very similar here as well. This is the reason why any adopted construction tech has to support the construction project in a significant way; it has to be something that will change the process of construction dramatically, a game changer, as we are dealing with processes that are based on decades of experience, of accumulated dos and don’ts. 

It’s true, on the one hand, it makes sense for an industry that has been around for so long and is used to rely on physical labor to be more hesitant in its approach to tech in general. But on the other hand, no good has ever come out of refusing to march forward, and close-minded construction companies might lose a lot of money and risk becoming irrelevant in the long term. And yet, for this process to really succeed, getting the current experts of the construction field on board is very important. 

We can expect to see major changes in this field not only because more VCs invest in construction tech and no longer wait for the industry to reinvent itself, but also because more and more contractors, construction companies, and real estate developers understand the monetary benefits of construction-focused technology. In this article, we will lay the foundations and explain the ROI that awaits tech pioneers in the construction business.

The build up

Technology is usually leveraged to solve problems, make things safer, more efficient, and help improve the bottom line. Contractors, construction companies, and real estate professionals encounter challenges when trying to communicate their needs and coordinate with other key players in the building process and making sure that everyone involved is on the same page. They discover painful miscalculations and devastating mistakes and delays that come straight out of their pocket; they suffer the heavy consequences of tragic injuries and even the loss of lives which could have easily been prevented, and more.  

Ofir Etgar, CEO of Neve Binyan construction company articulated very well one major challenge for the industry: The initial planning is usually very different than what actually happens in the field eventually, due to many rounds of changes on the way. This happens for many reasons, mostly directly related to the local authorities’ inspectors and clerks. For example, when people leave their positions and new people come in, when policies change due to political considerations and more. The human factor is actually one of the most  delaying factors in planning and executing construction projects.

So, the challenges are clear, and quite complicated. Now, it’s time to look at the brighter side of things, construction tech has some of the answers (not all of them yet, unfortunately).

One great example of leveraging technology to deal with the above mentioned challenges, is UltraWis, a startup company that’s part of our portfolio at Incubit Technology Ventures. UltraWis is looking to disrupt the way cranes are being operated on construction sites. Today, tower cranes are operated manually from a top tower cabin, with on ground verbal coordination. Many times this leads to deadly accidents, and inefficient operations that lead to project delays that translate into wasted funds and add costs to the project. Utrawis’ solution is using enhanced computing vision and auto control mechanisms for faster, more accurate and safer operation of cranes in construction sites..

We asked Lior Avitan, UltraWis CEO, what he believes the main benefits of adopting their technology are: It’s very clear that the industry is looking for enhanced efficiencies and a safer work environment. Working with solutions like ours means immediate cost savings and risk reduction for construction companies. We believe that with time, the construction worker will become more of an operator of machines and systems, and construction sites will look more and more like car manufacturing factories. The industry will enjoy more process automation, KPI measurement that will allow for data driven decision making, just-in-time supply-chain management and more.

 A recent report by McKinsey listed the different touchpoints between technology and construction, naming all the areas where technology can elevate the building process. The result is a list of every single step in building a structure of any kind. Planning and designing, forming legal contracts and assigning jobs, monitoring the process, communicating, managing construction sites, operating equipment in smarter ways, and more. Construction tech is here to handle these types of challenges.

Wall to wall ROI 

We already agreed that in order to see accelerated adoption we need to show them the money right? So, here are a few examples of what the construction industry can gain from implementing new technologies: 

• Faster time to market: This one is what Roy sees as the biggest advantage of adopting new technologies in construction. The faster you complete the construction of the building, the faster it can be used, and therefore yield income. Any technology that supports this goal and keeps the building safe and efficient at the same time – will have a good chance of being adopted by the industry. For example BIM technologies (Building Information Modelling) that have entered the market in recent years, enable designers to create a complete building design in 3D including all systems and relevant data, and then share this data with the supply chain. This way all the needed materials and systems can arrive to the construction site on time without delay and contribute to a faster delivery time while reducing mistakes.

  One example of a successful BIM company, already delivering value in this industry is Autodesk BIM 360, by the CAD company. The software unifies the processes of project, design, and construction teams. It’s cloud-based web service, providing teams easy access to data from anywhere, to improve decision-making and avoid expensive delays. It includes activity tracking, visualization layers and version management of models. 

• Improved planning: 3D printing and visualization technologies that combine VR and AR can turn dreams into reality much faster and more accurately. Analytics-based design can speed up the process and alert contractors on anything that was left out of the planning process. Blueprints are easily updated in real-time and using advanced modeling technology, turn into a fully designed project for all participants to examine and comment on. Visualization makes for a more efficient planning process, faster decision making, and contributes to the overall shortening of the planning process, which can save a lot of money.
• Solving HR shortage: The construction industry faces a real crisis when it comes to labor shortage. Technology can help out in a few ways: first, by changing the face of the business, making it more attractive to new generations in terms of interest, prestige, and safety. Second, it can offer tech solutions where working hands are missing. Drones, automation scripts, and robots can do a great job without taking lunch breaks or asking for a salary, just simple and relatively cheap maintenance.
• Reducing mistakes: If there ever was a great way to harness the power of AI and machine learning – construction tech is it. By studying, analyzing and optimizing every step of the way, contractors will be able to prevent delays, mistakes, and frustration to customers, all of which translate to many many dollars. AI will serve as a personal assistant to every worker, helping them do a better and faster job.
• Cutting facility and inventory management costs: Designing smarter facilities will boost efficiency and save lots of money for everyone involved. Better yet, offsite construction will allow contractors to save some of the facility costs by hosting them in other areas until it’s time to bring them on the site. Technology also enables the monitoring of materials, their expiration dates and even the proper way to recycle and reuse them, saving major budgets and headaches.
• Improving safety: It’s impossible to overstate the importance of safety in construction. There is a major price tag that not only businesses, but society as a whole, pay for the lack of adequate solutions to improve safety. Technology will enable the efficient monitoring of every corner of the site, communicating everyone’s different moves to one another and preventing dangerously contradicting actions, using wearable technology to indicate workers’ physical condition, and more. Think of the lives saved. Think of the huge lawsuits and settlements money our society can spare.
• Boosting collaborations: Onsite and offsite communication has already improved dramatically thanks to mobile technologies and dedicated platforms like Slack and WhatsApp. With more construction-focused tools, workers will be able to remain aligned throughout the building process and make sure that even minor changes are immediately communicated to everyone involved. This is the foundation upon which all other benefits are built upon. 

To summarize, we believe that as more construction firms will join the party, we can expect startups and investors to choose to leverage their professional experience to tackle more of the industry’s issues, and constantly improve current solutions. As construction workers on all levels become more accustomed to using such tools and enjoying their advantages, it will be impossible to stop innovation from taking over, making the people who build our homes and facilities feel right at home with technology.