Why Construction Tech will Make the Difference for Post-Covid Contractors

Dave Gordon, Volition Capital

Dave Gordon, Volition Capital

Between pandemic restrictions, labor shortages, and higher material costs caused by global supply chain disruptions, the $10 trillion construction industry has faced significant headwinds over the past two years. But as demand for new construction projects returns to pre-pandemic levels, contractors must work to ensure that their operations remain as efficient as possible. A strong 2022 could help recoup losses from the pandemic era, while simultaneously position the industry for strong growth in the years to come.

While the construction sector is one of the world’s largest with around $10 trillion in annual spend on construction-related goods and services, much of the industry is made up of small- or medium-sized contractors who lack access to technologies and resources used by large corporations. These contractors have traditionally relied on cumbersome management and accounting methods, including manual reporting of supply purchases and paper-based invoicing. But while high costs and complex technological needs have previously prevented small construction companies from automating their operations, new advances in construction tech are helping to level the playing field and empowering contractors to streamline their administrative processes.

Agile approaches to market recovery

As the construction market rebounds from two years of unpredictability, contractors would be wise to learn from a prior economic shock: the 2008 global financial crisis and its aftermath. The International Labour Organization estimates that at least 5 million construction workers lost their jobs in 2008 as the industry as a whole tanked. While not all productivity/jobs were recovered quickly, research published by McKinsey found that those construction companies that moved quickly to boost productivity, clean up balance sheets, and invest heavily in digital technologies came out ahead in the years following the 2008 crisis.

In 2022, small construction contractors have even more tools at their disposal to lay the foundation for a speedy recovery. Cloud-based SaaS solutions enable even the smallest construction contractors to embrace technology, with subscription and consumption-based pricing models making these previously unaffordable tools a viable option. These new tools are also noteworthy for their relatively low technological barrier to entry. Construction tech startups have introduced no-code solutions for everything from supply chain management to AI-driven analytics, making it possible for contractors to rapidly digitize their operations without needing technical expertise themselve. Now, nearly every construction firm can now harness the transformative capabilities of construction tech, with the biggest barrier to entry being a distaste for change.

Opportunities for innovation

Beyond labor shortages and supply chain challenges, difficult-to-navigate marketplaces and the productivity limitations of manual, labor-intensive processes have contributed to slow progress for the construction industry. However, new construction tech innovations could unlock significant advancement in a few key areas:

• Productivity: Addressing barriers to construction productivity requires both software and hardware enhancements. Cloud-based project management tools make it easier for contractors to monitor progress both on-site and in office, dramatically reducing the inefficiencies of paper-based procurement processes and providing real-time insight into on-site operations to sidestep delays on large construction projects. New modular construction approaches offer the dual benefit of increased efficiency and significant cost savings.

• Supply chain: Practically every material in common use on a construction site has been impacted by ongoing supply chain disruptions. The unpredictable availability and rising costs of these vital resources make it nearly impossible for contractors to effectively plan their work and maintain acceptable profit margins. Committing to digital transformation can help contractors to better predict and manage supply chain volatility, making it possible to keep projects on track and within budget even in the face of sudden lack of availability. Digital materials management makes it easier for contractors to assess their needs in real-time and make precise decisions regarding what to buy and when.

• Sustainability: As governments enact tighter regulations on emissions and the environmental impacts of building projects, the construction industry as a whole must find new strategies to increase sustainability and reduce its carbon footprint. Emerging construction tech solutions are not only able to make projects more resource- and energy efficient, but they also provide crucial monitoring capabilities to track and minimize carbon emissions. Sustainability-minded startups are targeting every aspect of construction, including developing new bricks that reduce air pollution and recycling minerals from emissions to create cement or glass.

As much of the world continues to emerge from the pandemic, past recoveries show us that fortune will favor those who invest in new technologies, giving way to more agile businesses which are in turn better equipped to navigate sudden market shifts. Contractors must keep their finger on the pulse of construction tech to ensure that they take every advantage in a competitive industry. In the post-COVID economy, these tools could make the difference between those who flourish and those who fail.

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