Tech in Construction: From Frenzy to Maturity

Over the past 10 years, the construction sector has steadily integrated a variety of technological advancements into businesses and operations. This shift may seem to suggest a stable routine has taken hold within the construction tech space, but the reality is more nuanced. The change is subtle, yet significant, with new software, equipment, and robotics making their way into daily business operations and jobsites.

As the construction industry continues to evolve, it’s important to understand these deep-seated changes that are taking place. The quiet yet persistent march of technology is not just a backdrop; it’s a vital actor in the future of construction. The story unfolding is one of gradual transformation, where the tools and systems adopted now will lay the groundwork for the future of construction, affecting how the industry conceives, plans, and executes building projects for years to come.

This article looks at how construction technology spending, the piloting of new technology, and technology research and development (R&D) has become more orderly and organized.

The Spark That Ignited the Frenzy

In 2010, the construction industry was experiencing a slow recovery due to high unemployment, a significant loss in construction jobs, and the stimulus bill offering limited impact. While residential construction showed potential for growth, commercial construction faced increasing challenges, and the industry called for new legislation to provide stability and support for further job creation.1

Since the days of the Great Recession and COVID-19, legislation such as the Coronavirus Aid, Relief, and Economic Security Act2 and the Infrastructure Investment Jobs Act (IIJA)3 was passed with at least some intent to assist the construction labor market.

But as many have experienced, the industry rebounded significantly, with construction contributing more to the economies of 43 states compared to 2010 and saw a 21% growth in GDP impact since 2011.

The surge was driven by pent-up demand, creating new challenges in the form of labor shortages — especially in skilled positions — prompting calls for expanded vocational training to supply the workforce needed for the industry’s continued expansion.4

McKinsey & Co seized on this predicament, seeing the construction industry at a critical juncture where embracing digital innovation could lead to significant gains in efficiency and quality. They found that overcoming the inertia of integrating new technologies into existing systems posed a significant challenge.

McKinsey’s push for contractors to adopt comprehensive suites of digital solutions was part of a call to action for the industry to commit to substantial and sustained investment in technological advancements.5

Fueling the Frenzy: Venture Capital & Private Equity

In looking back on the past decade, the tech evolution was apparent, and the money was present. In 2012, total venture capital and mergers and acquisitions (M&A) activity totaled $150 million. As the construction technology M&A space accelerated, it wasn’t until late 2022 that venture capital, private equity, and public markets temporarily slowed (Exhibit 1).

The Promise of Technology: Fade to Reality or the New Normal?

Integration & Learning Curve

On the surface, it may appear that professionals in the field have simply adapted to a new set of tools, but the underlying reality is that these technologies are fundamentally altering project expectations and management, from initial design to closeout.

Industry professionals continue to learn and access these new technologies, driving better implementation and usage. The industry’s engagement with technology has become less about fascination and more about a strategic imperative that has long-term implications for project life cycle collaboration, quality, certainty, and profitability.

Challenges & Shortcomings

The integration of technology into construction has not been a panacea for the industry’s challenges. Despite promising advancements, technology has fallen short of its lofty expectations in some areas. For instance, improvements in productivity have been incremental rather than revolutionary, with some tools failing to deliver the significant efficiency gains they promised.

Similarly, technology was anticipated to create capacity within teams, allowing for more focus on critical decisions and more important tasks. However, the reality is that so many new solutions have caused siloed information, requiring additional coordination.

These systems are organizing work and often adding new processes, but the processes are initially having the opposite effect of creating capacity. The result, in some cases, has been frustration and decreased productivity and capacity as teams and executives grapple with digital transformation and process maturity.

Predictive analytics and other project management technologies were touted as methods to foresee and mitigate project snags, but the unpredictable nature of construction, with its unique set of variables for each project, has meant that these tools are sometimes unable to account for the myriad of issues that can arise.

Return on Investment Concerns

Ultimately, the return on investment for some of these technologies has been underwhelming. The cost, both in terms of software licenses and time spent training staff, has not always been balanced by a corresponding rise in profits or project outcomes. This raises questions about the actual cost-effectiveness of adopting certain new technologies within the construction industry, signaling a need for a more critical evaluation of tech investments.

Generally, the realized value of construction wearables has remained questionable and proven to be best leveraged as part of a broader platform. Similarly, jobsite internet of things (IoT) technologies have not shown clear or direct improvement on reduced risk or increased project profitability, though most sense that it is providing better visibility of field activity.

Because of these missed goals, contractors have started to take greater control of the situation, signaling the industry’s maturing approach to technology. The initial frenzy has given way to a more measured, value-driven assessment of what these tools can offer, but the technology life cycle has reached a natural plateau, as the industry consolidates its gains and focuses on optimizing existing tools rather than seeking out the next innovation. However, this perceived lull might simply reflect the ebb and flow of venture capital investment cycles.

As fresh funding and R&D opportunities arise, they could reignite the fervor for innovation, leading to a new wave of technological breakthroughs in construction. The future trajectory will likely depend on the industry’s ability to align technology with tangible performance improvements and whether the next generation of construction tech can convincingly address the current shortcomings.

These technologies are likely those that automate workflows (particularly processes within software systems), reduce or eliminate time spent on a screen to enter or access data, or augment the field labor force without requiring extensive additional supporting infrastructure (connectivity, hardware, etc.) or radical changes to standard processes and human behavior.

This is a moment of cautious anticipation, where the next steps could either stabilize the role of technology in construction or launch it into a new era of rapid development, as ChatGPT has done.

While the full impact of technologies such as OpenAI are still in the early days, by leveraging advanced artificial intelligence with large language models, savvy users with managed expectations have benefited from solutions to increase the efficiency of research and generated access to information for improved awareness and better decision-making.

As these technologies mature, new use cases are realized, including assistance with organizing information, creating templates, and conducting data analysis within proprietary unstructured data sets.

Additionally, nearly all major legacy tech solutions have, or will likely soon, launch substitute solutions in the cloud, further improving access, maintenance, scale, and future development opportunities.

Taming the Frenzy

The construction industry’s once frenetic pace of technological adoption is giving way to a more mature, measured approach. This maturity is evident in the way contractors now handle planning and technology implementation. Executives, often with hands-on experience from early career use of project management software, are fostering this evolution with an understanding of the practical benefits of these tools.

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About the Author

Jay Snyder

Jay Snyder is President, and Principal of Big Blue Innovations (bigblueinnovations.com), offering advisory services to technology startups, technology consulting to contractors, and mergers and acquisitions planning, headquartered in Cary, NC.

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