Soil Join, The Walsh Group discusses 4 developments behind the “explosion” in constructing know-how adoption
Construction technology, or Contech, is “exploding,” remarked Cliff Fettner, founder and CEO of Soil Connect, during a live simulcast his company hosted on March 16. He cited a recent article in which venture capitalists said they had invested ten times more in construction in the past three years than in any other industry.
Fettner joined Aaron Toppston, General Manager of Walsh Investment Group, the Walsh Group’s investment division. Toppston manages all of Walsh’s infrastructure investment activities across North America and is the founder and head of the Walsh research team.
According to Toppston, the construction industry – at least on the surface – has been ripe for change in the form of technological growth for decades. He suggested four reasons why adoption rates in the industry are only now changing.
1. Changes in both talent pool and technology
Engineering & Construction has always been an experience-oriented industry. “What is your experience on a construction site in a particular project? [is placed] as really the abyss for defining our careers and the way we work, ”said Toppston. “But today we have a growth in talent in the industry and the workforce has a higher aptitude, a higher willingness to use technology.”
The gap between consumer and commercial applications is also starting to narrow, and Contech is becoming more and more “consumer-centric” in its approach. Toppston recently cited a presentation from Caterpillar which stated that the policy for the company’s IoT division is that everything must pass the “Apple Store Test” for looks, feel and feel. Otherwise, adoption rates tend to be lower.
As technology has become both more familiar and accessible, Toppston speculated, “I think people are more comfortable seeing technology on construction sites and being able to rely on and use it.”
2. Increased project complexity
“Ten years ago, a $ 500 million project was huge. Today there are billions and billions of dollars in procurements in both the private and public sectors, ”Toppston emphasized.
As a project grows in size, complexity increases and administrative reporting requirements increase exponentially. “Given the size of the projects and the complexity of the administrative requirements, today, in addition to executing the work requests, one person cannot remember everything and recording with pen and paper or older styles just isn’t enough,” Toppston said.
3. Builders are now considered professional service providers
“For decades there has been a divide over how the trades, GCs and architects are viewed in the industry,” said Toppston. “Architects and engineers in particular have historical [been viewed as] professional service companies. And that was compared to the way builders are viewed. Builders were viewed as having executed against blueprints. Where we think this is wrong, everyone on a construction site is a professional service. “
Project owners expect to be able to trust everyone involved in the project to do a good job, not just those traditionally viewed as “professional services”. This has resulted in greater parity and collaboration between different project units.
“I think the realization that there is much more in common with everyone [involved in] Building a road or bridge, a water treatment plant, etc. and functioning as a professional service company, communication and accuracy of decision making means a lot, ”said Toppston. “As a result, technology rollout has become more available along this value chain. And frankly, [there’s] willingness to talk about this shared experience rather than otherwise. “
4. Technology costs have fallen
Cost has played a significant role in the growing role technology plays in the industry. “The cost of technology is falling. Construction is a very low margin business. We are just about to run a grocery store. Because of this, we are reluctant to invest heavily in research and development, ”said Toppston.
While construction is a huge industry, representing trillions of dollars worldwide, it is not “well scalable”.
“If we don’t scale well, we don’t have a high margin, it has to be very affordable,” said Toppston. “Technology today can be used for a single project, and decision making can often only be for one project. This ability to get “bite size” at a low cost means a lot to technology adoption. “
Willingness to embrace technology
Fettner comes from a family business of building owners and builders in the New York metropolitan area. The company he recently started Soil Connect is a marketplace that connects those who have dirt with those who need it. This was the result of the difficulties his family’s company faced when it came to finding and getting rid of dirt on projects.
Like his father, an early tech user who introduced their first computer to the construction company in 1984, Fettner has always viewed technology as an investment rather than an expense. “After you’ve gone through the initial speed swings, engaging people and employees, and learning the new technology, you’ll just become more efficient,” he commented.
The Walsh groupThe Walsh Group is also a family business, but on a much larger scale. Again, this is about technology, both at the project and company level.
“On projects, we like to test ideas – find project-specific uses for certain technologies – and use them as decentralized decision-making,” Toppston said.
Not every technology is suitable for every project. Even proven technologies can work well in one situation and not in another. For example, working on a bridge over water is very different from building a building in downtown Chicago. “[They have] Many different reporting, compliance, monitoring, etc. needs require different uses of technology, ”Toppston said.
Because of this, the Walsh Group enables any project manager to determine specific types of technology that are appropriate for a project. According to Toppston, the project manager has a better understanding of how the work is being done and how the use of the technology can affect operations, thereby ensuring the value of the project.
Company decisions are based on analysis. “By that I mean, as a company, what have we learned as a global company to improve our business operations, consistency and reduce volatility?” Toppston said.
With other industries spending a million dollars understanding a payback period in two years, such valuation is more difficult in construction. “The reason for this is that building yields are very volatile. One project can be a home run and one cannot, ”Toppston said. “This volatility, this inconsistency in the individual financial returns per project is just as important for the entire company as the individual ROI for an application. Technology that can reduce this volatility is the path to ROI.
“This is where we build it into our corporate understanding,” he added, “and how we analyze what works and what doesn’t in the portfolio of more than 500 projects that we have as a company.”
Find the value regardless of the size
The technical requirements of a company like the Walsh Group, which builds bridges, tunnels, airports etc. across the country, differ significantly from those of a small to medium-sized construction company with, for example, five to 20 employees, Fettner acknowledges. However, the need to discover the value of technology is equally pressing for these companies.
“They are adapting to the new technology on a much smaller scale today, where they would never really be interested in a Procore, for example, because it takes on a different company size,” said Fettner. “But every company has to take care of every investment in technology at every level.
The key, he added, is to implement the technology and then help your team understand and accept it, “because technology only makes you more efficient as a company”.