From the Editor: Managing a $10 Trillion Construction Industry
Several years ago, the trillion-dollar global construction industry (projected to hit $10 trillion by 2020) caught the eyes of Silicon Valley and Wall Street. Much has been written (including in this column) about the industry’s inefficiencies, and there’s much interest in capitalizing on efficiency improvements. The result was and continues to be a flood of money pouring into construction technology.
One area of particular interest is project- and design-management software platforms intended to help manage the construction process from design development, estimating and bidding through to construction, hand-over and facilities management. Although various platforms put greater emphasis on different stages of this process, the emerging and growing trend is a tighter integration and hand-off between these stages.
Several standalone platforms have emerged to handle these tasks, many with names that may be familiar (e.g., Assemble, Procore, ViewPoint, Katerra, Aconex and PlanGrid) as well as some lesser-known apps (e.g., Kahua, RedTeam and others). Of course, the traditional major vendors in the AEC space—Trimble, Autodesk and Bentley—also have entered (or have been in) the fray with products designed to facilitate management of the construction lifecycle.
Then Things Get Interesting
In December 2017, Oracle acquired Aconex for $1.2 billion (adding to its portfolio, which already includes Primavera and Submittal Exchange). Then in June 2018, Trimble completed its $1.2 billion acquisition of ViewPoint. Next came the July 2018 announcement that Autodesk was acquiring Assemble Systems for an undisclosed amount. Bentley also has been busy with its July 2018 acquisition of Synchro, a 4D project-management platform.
Many of these project-management platforms have been around for several years but are only recently starting to get serious attention from the major vendors. In some way, this has to be related to the wider acceptance of cloud-based platforms and the increasing availability of reliable internet connectivity on the jobsite. I also feel that much of the low-hanging fruit in design applications development has been picked, so new areas for rapid sales growth must be cultivated. Industry trends toward cloud-based subscriptions and ubiquitous connectivity combine to facilitate this growth.
The Important Questions
Where do these acquisitions leave platforms that have a mixed relationship with the manufacturer of major industry products? For example, Autodesk’s BIM 360 is positioned as a competitor to Procore, while Assemble touts its Procore integration tools. How tightly will these newly acquired products be integrated into existing product portfolios? And how do end users sort all this out and make decisions about which products to use?
Another important consideration is how designers and contractors will keep up with all the differing platforms. Although a general contractor (GC) or construction manager (CM) may choose a single platform and thus only need to learn and maintain one system, the subs and designers likely will be part of many teams led by many different GCs and CMs. Will these firms need to become proficient in multiple project-management platforms to stay competitive?
As a consultant, I work with clients implementing some of these solutions, and they’re already seeing positive results. One client was so happy with its existing homegrown system that he was considering ways to sell it to other contractors. However, after he learned what was possible with these more-developed platforms, he realized what he didn’t know regarding productivity gains! Office productivity using the new platform has jumped dramatically, yet the office is just a small piece of
Where these systems have an opportunity to make a significant impact is in managing field operations as well as the relationship between field and office. As the supporting technology (i.e., 5G connectivity, embedded sensors, reality-capture tools, etc.) continues its ongoing roll-out and ramp ups, these platforms will become the bedrock on which the modern construction project is built.
I think it’s great to see such activity and efforts to address efficiency problems. What do you think? Are these consolidating moves good for the industry? What are the benefits and drawbacks? Please drop me a line or add a comment to join the conversation.