If you’re like most people, you know that tech is one of the hottest industries out there. But the funny thing about the tech business is that it’s really not just one thing.
You have biotech creating medical and biological solutions. Fintech is creating new ways to finance, bank and keep track of accounting. There’s martech, making sure everyone is as visible as possible, and wearable tech that’s changing the way we interact with the world.
Construction has always been a little late to the tech party.
Many construction companies still use the same construction estimating software they did twenty years ago, and they can be reluctant to embrace change. That seems to be changing, though, and the flurry of funding for construction tech over the last couple of years bodes well for the sector. Here’s a quick look at what’s happening, where the gaps in the market are, and what might come next.
Perhaps the reason that construction tech has been slow to change is because of the nature of the industry itself.
Outside of megacorporate general contractors, most construction companies are small to mid-size operations that people with practical experience run. They know a lot about the type of construction services they provide, but unless they have engineers, architects, project managers and other specialists on staff, they probably try to keep things as simple as possible.
However, while those companies might be quite happy to stick with doing things the way they always have, their clients have moved on. So, while they might favor simple processes and handwritten reports, clients and their teams want BIM, Gantt charts and complex projections.
The pace of construction has changed too. In fact, the whole world is a lot faster than it used to be. No one has time for lengthy meetings all the time, so there’s a growing demand for collaborative, cloud-based tools that connect teams despite the geographical distance.
As the construction world has changed, things have got more competitive too. This means that margins might have shrunk, and it’s more important than ever to track every tool, day on-site and task completion timeline.
The need for better tech in construction is clear, so it’s understandable that there are so many new tools and platforms out there.
Maybe one of the reasons why construction tech has been lagging over the years is that it’s traditionally been something of a patchwork.
For a long time, there weren’t many tools that did everything companies needed. This meant that there was a lot of manual data transfer, and as always, that resulted in mistakes and human error.
Today, there’s an enormous range of APIs and bridges that allow construction companies to use technology like GPS topography scanning to complete takeoffs and to connect CRMs with accounting software and construction estimating software.
So, where running a construction business used to be a hands-on process – even with the technology of the time – today, it’s a much more integrated, seamless process.
Construction is a vast, ever-growing industry. As long as there are more people in the world than there were before, we will always need more buildings. We’ll also need repairs and maintenance to the ones we already have.
Standards are rising, and governments are spending more on critical infrastructure (also, costs keep rising).
All of that has resulted in a truly gargantuan market for tools and technology, and since construction companies are realizing that they do need those tools, uptake is picking up speed too.
The market for construction tech is one of the broadest too. Everyone from civil engineers to architects and project managers to contractors need slightly different tools to meet specific needs. So, there’s always an opportunity to create something new that fills a unique need.
Construction is still one of the least digitized industries, but that is changing rapidly, and it will only grow faster as we become more comfortable with cloud-based solutions and digital tools.
To get a clearer picture of the intersection of construction and technology, it’s a good idea to look at some of the relevant facts and figures. Here are a few that you should know:
Construction in the USA is worth about $1.4 trillion per year
The industry employs nearly ¾ of a million people in America
Globally, 68% of construction companies use software to manage their finances, but only 58% use software for project management, 55% for safety management, and under 50% for equipment and field staff management
While construction companies are notoriously slow to adopt new technologies, those that do outperform their competition, on average, by 27%
45% of construction companies in a recent survey still believed that they would not see sufficient ROI on construction technology investments – in spite of all evidence being to the contrary
The forced decentralization brought about by Covid has been a catalyst for the growth in technology adoption in construction.
Even though there’s a bottomless pit of possibility in the construction tech space, there are a few companies who got into the game earlier and have systematically acquired competitors over the years to dominate the commercial construction software and technology markets.
Those companies are:
Procore
Trimble
Viewpoint
Infra.Market
However, if you look closely at the products offered by those companies, you will notice that they have one thing in common, even if the technology itself is different. They’re all targeting their products and services at the commercial construction market, which leaves smaller residential contractors out in the cold.
It’s understandable that big tech companies are focused on the trillion-dollar commercial and industrial construction markets, but it still creates somewhat of a vacuum at the residential end of the spectrum.
If you are not involved in the construction industry, it’s reasonable to ask why residential contractors can’t use commercial construction software. After all, they’re both doing the same thing, albeit on a different scale.
But if you’ve had any experience in construction, you know the reason.
Residential and commercial construction are lightyears apart in terms of pricing, contract administration, staffing and more.
Large commercial contractors have large teams of construction professionals handling different departments. Residential contractors have tight-knit teams that usually wear many different hats.
Commercial and industrial contractors only have to complete a handful of large projects in a year to be profitable. In contrast, some residential contractors are on a different job site every week.
Customers’ demands in the commercial and residential construction spaces are very different too. While commercial and industrial construction clients expect complex reports, 3D modelling and adherence to conditions of contract, residential contractors want a result they can be proud of and quality materials and workmanship.
The amount of time a residential contractor would have to spend to set up, learn and deploy a complex commercial contracting estimating software solution alone makes it a poor fit. When you’re always on the go, there’s not a lot of downtime to implement enterprise-level software.
This means that while there are many construction tech options, most don’t meet the needs of smaller contractors. So, they’re usually stuck using the same 20-year-old construction estimating tool or trying to make accounting systems do estimates. Neither of which work very well.
When the team behind Bolster were running their own construction businesses, serving a primarily residential market, they learned firsthand just how hard it is to find the right construction estimating software and tools for that very specific segment of the market.
Many of the options that do exist are simply reskinned and repurposed versions of older systems, and often, software companies are little more than a single programmer who struggles to provide support when needed.
Among the packages that do exist, many include a lot of features that residential contractors don’t really need and paying for them is a waste of money.
Money is another important factor. Those contractors who do consider some of the existing commercial software offerings find that it’s priced for large corporations – not smaller organizations.
All of those things and the belief that there was a better way to do estimates and make more sales drove the Bolster team to build the tool they needed but could not find.
The interface is simple, it’s entirely cloud-based, so there are no hardware concerns to worry about. It delivers what residential contractors and customers want without all the extra stuff.
Bolster built a construction estimating tool that’s immensely flexible, easy to set up, integrates well with other commonly used technologies, and incorporates necessary features like live price crawlers, so there’s no need to update a price database manually.
They’ve stripped out all the unnecessary things that slowed their customers down and added more features that help drive residential construction sales, like images and visual presentations.
Large software companies that are solving complex commercial and industrial construction problems tend to create complex solutions. But that’s precisely what has kept the residential end of the market from adopting technology more widely.
In a fast-paced industry like residential construction, companies need to be able to hit the ground running with a system that’s easy to learn, easy to use and suits their budget.
For now, Bolster and its investors are happy to be one of the pioneers in this critical segment of the market. As more companies discover the platform and its power to transform their business, so is the residential construction software market.