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Where Construction Firms Are Finding Value | FMI

Where Construction Firms Are Finding Value

2020 FMI/Procore Industry Report

Conducted with over 700 industry representatives throughout the United States, Australia, the United Kingdom, and Canada, this report looks at the major concerns firms are facing, and how they are addressing them.

FMI conducted a Procore-sponsored industry study to examine the top challenges facing construction today and how firms are leveraging technology to combat them.

The report covers:
  • The industry’s top concerns for success, how well those concerns are being addressed, and where improvement efforts can have the greatest impact.
  • The rise of construction technology, the types of solutions firms are implementing, and what they are using the software to do.
  • The top criteria when investing in construction technology, the biggest challenges with software solutions, and how buyer behavior impacts outcomes.
  • How firms gauge the ROI of construction technology and the value of technology partners vs. technology vendors.

Across the globe, while construction projects continue to grow in both scope and complexity, labor productivity is flatlining. According to McKinsey Global Institute, builders’ productivity growth worldwide has averaged only 1% growth per year over the past two decades, compared to 3.6% growth in the manufacturing sector. In the U.S., construction productivity has actually dropped by half since the late 1960s.

While productivity is stagnating, the labor shortage is intensifying, and the cost of both materials and labor is rising. These industry challenges are being magnified by global migration from rural to urban settings. In fact, the population of global urban areas is increasing by 200,000 people per day. A report from the United Nations predicts that by 2050, the global population living in cities will have increased from 55% to 68%. That translates to a need for everything from new housing and schools to office buildings and infrastructure—for 2.5 billion people. Put simply, we will need to build “an entire New York City every month” for the next few decades to keep up.

The construction industry today is both booming and fiercely competitive. In this climate, status quo business processes are no longer valid. To keep pace and sustain profitability, firms must find new ways to increase efficiencies, improve productivity, and increase margins. The good news is that after a much slower start than most industries, construction is finally joining the digital revolution. Investors, seeing a multi-trillion-dollar industry poised for disruption, have been pouring billions of dollars into construction technology. In the first half of 2018 alone, venture capitalists injected a whopping $1.05 billion into global construction technology startups. As a result, there has been a sharp rise in the number of construction specific solutions available on the market. Construction firms are moving fast to implement a range of innovative software solutions. But merely purchasing software is not enough.

In order to achieve the transformational change we’ve seen across other sectors, firms must invest in a technology partner that will ensure the software is leveraged effectively.

Construction’s Top 3 Concerns for Future Success

In today’s hyper-competitive and ever-evolving construction landscape, sustainable success depends on continuous improvement. Today, firms are most concerned with optimizing outcomes in three key areas:

While jobsite safety is being handled effectively, the industry is lagging to address its other top priority concerns:

Top Impact Areas

Where firms expect to see the greatest direct impact in addressing their concerns:

  1. Schedule/productivity
  2. Reputation
  3. Financial performance