In Part 1, I wrote about how low the IT spend in the construction industry is. The lack of spending on IT means that builders are missing out on a major source of productivity gains. I also mentioned in Part 1 that low profitability in the construction industry, relatively speaking, means that there's not a lot of capital sloshing around on the balance sheets of construction companies to be invested in IT. That's a major problem. A second major problem will be discussed below in Part 2.
So, construction companies spend lightly on IT. That isn't the only reason why the industry is missing out on productivity gains afforded by IT investments. Another big reason is that many people in the construction industry are, uhhh, how do I put this...old. When I talk to people in industry (particularly those managing specialty subcontractors), they commonly tell me that they have become very serious about hiring young college grads because they need new blood to replace the baby boomers, who tend to dominate management in the construction management. That anecdotal evidence is supported in the chart below:
The chart above was created from data compiled by the Bureau of Labor and reported by The Center for Construction Research and Training. The full report can be downloaded here. The data is from 2005, but it confirms what people are saying today: the construction industry is graying. And notice where the baby boomers in the construction industry are concentrated: as construction management (and I don't know who is included in the construction manager category, but I suspect it includes project managers, superintendents, project executives, etc.) and foremen. The people running projects and craft labor tend to be older. This should shock no one for two reasons. First, in most cases, it takes time and experience to get promoted to management. Secondly, most people who perform craft labor tend not to work in craft labor too late in their lives because it's, by and large, hard work. Many baby boomers have left the craft labor ranks.
So now that I've insulted baby boomers in the construction industry as being less productive, what does age have to do with IT adoption? Well, a lot. Technology adoption is more difficult in a population that did not grow up with personal IT devices, whereas younger people, who are considered digital native (which is just a fancy way of saying they grew up with personal computers, mobile phones, and gaming devices) take to IT with great ease. So the majority of the people managing construction projects and companies come from a generation that tends to adopt technology only as they feel pressured to do so. If you think these are stereotypes, check out this article.
If I expected this trend to continue, it would be pretty dumb of me to be calling for a technological revolution in construction, right? As previously mentioned, there is a changing of the guard in the construction industry, whereby the baby boomers are retiring in droves and the Gen Ys and Millennials replacing them are bringing their technology with them. And it's not an orderly transition, at least as IT is concerned. In the past, construction companies had to make big bets on technology adoption (buying desktop PCs and later laptops, investing in Windows and the Office suite of programs, and other expensive software (back-end databases, Primavera P3, AutoCad, etc.). It took training and effort for these IT tools to be adopted, an effort many are reluctant to repeat.
Fast forward to today, and many recent graduates of construction management, engineering, and architecture programs are entering the workforce and they think these older tools suck. Well, that may be a bit strong, but they have found stuff that works better in some cases, and they're bringing it onto job sites. I never really clicked with me until I saw this video a few days ago. I am a big fan of Paul Kedrosky's commentary on technology, and in this video he's talking about the convergence of technology and medicine, but at the one-minute mark in the video, he describes how iPhones became a business device (paraphrasing): people are tired of working with crap so they smuggle in their own better personal technology to work. And as discussed in a previous post, it's not just iPhones, it's iPads and other tablets. And it's not just the iOS, it's Android (leaving Windows wheezing in the distance). And it's not Window's based software, it's apps. A deluge of technology is finding it's way onto the job site, and that's a good thing. The hard part is "institutionalizing" it so that some form of a technology "platform" can be created and managed and not hacked together by individuals arbitrarily adding IT to the project.
The bottom line: the demographics of the construction industry are changing, bringing in a new wave of younger technology-adept project management personnel, and they're bringing their technology with them. The next step: software developers will recognize this changing demographic as an untapped market and will increasingly develop new IT tools for the construction industry. That will create the disruption that Kedrosky talks about later in the aforementioned video, where he talks about how the medical industry needs to be disrupted because its technology adoption has lagged other sectors of the economy while its costs soar. Sound familiar?
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