American cities are in the midst of an affordability crisis. Just between May 2020 and May 2021, house prices saw their highest annual increase in more than two decades and price of building materials increased by 24%. The cost of renting has increased faster than the income of tenants for 20 years. Construction must play a vital role in solving these pressing problems, but is the industry ready?
Construction is a 10 trillion dollar global industry that employs more than 200 million people worldwide. But despite its size and importance, the industry annual labor productivity has only grown by 0.1% per year since 1947.
Since 1947, we have witnessed incredible advancements in technology and science. Industries such as agriculture, manufacturing and retail have achieved quantum leaps in productivity through improved bioengineering yields and the introduction of advanced logistics bringing affordable consumer goods. in the mass market. Labor productivity in these industries increased more than 8 times between 1947 and 2010, compared to 1 time in construction.
Why, in the midst of all this advancement and innovation, do millions of construction workers in the United States still have to rely on manual processes, pen and paper for critical parts of their jobs?
We have heavily underinvested in the technology that can help us save ourselves from the crisis we are facing. Historically, contractors, technologists, and investors haven’t taken the time to understand the specific needs and workflows of the construction industry.
Today, over $ 800 billion a year is spent on commercial construction, but a tiny fraction of that is spent on construction technology. In recent years, the construction lowest ranked of all industries for technology spending as a percentage of revenue – at just 1.5% – well below the industry-wide average of 3.3%, not to mention industries like banking, which s ‘is set at 7.2%.
Much of this annual spending – over $ 250 billion a year – is spent on building materials. And they only get more expensive. Materials are about a third of the cost of a project, but most contractors have to rely on manual workarounds created long before smartphones were invented to order materials.
As a result, workers on the job site and in the office are overworked and spend far too much valuable time on paperwork, finding materials and correcting errors.
Office teams receive hundreds, if not thousands, of requests for materials from the field, all in different formats, including requests written with a marker on pizza boxes. They have to manually convert handwritten requests into purchase orders sent to suppliers via email, spreadsheets and PDFs, re-enter order information into their accounting systems, and play on the phone with their suppliers and field teams to keep a eye on the status of orders.
Unfortunately, all this chaos often leads to mistakes, missed opportunities to buy at the best price, and project delays.
The chaos continues for accounting teams, who have no easy way to reconcile their invoices or know if they are paying the right amount, let alone keep track of discounts and payment terms between different vendors.
Meanwhile, the foremen – whose time is more precious than ever in the workforce squeeze – often spend less than 30% of their time doing what they do best: building. Without a simple way to select the exact materials they need and track them to delivery, instances where the wrong materials show up at the wrong time are all too common, derailing project timelines and creating a huge amount of waste.
Technology can make ordering and managing materials much easier, allowing workers on site and in the office to focus on other critical tasks. It can also help entrepreneurs to catch common mistakes before they derail a project and help us build in a more environmentally sustainable way.
Buildings are more than bricks and mortar; these are hospitals, schools, homes and small businesses. The buildings around us literally shape our lives. Our communities need it – we need places to meet, learn, play and heal. Imagine if the things we rely on to create vibrant communities were cheaper to fix – or faster to build?
A new generation of workers who grew up with phones in their pockets are now joining the construction industry and expecting change. By fixing the broken supply chain, we can make construction faster, cheaper and more efficient.
We can move forward and solve our most pressing needs as a society – from building affordable housing to repairing our country’s infrastructure – and making our cities more affordable and accessible to all.