A lot of people are familiar with the term PropTech but less so with the term ConTech. ConTech, or Construction Technology, incorporates technologies for construction solutions in the design, engineering, and building stages of the construction process.
ConTech has grown into a billion-dollar industry where according to Tracxn, a total of 4.1 billion USD has been invested in the ConTech sector since 1999 globally. Construction is often seen as a traditional industry that is slow to adopt technology. However, according to JLL’s “The State of Construction Tech” report, the industry in 2020 adopted technology at a much faster rate than previous years. What would have normally taken a construction company 3 years to invest in new tech took less than 12 months when the pandemic hit. Tech products and platforms that helped with digital collaboration, virtual scanning tools, and safety-focused wearables were the most accelerated categories in tech adoption. It’s no surprise that ConTech companies that provided these solutions were also some of the most funded in 2020.
$150M | Procore | May 2020 | Digital Collaboration
$35M | ICON | Aug 2020 | 3D Printing
$33M | PlanRadar | March 2020 | Digital Collaboration
$25M | Headlight | June 2020 | Scanning
Construction in 2020
According to Procore’s “Construction Owner and Developer Survey” where they spoke to US and Canadian senior executives in the construction space, they have seen a shutdown in construction sites with 37% of ground-up and 46% of capital improvement projects put on hold in 2020. Investments in 2020 were expected to reduce by 32% compared to initial plans. Most expect their capital spend in 2021 to be less than in 2019, with challenges like project delays, supply chain disruption, and funding.
In a survey done by the US Chamber of Commerce, due to Covid-19, 67% of construction firms have introduced remote work for office employees in 2020. Social distancing measures put in place created a unique challenge for ongoing construction projects. Technology was able to help with the continuation of some aspects of the construction process via platforms that provided solutions to having less people onsite (such as scanning tools, virtual walkthroughs, virtual inspections, and digital issue tracking) and keeping anyone essential to being on site as safe as possible (via wearables and monitoring devices to ensure social distancing, contact tracing, and planning tools to help with staging and scheduling to keep teams stay separated).
While the pandemic has increased the overall adoption of technology in the construction sector, the economic downturn has reduced demand for new projects. Other effects of the pandemic have imposed challenges that have left ongoing projects unable to continue leading to backlog failure. JLL’s findings from their ConTech 2020 report say that there will be an overall growth in the construction tech industry, however, smaller startups in the tech categories that did not benefit from the pandemic will shut down as they have struggled to gain revenue and traction.
JLL predicts that during post-pandemic years the foundational technologies for construction will be BIM, CAD, artificial intelligence, and digital collaboration.The same report expects that other technologies that will significantly impact construction in the future are drones, scanning, and modular construction.
Technology will be adopted faster off the back of the pandemic.
The construction industry was badly hit by Covid-19. However, it was by no means the worst-hit. Regardless of whether or not there’ll be an economic rebound, we can see that tech is a clear winner in terms of long-term and permanent changes to the construction space. The disruption brought by Covid-19 has paved the way for faster adoption of technology in the industry.