Exploring the Slow Adoption of Construction Technology: A Case Study on Major Contractors’ Software Expenditure

A lot of people say construction is going under HUGE digital transformation. I wanted to see how fast it’s changing.

Keep your filing cabinets to yourself.

Today, I’m interested in main contractors that do one thing: spend money on software.

Why?

Self-interest really. Good software spending usually means a strong media market. Construction tech firms have big digital media budgets. And new tech creates more editorial opportunities. 

But there is a nicer side of me..

I worry the construction industry will simply run out of good people. Leading to more inflation, more late payments, and more bankruptcies. We currently have the highest insolvency rate in the UK, so we don’t need more.

See, new technology adoption attracts fresh meat. College students are not lazy, but they would rather work with their heads than their hands. So, anything tech related is going to pique their interest. 

Do you honestly think kids wanted to work in car manufacturing before Tesla came along? 

For this case study, I focused on four main contractors — ones that do over a billion in revenue. The “Tier 1s” as we like to call them. I’d love to do it on the small guys but the information is difficult to find.

But before we dive in…

3 reasons why you should care about software expenditure.

• Reduced costs, better delivery: While tech implementation can initially be a pain in the ass for contractors. After time, the rewards begin to kick in. You just don’t waste time anymore on the nitty gritty bits. The tech can do that, while you fully focus on better execution.
• Culture: Less time arguing. More time producing. People like to be part of companies that are growing in every sense. It’s fun to use tools that can help you become better at your job. Working on manual tasks when they can be automated is soul-sucking!
• Talent attraction: I already mentioned this, but I think this is where the macro benefit lies. Tech creates new types of jobs, leading to new types of people.

Is software spending accelerating every year?

Across the entire sector, yes. But it’s not moving rapidly. We are still in the infancy phase.

The best way to view software spend is to see how much the big boys are spending on tech. 

Here are the companies were gonna look at:

• Balfour Beatty
• Kier Group
• Costain
• Galliford Try

Note: Costain doesn’t have a category for computer software spend. It’s under “intangible assets”. So, maybe discount some percentage. 

Inside the numbers:

Within the software spend itself, construction tech is the most interesting part. I want to know about the software for executing projects, not for running payroll.

Here is what I found:

• In 2019, Balfour Beatty US signed a contract with Procore allowing them to scale its project management capabilities through utilising Procore’s Project Management solution. 
• In 2022, Kier signed a similar contract with Procore for their UK operations.
• London based Sensat partnered with Costain in 2016 to integrate aerial drone based 3D site modelling into the firm’s highways construction projects across the UK for the first time.
• In 2021, Galliford Try selected Dalux to provide a business-wide BIM solution.
• Kier began using nPlan to help them optimise their pre-construction programmes using active risk identification.

The exact size of these contracts are hard to find, but they are in the millions.

Back to the stats..

The results I found were disappointing to say the least. I was expecting peaks and troughs in the data. Both Kier and Balfours spend less on software than they did two years pre-covid. Galliford Try have barely made any movement in the past five years. Their BIM partnership with Dalux in 2021 shows that they are later to adopt.

Why?

It’s a difficult industry to change mindsets. The old ways of thinking are still very much part of the DNA of our largest contractors. Yes, digital is becoming more and more prevalent, but we’re at the bottom of the bellcurve. 

Feel free to ask questions and tell us what you think.

Andrew Curtin

andrew@wavenews.co.uk