ConTech: Disrupting the Next Ten-Trillion Dollar Market

Similar to most of the traditional industries, construction is also coming across many problems like low productivity, increasing cost and labor shortage during its development. However, digitalisation and tech innovation have rarely penetrated the industry, making it one of the least disrupted sectors among others. Mckinsey & Company has ever done a productivity comparison between construction industry and average economy, resulted in a gap of $1.6 trillion per year, which is expected to be filled by construction technology (ConTech).

2018 has witnessed a drastic development in ConTech, especially in terms of the investors piling into the sector globally. JLL has reported a $1.05 billion investment from the first half of 2018, which is a 30% increase from same period last year. And for the entire 2018, just US alone has already recorded nearly $3.1 billion investment, more than quadruple comparing to 2017 ($731 million). Alongside the boost of investment, the number of startups, the adopted technologies, as well as the market-proved use cases are also growing for the ConTech ecosystem. ConTech is taking off, to disrupt the industry valued of $12 trillion in 2020.

In this article, I would like to briefly introduce ConTech innovations in 3 scales, from what is currently taking place to what might be happening in the near future.

Adoption of frontier technologies

What is the most popular frontier technologies nowadays? AI, robotics, AR/VR, IoT, drone... and the good news is, construction sector is now embracing them all.

The construction industry has started to see more AR/VR applications even from the early design phase. The famous Dutch architecture firm Mecanoo has showed its interest in VR for design simulation very early on. In US, the VR-enabled 3D visualisation is unified with BIM (Building Information Modeling) intelligence startup Revizto. Back in Asia, the Korea-based startup Urbanbase, is also aiming to provide VR/AR tools for architecture and interior design.

Mecanoo showcasing a VR application in architecture design (Source: Mecanoo)

In comparison, the construction phase seems benefit even more from the frontier technologies. There are many use cases of loT especially for security management and workforce management. The new startup WakeCap (UAE) is one of them, which provides real-time tracking of workforce onsite via helmet. Moreover, robotics and drone are also playing increasingly important roles for onsite monitoring, with 360° reality capturing solution HoloBuilder (Germany) and drone-mapping and analytics solutions Propeller Aero (Australia) as two of the examples. Additionally, robotics has also led to plenty of initiatives to free human from construction work with functional robots, like Endless Robotics (India); or to protect human at construction work with wearable exoskeleton products, like Ekso Bionics (US).

Last but not least, we have to count the wide range of use cases of AI. Besides embedding in robotics, the use of AI is of great significance in, first predictive analysis with machine learning, which enormously improves the productivity by avoiding mistakes before it gets too late; and secondly project scheduling with auto planning, which eliminates the time waste in multiple-team collaboration.

On the other hand, the adoption of the technologies is not only limited to the new technologies to apply, but also refers to the enhanced adoption rate of the existing ones. Take BIM as an example. The classic automated construction tool, which is introduced last century, has gained a lot more popularity in recent years, particularly with government's awareness of its benefits in risk reduction and cost control. Many countries like US, UK, Russia, Denmark have obligated the use of BIM for government projects, while countries like Australia, Sweden, South Korea have mandated its use in place. And Singapore, which is working long towards smart nation, has even made BIM electronic submission compulsory for regulatory approval.

In line with the BIM adoption, Mckinsey & Company research has also found out an upward trend of market-backed use cases in ConTech, offering a solid indication that the new tech solutions are not only created, but also gradually accepted.

Integration of solutions

Jumping out of the individual technology itself, on a larger scale, let's take a look of the construction industry value chain as a whole.

By dividing the construction life cycle into 5 phases of design, pre-construction, construction, operation and business, we could roughly map the ConTech in the following way.

(*Please note this might not be the most scientific way to categorise the sector, but just to give an overview of the existing solutions.)

With the maturity of increasing number ofdigital solutions, there is also a trend of integration to be identified, such as workforce management onsite with collaboration management for operation, supply chain management with project scheduling, etc.

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