Many inside and outside the industry think disruption is coming. But construction has been stubbornly resistant to reinvention. Is real change possible?
The numbers are downright depressing.
McKinsey says that while sectors such as manufacturing, retail, and agriculture in the United States have increased productivity 1,500% since 1945, construction is still where it was 80 years ago. The trend led the global consulting firm to conclude that construction has an “intractable productivity problem” while identifying the sector as the second-least digitized industry in the United States.
Meanwhile, promising areas within construction are still nascent: Modular construction, for example, accounted for just 3.27% of construction spend in the United States in 2017, according to the Modular Building Institute.
Source: BEA, BLS, OECD, World KLEMS, IHS, ITF, GWI, World Energy Outlook, Moody’s Analytics, U.S. national accounts, McKinsey Global Institute analysis
But the numbers also shine a light on a massive opportunity. Indeed, McKinsey estimates that globally, if construction productivity were to catch up with other industries, it would add $1.6 trillion a year to the world economy, with one-third coming from the United States. That outsized potential has led a raft of firms, such as Procore, PlanGrid, Triax Technologies, Rhumbix, Entekra, Katerra, and others, backed by Silicon Valley-style venture capital, to stitch a bullseye on construction’s back as a prime target for disruption...
By Joe Bousquin