Evolution, Not Revolution: Strategizing Innovation & Digitalization in the Construction Industry

Construction jobsites in the 2020s are remarkably reminiscent of those in the 1920s. On-site assembly, paper plans, and a legacy of best practices and techniques passed down through generations of determined builders have earned the architecture, engineering, and construction (AEC) industry a reputation for being solid, but old-fashioned.

Things are changing, though. In the 2010s, a wave of construction digitization brought analog documentation into digital form, improved design capabilities, and strengthened information management systems. It also has enabled the industry to digitalize—that is, process its data through digital technologies. By the second half of the decade this software allowed many contractors to manage their relationships and project data digitally and more intuitively.

Even so, construction’s technological advancement has been incremental compared to industries like manufacturing or agriculture, which have seen massive leaps forward. The progress is what author Mark Erlich—a 40-year tradesman and Wertheim Fellow at Harvard Law School—calls “Evolutionary, not revolutionary.”

Technology continues to hold promise. An estimated $50 billion was invested in AEC tech between 2020 and 2022—85% higher than the previous three years.1 Due to strong demand for new or updated infrastructure, industrywide shortages of skilled labor, and increased need for advanced data analytics, construction firms’ abilities to innovate and digitalize could be what defines success for the rest of the decade.

“Technology is one of the last levers we have to push efficiency in our business,” says Aaron Anderson, Director of Innovation at Swinerton.

According to Anderson, the construction industry’s slowness to adapt is not the result of refusal, but rather due to the unique way in which its players operate. It’s also the nature of the industry itself. Identifying these hurdles is the first step towards developing and implementing a successful innovation strategy.

A Fragmented Industry

Insiders agree that the construction industry is averse to risk. Most general contractors find their success in securing schedule and cost certainty early in the project. Often, this is by leveraging the same trusted suppliers and trade partners on multiple projects, following the same tried and true processes, or operating on internal best practices and company beliefs that produce predictable, desirable results time and again.

The industry is also naturally fragmented. According to McKinsey & Company, the delivery of a single building, on average, involves over a hundred different suppliers and subcontractors in addition to general contractors, architects, and engineers.1 Firms also vary drastically in size, with players ranging from small enterprises to multi-billion-dollar general contracting giants.

Apart from innovation, the construction industry is susceptible to labor shortages, material cost inflation, and other industry fluctuations1. Upsetting the delicate balance could have cascading effects for scopes across the project. This is especially detrimental to an industry known to have relatively low profit margins.

“Ultimately, our industry is limited due to how little is spent on R&D—research and development. Typically, construction companies don’t have the profit margin to be able to just go and develop new technology,” continues Anderson.

In order to justify the risk of bringing in new technologies or software that could potentially disrupt adequate processes, firms must not only clearly demonstrate profitability or other value-adds, but also scale it to their entire enterprise, Anderson adds.

Scalability Hurdles

While construction firms are genuinely open to change, they tend to be selective in what innovations they choose to adopt. The Fails Management Institute (FMI) has observed that companies appear more willing to invest in core technologies that bring efficiencies to their overall business, but advises firms to deprioritize quick solutions that will only solve niche problems on individual projects.

“A bottleneck we face is that innovation tends to be project-specific,” says Anderson. “Teams often come up with brilliant solutions that can’t be repeated on other projects because the challenges are inherently different.”

Swinerton, however, has proven that innovations beginning at the project level can have companywide implications if they solve a common industry problem. Spurred by the annual Innovation Challenge, Swinerton’s own craft teams developed, piloted, and launched a solution called the “Buggy Dumper” to efficiently lift, tip, and dump debris via hydraulic mechanisms, increasing cleanup efficiency and improving worker safety.

The Innovation Challenge’s reach, alongside a network of internal change makers, educated teams across the company about scaling an innovation like the Buggy Dumper. It also illustrated the network effects that drive the success of new technology when applied strategically to self-perform activities and general project management.

“Being able to patent and productize certain innovations requires repetition,” says Anderson. “Chances are, if you can repeat something with similar success from project to project, you’ve got yourself a good industry-applicable innovation.”

Shifting Headwinds

Despite these hurdles, analysts anticipate that the construction industry is ripe for disruption. In a global survey of over 500 executives in the AEC industry, McKinsey reported that 70% are planning to increase their investment in innovation. While automation is unlikely to completely replace people on construction jobsites, the digital landscape shows promise.

Top-ranking trends emphasize digital design, BIM, digital jobsite management tools, and productivity trackers. The Infrastructure Investment and Jobs Act, signed in 2021, will provide $100 million of funding over five years to advance digital construction management systems and related technology. The goals are to streamline processes and complexities, boost productivity, reduce project delays and cost overruns, and enhance safety and quality.

Even with the market pull, however, Anderson emphasizes that organizations must remain strategic and innovate to the needs of their operations.
“In construction, we develop workflows and processes based on intuition and experience,” Anderson continues. “But innovation doesn’t work if it’s not a part of a larger strategy. We have to strike a balance between having a high-level understanding of where the industry is going, and sharing in what the implications are for folks who are on the front lines.”

A Partnership Mindset

From pioneering the use of steel-reinforced concrete in the early twentieth century to being one of the first construction firms to embrace complete cloud-based technology integration in the twenty-first, Swinerton’s vision has been propelled by the skills and entrepreneurship of its people and its partnerships. Swinerton proudly partners with organizations to move the industry forward, such as Dusty Robotics and TopDeck AI. When deploying any technology, the goal is simple: delivering a quality environment at the best possible value for the client.

“On certain projects, partnerships like the one we have with Dusty Robotics are great. We can complete a floor layout in two days versus the two weeks it takes to do by hand,” says Anderson. “But that isn’t always the case. Other industries have benefitted from automation, but construction is a different and sensitive landscape. We aren’t going to deploy robots on a client’s project if doing it manually is still the best option.”

Anderson is pragmatic: “We have to lead in both directions. You need to develop that camaraderie and that two-way communication with the folks who are putting the work into place. But also, you need to have a consistent story about the strategy behind it. You need to lead up and you need to lead down. Ask the question: Where are we going with this? What does it mean?”

For Swinerton, innovation is fueled by an insatiable drive to serve clients with industry-leading best practices. That means staying sharp, identifying new ways to deliver and develop clear instructions for the field crews implementing the technology, and drawing on other industries that have already been disrupted by industrialized methods and uniform digitization. At its core, our goal is to adopt the processes and technologies that will yield the best possible value for our clients.

According to Anderson, this strategy is our competitive advantage. It’s what allows us to stay on the leading edge of change, maintain a safe and engaged workforce, and above all—deliver quality projects more efficiently than ever before.