Walking through the more than 1,500 exhibitors at the National Association of Home Builders (NAHB) International Builder’s Show (IBS) at the Orlando Convention Center last week, the same thought kept reoccurring. “There is an innovative appetite heard in the voices of everyone we met at IBS, that I have not heard before,” said Steve Wightman, a 30-year veteran of the construction industry.
The construction industry’s relationship with new technology has always been reported as rocky, at best, but Wightman disagrees with the reasons why. “I think many new technology ideas have focused too narrowly on isolated process-inefficiencies instead of how to make their idea improve the daily challenges of the industry. I have always been drawn to technology but I cannot say I have ever heard of failures because a construction company, or project, wasn’t using the latest technology.” And construction is one of the leading segments for high 5 year failure rates.
“I think many new technology ideas have focused too narrowly on isolated process-inefficiencies instead of how to make their idea improve the daily challenges of the industry.”
Perhaps the resistance to technology has simply been a practical matter? Given the all-consuming, daily challenges to win work, recruit and retain talent, get paid quickly and secure adequate working capital, it’s not surprising that builders aren’t prioritizing new technology investments to improve efficiency of more subordinate tasks. Just step back and look at all the new tools and material innovations to improve quality and production – it’s clear the construction industry is not shy about innovating to deliver better, faster and cheaper projects. Remarkably, productivity numbers reported by the US government indicate construction has not improved in decades. The conclusions that it’s the industry’s own fault for not embracing more technology to attract more young people seem just a bit premature.
“The one thing that all construction has in common is that it’s all supposed to get paid for,” Wightman explained. “Unfortunately, the other commonality is that the construction industry leads all others worldwide for length of accounts receivable and least access to working capital.” These daily, payment-related challenges simply supersede exploring most new technology. The prominent feedback BuildPay got from NAHB-IBS was that slow payment, trade credit limits and working capital issues were all considered part of doing business. Presented with how these problems could easily be solved with technology was interesting to even the most weary show-goer and exhibitor.
Leading up to 2018 it was clear that decades of coping with high cost from flawed and outdated payment-related processes was no longer sustainable. Many companies report avoiding growth to limit payment risk; especially at the work provider level where the current shortage of labor is centered. With what looks like an emerging construction boon the industry seems cautiously optimistic to hear new ideas and collaborate a bit. Perhaps 2018 will see the industry start breaking new ground with ground-breaking financial technology ideas!