In 2016 demand for construction continued to rise and the industry embraced new technologies to profitability serve the opportunity. As we start 2017 it appears that the industry will enjoy continued upside. However, several factors indicate that gains will not be won by business as usual. Specifically:
Margin pressures will continue
Workflows will need to be adjusted to manage volume approaching 2007 highs
Pressure to shorten the construction cycle will heighten
Collaboration technologies (SaaS, mobile, BIM), product tracking (RFID, barcode), and Internet-of-Things (sensor communications) are poised to play big roles in helping companies manage the challenges of the current market environment. Here's how:
1. Margin Pressures Will Continue
Though growth has resumed, margins have not improved in a manner typical of prior market rebounds. This is largely because technology has produced transparency that creates downward pressure on margins. Just like the internet-induced power shift that leaves the consumer holding the upper hand with auto dealers now. As a result, all parties in the value chain need to wring cost out of every step of manufacture and construction. (This is why the Lean Construction movement is taking root.) Containing the cost of inventory management is already recognized as an important first step. This will likely gain momentum in 2017, so expect to see growth in product tracking.
2. Workflows Will Need To Be Adjusted
The over-arching theme of workflow adjustment will center in supply chain visibility. Project owners (NC DOT, MassDOT) have already put supply chain visibility practices in place by requiring concrete vendors to use precast RFID tracking. Construction contractors also recognize the savings in tracking production and managing deliveries from their vendors on-line. The application of collaboration technologies will blur the traditional boundaries between manufacturer, contractor and project owner to create one project team.
3. Shorten Construction Cycle
When Henry Ford introduced the assembly line, he reduced the time to manufacture a car from 12 hours to two and one-half hours. Just over 100 years later, construction technology will enable comparable productivity gains. We don't know yet exactly how this will happen, but it is clear that collaboration and tracking technologies will play central roles in the reformation. Application of Internet-of-Things technology will start in 2017 but its full effect will come later as the technology matures.
Companies that recognize and embrace these market challenges will emerge larger and more profitable as a result. In hindsight we will see that these were the early-adopters who put technology to their advantage.
Our purpose at Idencia is to offer asset tracking solutions that improve productivity throughout the construction value chain. Our subscription offering applies RFID and bar code tracking to products from the time of manufacture through end-of-life. As a cloud-hosted product tracking system that is seamless between manufacturers, contractors and asset managers, Idencia adds information value to all, eliminates redundancy and saves time. If you would like to learn more, click below.