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October 5, 2018

The construction industry is finally embracing technology

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AT THE BUILD SITE for One Dalton, a 61-story luxury residential tower rising over Boston’s Back Bay, you’ll find all the trappings of a major construction site: hard-hatted tradespeople in neon vests, the steady din of diesel delivery trucks, a massive hoist moving tools and materials along an unfinished facade.

One thing you won’t see much of is paper.

The once-ubiquitous sheaves of oversize design drawings and blueprints that typically litter every flat surface on any job site have vanished, replaced by tablet computers and smartphone apps—some of which are even made by Suffolk Construction, the Boston-based builder developing One Dalton.

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For just about any other industry, a shift from the physical to the digital would come off as passé in 2018. For a $10 trillion global construction industry playing technological catch-up, it’s proving downright revolutionary. The global engineering and construction sector holds the dual distinctions of being one of the world’s largest industries—yet one of its least efficient. By some accounts, construction projects regularly lose up to a third of their value to waste. Productivity growth in the industry has averaged just 1% each year over the past two decades, compared with a 2.8% growth rate for the global economy as a whole, according to McKinsey & Co.

“The industry never really invested in tech or IT,” says Steffen Fuchs, a McKinsey partner who specializes in capital productivity. “So it’s been operating the same way since the 1940s.”

To close the gap—and grab a piece of the $1.6 trillion in cost savings the industry could realize if it brings its productivity in line with other sectors—construction companies are (finally) leveraging technologies like artificial intelligence, cloud-based data analytics, and mobile computing to drive efficiency and boost margins. And for the first time, the tech industry is showing up at the job site with the right tools. Since 2013, construction technology received more than $18 billion in cumulative investment, according to McKinsey. Silicon Valley software giants in particular have gone on a construction-tech spending spree. In February, Oracle acquired Aconex for $1.2 billion (after spending about half that for Textura in 2016); in April, global positioning giant Trimble snapped up Viewpoint for $1.2 billion; and in July, Autodesk acquired Assemble Systems for an undisclosed sum.

Keep reading on Fortune.com

 


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