It’s been a decade since construction players began embracing digital solutions. In the early- to mid-2010s, thousands of new market entrants offered point solutions that served existing use cases or, in some instances, created new ones. The first widely adopted construction point solutions addressed basic needs; for example, improving design capabilities or digitizing paper-based information.
Top construction companies were already investing heavily in technology prepandemic. By necessity, contractors, architects, engineers, and suppliers have quickly shifted to working and collaborating digitally—from video-call site meetings to filling digital orders. While there has already been a rapid increase in collaboration technology uptake, the pandemic has also triggered a painful shakeout. Many contractors are seeing shrinking backlogs and more competitive bidding environments, which have analogously impacted the construction tech industry. Construction tech players have been forced to lay off employees and cut costs to manage cash flow. Continued uncertainty on recovery timelines and the risk of virus resurgence could drive an additional wave of bankruptcies among smaller players, further accelerating the trend toward industry consolidation.
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Taking the good with the bad, we expect that the continuing COVID-19 pandemic will drive a net acceleration in the use of technology and the construction industry will continue its transformation from a highly complex, fragmented, and project-based industry to a more standardized, consolidated, and integrated one.
Construction technology is still a heavily fragmented, point-solutions-driven market with ample opportunity for integration plays that create either new platforms or attractive component acquisition targets for growing incumbent platforms. This fragmentation is more evident when analyzing construction tech offerings across the project life cycle. The construction and commissioning phase continues to be the most active, with twice the investment activity and more active players than other phases.