The global Proptech Venture Capital firm,Pi Labs, has led the latest investment into the AI-based analytics software Contilio to enable the global construction industry to intelligently track, predict and transform the delivery of building & infrastructure projects, with 3D AI.
The breakthrough 3D AI construction analytics platform will use the funds to onboard more customers, further advance its product & tech and accelerate its growth. This acceleration is fuelled by a c500 per cent increase in global demand for its construction progress, installation quality and risk software.
The global construction is valued at USD13 trillion. Despite pioneering a lot of technological innovation, including CAD, simulation and early machine learning applications, the building and infrastructure construction is still the 2nd least productive industry. Every year, approximately 40% of the construction value is lost in unnecessary delays, rework and waste. Increased investments in Building Information Management (BIM) and visualisation while valuable, has not done much to bridge the critical gap between construction plans and the as-built reality.
Contilio’s world-first AI platform provides actionable intelligence from 3D construction site data (Lidar/Laser scans) by intelligently classifying all structural, architectural and MEP elements and automatically comparing them with the BIM and the schedule. The easy-to-use software works seamlessly with all commercially available Lidar/Laser scanners and most recently drones. Since launching from stealth in 2019, Contilio has been used by global general contractors (e.g., Balfour Beatty), developers (e.g., Prologis) and owners (eg TUV SUD), helping them deliver building, infrastructure and data centre projects cheaper, faster and more sustainably.
On average, customers report that the Contilio platform delivers the progress and quality insights 15 times faster for 100 per cent of the construction site. This, for the first time, enables key stakeholders to automatically track construction progress, swiftly eliminate delays and installation errors, and to make smart decisions. When deployed at scale, Contilio delivers significant cost savings, better bid performance and 20x return on investment. Due to the significant reduction in construction rework and waste, CO2 emissions are reduced, helping sustainability strategies.
The next version of Contilio’s cloud-based product which will be launched soon enables the users to access the insights 24/7 from anywhere in the world with 10x better performance in terms of visualising 3D insights when compared with the likes of Autodesk. A free version will be also made available to a short-list of power users.
Zara Riahi, Co-Founder & CEO, at Contilio, says: “Construction is a pivotal part of all of our lives whether we are indoors, commuting or communicating. After spending years managing mega construction projects and investing in AI and Fintech, I realised that the 3D AI advancements would help deliver the much-needed change for an industry that I knew deserved much better.
“The Covid-19 pandemic, shortage of skilled workforce, and the growing trend for better build quality have exponentially increased the demand for data-driven insights, predictable outcomes and timely verification of installation errors. This has shifted the industry’s focus from 360 visualisation tools, to automated and scalable software, taking the value game to the next level.
“Pi Labs investment and its unparalleled access to a global network of property and construction leaders will be a great asset to Contilio as we quickly grow our customer base and advance our business in our journey to reshape the global construction industry. We look forward to working together and having a positive impact on the future of real estate and infrastructure.”
Faisal Butt, CEO of Pi Labs, says: “ESG and progression of the real estate industry have always been core to Pi Labs’ mission. Construction is a key part of that equation, where manual, costly and paper-based processes have been a core reason for wasteful errors, costly delays and significant overruns. Our research shows us that Construction is ripe for technology disruption and that Construction tech has a vital role to play as we work towards achieving net zero, optimised supply chain and efficient construction delivery.
“Contilio’s innovative solution fills a large void in terms of enhancing construction efficiency and reducing waste. Their AI software not only helps enable significant cost savings during construction, but also drives sustainability benefits and better build quality for owners and developers, enabling them to continue to reap the benefits during asset operations. That is why we at Pi Labs are delighted to be supporting Contilio’s expansion and continue to believe that Construction Tech will offer many innovations that will improve our built environment.”
Q 1: What is 3D data? 3D data (point clouds/ LiDAR scans) has reliable depth, shape and location information, in addition to the colour and texture information available in 2D photos. This means that with reliable 3D data, you can take accurate measurements, understand what is a size of an element, how that element is related to other elements in the space and whether a specific element is behind or in front of other element(s) and by how much. As such, you need reliable 3D data to make sense of the world in 3D, for AR/VR applications, and to improve quality of photos.
Q2: Why do I need to collect 3D data in construction? for many reasons! the key one is that construction is a 3D physical environment changing on a daily basis. tTo “automate” critical processes such as progress tracking and installation quality verification, and to build semantic digital twins (not digital records), you need to have reliable 3D data, which would then be fed into intelligent AI engines for scalable automated analysis
Q3: Can’t I just collect the data using 360 cameras? 360 photos are 2D photos shown in 3D, not 3D data. Yes, you can use photogrammetry to stitch photos together and get a walkable, 360 visual record of your sites, but a) the underlying 3D data is very noisy and cannot be reliably used in automated AI pipelines (beyond applications related to safety, tracking equipment and people) b) 360 cameras are lighting dependent and very sensitive to clutter (the norm on construction sites), introducing significant performance limitations c) different photogrammetry methods have different results and the performance changes with the camera, clutter and lighting conditions!
So, go with 360 cameras if your goal is a) to create a 360, visual documentation of your construction sites and b) to automate processes such as tracking people, equipment, safety, etc (in combination with 2D AI algorithms). But if you are after automated, scalable processes that can be systematically used across all your construction projects, turning site data into automated, actionable insights for the whole construction duration, and at scale, 2D Data and photogrammetry do not cut it, period.
Q4: How can I reliably collect 3D data? currently through stationary LiDAR scanners (range varies depending on application and device), mobile LiDAR scanners and drones. Stationary LiDAR scanners have mm accuracy and mobile scanners are 10-20mm accurate. There are some semi-autonomous systems in the market, but while fully autonomous and small sensors are the future, they are not practical yet. The data collection device and mode should be determined based on the nature of your site (linear infrastructure vs buildings), its size, and the accuracy required (healthcare and transport projects require more accuracy compared to a residential property)
Q5: What is Apple LiDAR then? Apple has introduced the LiDAR technology to their iPhone 12 and latest iPad Pro lineups, but the current version cannot be reliably used in construction for global data collection given accuracy, range, etc. The current model is between a 360 camera and a LiDAR scanner and is developed with AR/VR applications, including interior scanning, human AR/VR, etc. in mind. At present in construction, you can use Apple’s LiDAR functionality to grab local LiDAR data for immediate, fast feedback that can be embedded into the reliable global 3D data. But do not take Apple LiDAR and similar technology lightly! a revolution is about to happen and soon 3D data collection will be an integral part of every construction project; so be prepped for it and build it into your strategy if you have not already done so.
Q6: I know 3D data is great, but the volume of the data is very big, what should I do? The challenges you have been experiencing is because you have been handling the data manually. You have some “pointed tools” that can help visualize Point cloud data and/or perhaps import parts of it into BIM models, etc. But these methods are slow, very manual and prone to error and they crash very regularly due to capacity constraints.
@ Contilio we have built smart algorithms that can structure the otherwise unstructured, meaningless point cloud data and filter it for what does not belong to the construction site, including trees, vegetation, material, scaffolding, etc. This helps reduce the data volume 20-fold, as well as to structure the point cloud data so it looks like your construction site. Our cutting-edge 3D AI engine (AI that works on top of 3D data and is similar to what is used in autonomous driving) automatically identifies and classifies every structural, architectural and MEP element in the Point Cloud and then compares the results automatically with the BIM and your schedule. This helps automate progress tracking, installation quality verification and predictive risk management for your construction projects, providing you with 20X value/ROI. We also create smart (semantic, structured and machine readable) digital twins, enabling you to realize further benefits during the whole asset’s life cycle. All the results can be accessed through a cloud-platform that is intuitive and easy to use. To learn more about how you could use Contilio for your construction projects and operating assets and the value you can create for your projects and organization, please reach out to us at email@example.com or book a demo with us on our website
There is no denying that despite significant time and effort spent by general contractors (GCs) and their partners, construction projects of all sizes are troubled by escalating cost-overruns and waste caused by quality issues. Installation errors are caught late and based on spot checks, usually when the next subcontractor comes in, or even worse, when projects are handed over and the cost of fixing errors is 10X higher!!!
Poor installation quality and associated rework are estimated to cost the global $12 trillion construction industry around 12% every year, resulting in a $1 trillion crisis of lost productivity and margins. This doesn’t even take into consideration the time and effort required to verify the quality of installed work, which adds up to 3% of total project costs on top of immediate rework cost; nor does it include the significant waste, CO2 emissions and reputational damages involved.
As an industry we’ve tried to fix this problem by pouring more people at the problem and transferring the risks, but progress has been limited. We interviewed several experts and stakeholders in the industry and identified 5key trends that will increase construction complexity and make things worse. But, we have also identifiedbestpractices used by industry leaders to turn these challenges into cost savings, enhanced build quality and sustainability measures, using the latest technologies. For a more in-depth example on how one of our global customers achieved 30% lower rework costs and 23% higher productivity for the construction of their new APAC Headquarters using the Contilio 3D AI analytics software, please read this casestudyhere.
The current process: manual, limited outcomes, and little trust
“Normally, the responsibility for construction quality lies with the subcontractors, but there is so little trust and so much complexity that the main contractor ends up doing much of the quality inspection themselves, adding significantly to the project costs and overhead.”
Project Director, Bouygues Construction
Today, the process to verify and manage installation quality is very time consuming, slow and it involves many people who need to be on site. As different trades and subcontractors complete different parts of the construction, the GCs try to verify the quality of installed work through spot checks and then manually update documents and systems spread across different “data siloes”. Construction managers, work package managers, quality engineers, and commercial teams all spend significant portion of their time on ensure quality, adding 1%-3% to the project costs just to inspect work. And despite all these efforts, teams report that at most they can check 5% of the work installed, leaving the remaining 95% up to chance, built-in contingencies and warranty packages.
In addition, quality KPIs such as number of critical defects, the time and cost to fix them, and their impact on the delivery speed are usually not tracked using a standardized, scalable process. Subjective and delayed outputs end up in various data siloes, without being meaningfully used to drive efficiencies.
While contractually the subcontractors might be responsible to track and report on installation quality, in reality, the GCs whose commercial success and reputation are closely tied to long-term asset quality and successful construction delivery end up verifying all the work done by trades! Equally if you are an asset owner or an investor, you want to ensure that the asset you ordered is what is getting built and the quality issues are identified and resolved immediately. If you are a public sector entity, you want to maximize value for taxpayers, achieve your sustainability outcomes and ensure fair payment and transparency. We live in a world where data-backed quality assurance is becoming increasing important, particularly when several trades/subs are onsite simultaneously (when MPE and services are getting installed).
This trend is only going to accelerate at a much faster pace
As a part of Contilio’s growing engagement with the global construction industry, we interviewed the executive and delivery teams from several construction companies on the pressing matter of build quality and identified five key trends making the construction quality and sustainability challenge even more daunting:
1. COVID-19 has made manual, on-site quality verification hard: Many construction companies are forced to reduce the number of onsite crew due to COVID-19 safety requirements, but at the same time still have to track and document installation quality reliably particular for critical assets such as healthcare facilities, data centres, and technology assets. With increasing pressure to offset the pandemic’s negative impact, this is only going to get harder. Digital leaders are turning to automated software solutions that can help verify quality of all elements in a few hours, improving productivity and safety simultaneously.
2. The labour gap is widening: Young expert and young talent is less and less interested in moving around the construction sites and “ticking boxes” to manually verify the onsite quality. They want to focus on high-value tasks and conduct their work supported by digital tools, just like what they would do in other industries. We strongly believe that digitization and adoption of the latest available AI technologies can reverse this trend and increase the construction industry attractiveness as an employer. It can also enable your expert workforce to focus their efforts on what matters the most.
3. Good subcontractors have less incentive to focus on quality: Good subs are in high demand and want to finish their jobs quickly and move to the next one to maximize their utilization. This, together with increasing delivery complexity and trend #2, makes installation quality verification and rework even costlier – something we believe our cutting-edge and easy to use solution can help address.
4. Offsite manufacturing needs verification too! Yes, offsite and modular are picking up fast and the great news is that they have the potential to drive significant efficiencies – but similar to manufacturing, the installation quality (i.e. dimensions and fit to the rest of the site) needs to be verified to mm accuracy before the components are shipped to the site; otherwise, everyone ends up paying significantly more for rework, logistics, and other costs.
5. 360 photos and videos are no “silver bullet”: While the industry has seen a few 360-degree photo tools used more broadly for site visualization, construction companies have already realized that photo-based solutions cannot be relied upon to check the installation quality automatically, whatever the marketing message. Only AI solutions that work with 3D data can offer the accuracy and the automation potential to do so.
“We have tested some photo-based solutions to visualize our sites, but we would never rely on photos to evaluate quality of subs work or for disputes, as photos do not tell the full story”
Head of Quality Inspection, Sir Robert Mcalpine
The opportunity for Digital Leaders in construction
But it is definitely not all doom and gloom. Several construction companies have started to test and deploy software solutions at scale to address the big quality challenge and drive a long overdue digital transformation. Besides the mitigations for trends mentioned above, Digital Leaders are additionally:
1. Establishing new digital records of transparency and trust: Digital leaders are using software tools and technology solutions to create traceable, structured and trustworthy digital records and quality insights for 100% of installed work as opposed to the traditional 5%. and they do it in just a few hours. This new transparency establishes a “single source of trust”, from which the general contractors, the subcontractors and the owners benefit alike.
2. Using analytics to finally drive cross-portfolio efficiencies: Yes, you got that right. Enabled by the latest advancements in AI and analytics, digital leaders can leverage actionable insights captured on one project and use it in real-time across their entire portfolio to predict and avoid similar installation mistakes, saving additional costs. They can also use these insights to win more tenders, and/or to drive sustainability benefits in addition to benchmarking assets globally.
3. Not settling for just a “quick digital fix”: Digital leaders do not just choose the cheapest digital tool, but rather systematically assess and embrace digital solution(s) that have the potential to drive tangible value at scale and won’t need to be replaced in a couple years again. And the good news is that advancements in 3D Artificial Intelligence (3D AI), BIM and big data combined with the power of innovative data capture solutions have enabled them to do so effectively.
How a global leader reduced rework by 30% using Contilio 3D AI
Based on decades of experience in the construction industry (yes we’ve been in the trenches) and engineering advanced technologies, we developed our cutting-edge and easy to useContilio 3D AI analytics platform to provide objective, real-time, and fully automated quality verification for all areas of your building and infrastructure projects ranging from millions to a few billions. Drawing on the latest developments in big data analytics, autonomous driving and 3D reality capture, the Contilio 3D AI platform not only can do this in a fraction of a time and cost, and for all trades, but also, we can create machine-readable, structured digital twins (BIM connected with intelligent, structured site data) to enable additional whole-life asset efficiencies.
We are trusted by many GCs and asset owners around the world to verify installation quality and track construction progress, enabling our customers to do a lot more with a lot less, win more business, and ensure they are doing so safely and sustainably. One global customer we’ve been working with deployed Contilio’s 3D AI solution on their new Asia-Pacific Headquarters to verify the quality of 100% of installed work and to reduce the rework costs by 30%. They also experienced significant productivity gains due to significantly reduced need for travel and overhead, augmenting their construction managers and skilled professionals to focus on more value-add activities. See the case study here.
Please get in touch if you’d like to learn how we can join forces to drive significant value for you and construction projects.
Contilio brings real-time, actionable insights to the construction industry, enabling significant cost efficiencies.
APRIL 15, 2020 – The cutting-edge 3D AI Construction analytics company, Contilio was announced by the Industrial Internet Consortium® (IIC™) as the Global winner of its Smart Construction Challenge. The Challenge was designed to advance real-world validation of Smart Construction applications and solutions while integrating cloud, edge, fog and IoT technologies. Many companies from around the world applied and competed through this multi-stage completion. As the global winner, Contilio was awarded €25,000 and the opportunity to work with TÜV SÜD on their International Business Park project in Singapore.
Contilio’s solution uses advanced technologies including 3D computer vision and deep learning to provide intelligent insights from 3D data and photos captured from a construction site. This data is uploaded to a cloud environment and processed automatically through a 3D AI platform into intelligent analytics on construction progress, installation quality and predictive KPIs on risks and issues. The analytics can be accessed through a cloud dashboard that communicates the insights to key construction employees and other stakeholders, including owners, financial partners and company management.
“We are delighted to work with TÜV SÜD, a global leader in real estate inspection and certification.” said Zara Riahi, CEO of Contilio. “Our cutting-edge analytics software and agile approach, combined with TÜV SÜD’s expertise and innovation leadership resulted in a powerful partnership at TÜV SÜD’s new Asia Pacific Headquarters, where we successfully deployed our 3D AI technology. We hope to continue to bring significant value and cost-efficiency to TÜV SÜD and their global customers in the built environment.”
“By replicating the complete property lifecycle, from initial planning to construction to facility operations, the Challenge put the focus on Building Information Management (BIM) as the foundation of today’s smart construction design,” said Joachim Birnthaler, CEO, Real Estate & Infrastructure Division at TÜV SÜD. “The Contilio team presented an innovative analytics solution that met all of the criteria. We believe it will prove to be essential for any lean, BIM-oriented construction project.”
Construction industry partners TÜV SÜD (principal partner), Züblin, Bosch and Liebherr provided the requirements and use case definitions for the challenge and assisted challenge participants in testing their proof-of-concept (POC). Technology suppliers Autodesk, HERE, Ottobock and Qtum provided relevant technology components to assist start-ups and solution providers in the creation of their POCs for further development and offered overall technology guidance. Global independent IoT research and benchmarking firm MachNation published the Smart Construction summary white paper.
To learn more about Contilio and how we are saving billions for the global construction industry by making on-track and on-budget the new normal, please visit our website at www.contilio.com.
LONDON, April 15 , 2019 – the London-based deeptech startup, Contilio, has been awarded a significant grant by Innovate UK, the UK’s innovation agency. The grant is a part of the £170m “Transforming Construction” fund and will drive a ground-breaking R&D project, tackling the main cause of billion-dollar delays and cost overruns for the global construction industry: that is the lack of real-time feedback on construction progress and quality. Through application of cutting-edge technology, the project will equip the construction industry with real-time insights on construction progress, installation quality and risks and help deliver large construction and infrastructure projects on-time, on-budget and with enhanced productivity. Contilio is delighted to collaborate with an outstanding team from Imperial College London on this project, co-led by Professor Jennifer Whyte and Doctor Stefan Leutenegger, renowned experts in the fields of digital innovation in the built environment and computer vision.
Construction is one of the biggest drivers of the UK economy and the global GDP. The UK’s national infrastructure programme alone targets £650 billion projects by 2025. However, unlike manufacturing where the quantity and quality of output is known at any given time, in construction, there is no intelligent control room communicating progress and performance insights to project stakeholders in real-time. Project owners and contractors literally steer multi-million-pound projects “blind”, that is with partial, siloed information 4-8 weeks old.
Zara Riahi, Founder and CEO of Contilio states: “This means delayed decisions, compounding risks and costly overruns for the majority of construction projects, something we are changing for our customers. We are delighted to have been chosen by the Innovate UK’s Transforming Construction challenge to drive this change and make on-track the new normal for every major construction project. This funding is a testament to the size of the productivity opportunity for the UK construction industry and a great endorsement for our approach and the strength of our team and our R&D partner, Imperial College London. Over the next 12 months, the funding will be used to further advance Contilio’s AI-based analytics platform and to deploy our software solution on construction sites, delivering against the targets of the challenge.”
Imperial College London has assembled a unique team of experts and will use the funding to conduct state of the art research on 3D computer vision, Building Information Modelling (BIM) and machine learning techniques, contributing to the advancement of Contilio’s cutting-edge technology and the UK’s research leadership in the built environment.
Contilio would like to thank its customers and partners for contributing to this great success and the Knowledge Transfer Network (KTN) for their support in helping us make on-track the new norm for every major construction project at every corner of the world.
For further information or press inquiries please reach out to Jack Li (firstname.lastname@example.org).
About Contilio: Contilio(http://www.contilio.com)is a ground-breaking analytics startup at the intersection of construction, deeptech and enterprise SaaS. Our AI-based platform analyses site data in real-time and turns them into intelligent insights on construction progress, performance KPIs and risks. This empowers contractors, project owners and investors to have 360-degree visibility into risks and issues, make timely and accurate decisions and enjoy from billion-dollar productivity, cashflow and compliance benefits. Contilio was founded by an expert team around CEO, Zara Riahi who has experienced this massive problem first-hand managing and investing in global construction projects. Having experienced the significant productivity improvements big data analytics & AI drive for gigantic industries including finance and manufacturing, triggered Contilio’s vision to bring the same to the $12Tn construction industry.
About Imperial College London: Professor Jennifer Whyte is the director of the Centre for Systems Engineering and Innovation of Department of Civil and Environmental Engineering and leads the Alan Turing program for ‘Data-Driven Engineering design under uncertainty’. Professor Whyte has a stellar track record researching how big data and digitization would transform the design and delivery of major construction projects. Dr. Stefan Leutenegger is a Senior Lecturer of Robotics in the Department of Computing, leads the Smart Robotics Lab and is the co-leads research undertaken by the Dyson Robotics Laboratory with Prof. Andrew Davison.
About Innovate UK (www.innovateuk.ukri.org):Innovate UK drives productivity and economic growth by supporting businesses to develop and realise the potential of new ideas. We connect businesses to the partners, customers and investors that can help them turn ideas into commercially successful products, services and business growth. We fund business and research collaborations to accelerate innovation and drive business investment into R&D. Our support is available to businesses across all economic sectors, value chains and UK regions. Innovate UK is part of UK Research and Innovation.
Professor Schindler brings 20 years of global research and industry experience across computer vision, photogrammetry and remote sensing. He has held several faculty and research positions at distinguished universities across Europe and Australia, including Monash University and TU Darmstadt Germany. He has been a professor at ETH Zurich since 2010 and published many papers in the field of computer vision and photogrammetry.
“Konrad is joining us in the capacity of a scientific advisor and will be helping Contilio bring the state of the art in 3D vision, photogrammetry and image processing to our world-class platform and technology” Zara Riahi CEO stated. Andreas, myself and the rest of the team at Contilio look forward to working with Professor Schindler to tackle one of the biggest challenges of the $12Trn construction industry and to enable significant cashflow, productivity and compliance benefits for our customers and partners.
Microsoft names its finalists in its $4M Female Founders Competition.
Finalists in the Female Founders Competition made their pitches on Nov 14 at the Microsoft Reactor in San Francisco.
Microsoft’s venture fund, M12, wants to bridge a funding gap in venture capital and dispel the misconception that few women are building enterprise tech companies.
M12, along with EQT Ventures and SVB Financial Group, launched the Female Founders Competition in July, which will award two women-led companies $2 million each in funding. Ten finalists, selected from 800+ submissions from 28 countries, pitched their companies to judges Wednesday at the Microsoft Reactor in San Francisco.
“There’s some sort of myth out there that there just aren’t a lot of women who are starting enterprise tech companies and that they’re generally focused on consumer. I think we’ve proven that’s not true with this competition,” said Lisa Nelson, managing director of M12, which was previously known as Microsoft Ventures.
Broadly, consumer tech companies market to the masses, while enterprise tech companies focus more on selling to other companies.
Women make up about 40 percent of M12’s investment team, but only 7.5 percent of founders in its portfolio are women, according to Nagraj Kashyap, corporate vice president and global head of M12. That’s not enough, and he hopes M12’s investment team, with its more diverse networks, can discover entrepreneurs that less-diverse teams might not come across.
“If we just play it safe and we just go back to our own networks, we will never solve this problem,” Kashyap said. “There’s no shortage of smart female entrepreneurs. We just have to look harder to find them.”
There’s good reason to fund female entrepreneurs. Research shows that companies led by women tend to generate better returns. Still, just 2.2 percent of venture capital funding in the US last year went to companies founded only by women, according to data from industry tracker Pitchbook.
Nelson wants the competition to bring awareness to this issue and to give hope to the finalists that there are investors who want to bridge the gap in funding.
In addition to $2 million in funding, the two winners will also get access to tech resources, mentoring and legal counsel. The winners will be announced Dec. 11. The other 8 companies will get access to Azure credits and co-selling opportunities with Microsoft.
Here are the 10 finalists:
Acerta Analytics (Canada)
Contilio (United Kingdom) : founded by CEO Zara Riahi in June 2018, Contilio is an AI-based analytics platform, empowering the construction industry to understand, predict and significantly improve the performance of multi-million dollar projects.
A new analysis of the construction technology ecosystem finds emerging trends, constellations of solutions, and an ever-increasing universe of technology use cases that are disrupting the way we plan, design, and execute projects.
After decades of under-digitization, the engineering and construction (E&C) sector is making bold moves in a new era. Last year, we mapped the industry’s technology ecosystem with a focus on the solutions that are proliferating in the construction phase of the project life cycle. The research shed light on the emergence of technology clusters, industry-wide technology investment of more than $10 billion in less than a decade, and the lack of integrated solutions that span three identified use case clusters: on-site execution (“field”), digital collaboration (“team”), and back-office and adjacencies (“office”).
This year, we expanded the study to include the entire asset life cycle—concept and feasibility, design and engineering, preconstruction, construction, and operations and maintenance—across more than 2,400 technology solutions companies, creating the most comprehensive database of the construction ecosystem worldwide. In this article, we explore three key topics based on our latest research:
What are the emerging trends from this year’s research? We explore how the landscape has changed over the past year in terms of constellations of technology, accelerated investment, and an expansion in the number of use cases.
How will the market evolve in the coming years? We discuss the changes we expect over the next few years, including continued fragmentation of the industry, which will lead to consolidation, as well as an intensifying fight for talent.
How can the industry accelerate its transition to a digital future? We outline recommendations for AEC firms, technology providers, and owners to accelerate the impact of technology.
1. What are the emerging trends from this year’s research?
Three key trends are shaping the industry: emerging constellations of solutions around established use cases, accelerating technology investment, and an expanding set of promising use cases.
‘Constellations’ of solutions emerging around established use cases
In our continuous mapping of the construction technology landscape, we see the concept of different “constellations” of connected solutions emerging around established use cases, which serve as indicators of what technologies are gaining the most traction and where their impact can be expected to rapidly increase in the near future. Today, the most prominent constellations include 3-D printing, modularization, and robotics; digital twin technology; artificial intelligence (AI) and analytics; and supply chain optimization and marketplaces (Exhibit 1).
Within each constellation are three or more use cases that span the three use case clusters we identified last year: on-site execution (“field”), digital collaboration (“team”), and back-office and adjacencies (“office”). For example, the digital twin technology constellation includes drone-enabled yard inspection, which is an on-site execution use case, as well as several digital collaboration use cases: laser scanning, virtual learning, and design simulation. In Exhibit 1, the thickness of the lines connecting various use cases indicates use cases that are often addressed together; in the digital twin technologies constellation, design simulation and virtual learning are strongly linked given the increasing amount of solutions offering these two uses cases in combination.
In particular, three of the constellations—3-D printing, modularization, and robotics; twin models; and artificial intelligence and analytics—are poised to be transformational for the industry. A fourth constellation, supply chain optimization and marketplaces, is notable due to its quick rise as dozens of smaller players have entered into this market over the past year.
Artificial intelligence and analytics. In the long-term, AI and analytics have boundless potential use cases in E&C. Machine learning is gaining some momentum as an overarching use case (that is, one applicable to the entire construction life cycle, from preconstruction through O&M), particularly in reality capture (for example, in conjunction with computer vision) as well as for comparison of in situ field conditions with plans (for example, supporting twin models). Indeed, by applying machine learning to an ongoing project, schedules could be optimized to sequence tasks and hit target deadlines, and divergences from blueprints could be caught closer to real time and corrected using a variety of predetermined potential scenarios.
In the immediate future, we expect AI’s proliferation in the E&C sector to be modest. Few leaders have the processes, resources, and existing data strategies in place to power the necessary algorithms and meaningfully implement this technology. However, the potential impact is so large that the industry can no longer afford to ignore it. AI methods are increasingly able to work across industries, elevating the threat of competition from nontraditional market entrants. And a narrow set of start-ups are already gaining market traction using AI-focused approaches.1
3-D printing, modularization, and robotics. Parts of the construction industry are moving toward a manufacturing-like system of mass production, relying on prefabricated, standardized components that are produced off-site. Our research finds that consistent use of these techniques, on projects where they are economically feasible, could boost the sector’s productivity by five- to tenfold. Such a system would include applications such as fully automated prefabrication processes that turn a 2-D drawing or 3-D model into a prefabricated building component, or fabrication directly off a 3-D model or shop drawings; construction robotics such as bricklaying or welding robots; self-driving heavy machinery to make construction safer, faster, and more affordable; exoskeletons and wearable robotics to improve the mobility of workers with injuries or to harness the strength of robotic arms; and metal 3-D printing of long-lead components such as joints, enabling the production of high-performing components and, ultimately, more efficient, cost-effective parts.
On the robotics side, the E&C industry is at the beginning of its journey to embrace the hardware innovations that enable field augmentation with exoskeletons and drone-enabled yard inspection. These advances are particularly important given a labor shortage in many geographies as well as the natural ceiling of human physical productivity. Pairing humans with robots can assist in tasks that would take a human worker more effort (for example, lifting heavy objects and placing them in exact coordinates).
Digital twin technology. In E&C, productivity gains are directly driven by transparency and proactive problem resolution. Digital twin platforms and reality-capture solutions enable stakeholders to minimize rework in the field by allowing a dynamic view of the project and real-time comparison of progress to design blueprints—and the ability to adapt those blueprints as the work progresses and inevitably results in changes. Drones and satellite imagery, as well as LiDAR and photosphere based-solutions, are key components of many reality-capture efforts.
The most exciting applications of twin models can be found in the seamless integration of 3-D models generated by drone imagery, turbocharged by live key performance indicators that are monitored using Internet of Things sensors. This approach creates an exact digital replica of a project’s physical reality, allowing us to rapidly advance data accuracy and incorporate as-built data into 3-D models for automated, real-time progress updates. It also enables users to virtually interact with “mixed reality” models that combine 3-D design and as-built configurations. What is truly exciting about these applications is the ability to reduce decision-making cycles in a construction project from a monthly basis to a daily basis through full automation of the project’s scheduling and budgeting updates.
Supply chain optimization and marketplaces: Currently, procurement of materials, equipment, and labor is a largely manual and cumbersome process. However, start-ups that offer marketplace platforms for the buying and selling of goods as well as hiring have begun to gain traction in certain regions. Some of these start-ups have been acquired by large suppliers, which have quickly deployed these platforms at scale. By enabling players to match supply with demand, these marketplaces have huge potential to optimize the supply chain—much the way such marketplaces have revolutionized industries such as retail—improving productivity and profitability. In construction, these marketplaces can also enhance competitive bidding by improving transparency on costs and availability of materials, labor, and equipment for both future and ongoing projects. They will also become increasingly important given the rising use of prefabricated components that are manufactured off-site. Despite the progress, this constellation is nascent and limited to North America.
Increasing and evolving technology investment
Through the mapping of the investment flows we found two critical insights:
Investment has doubled in the past decade: Last year, we found that construction technology companies had garnered $10 billion in investment between 2011 and early 2017. Our updated research has pointed not only to a greater volume of outside investment but also an acceleration in investment. Between 2008 and 2012, construction technology received $9 billion in cumulative investment. Between 2013 and February 2018, that number doubled to $18 billion, largely driven by mergers and acquisitions (Exhibit 2).
Early technologies are delivering on their promise: Our research reveals that by count of transactions, early-stage venture capital (VC) is on the rise. Of the 908 transactions from 2013 through February 2018, three in four were early-stage VC. Indeed, since 2015—a peak year for VC investments—the construction technology space has sustained a relatively high level of investment from VCs, suggesting that more solutions will be ready for scaling and that high levels of merger and acquisition (M&A) activity will continue unabated. M&A activity tends to occur one to two years after late-stage VC.
Furthermore, late-stage VC has been trending upward in the market (Exhibit 3). From 2010 onward, late-stage VC has almost steadily increased (except a small dip in 2016). Such a steady rise indicates that certain use cases are market-backed and ready for growth financing,2 delivering on the promised impact.
An expanding set of use cases
Last year, our research focused on technology in one phase of the asset life cycle: construction and commissioning. As we expanded our taxonomy to look at the entire asset life cycle, we found that two phases are attracting the most growth: construction and commissioning and operations and maintenance (Exhibit 4). Other phases tend to be already established—for instance, preconstruction and back-office—while others are small or still maturing.
Construction remains the highest invested phase of the asset life cycle.Construction leads the ecosystem in garnering the most overall capital from 2013 to February 2018, with both the highest number of use cases and the highest number of transactions. It is also relatively mature; only one-third of companies in this phase are newcomers. Over time, we expect to see M&A investments related to consolidation as well as incremental late-stage VC investments (for example, for scaling sales operations).
Preconstruction and construction back-office phases are both garnering large investments. Investment in the preconstruction phase is primarily driven by labor and equipment marketplaces, a relatively fragmented solution space where regionally focused players will eventually face consolidation. Construction back-office, on the other hand, is a very mature solution space. Investment in this phase is driven primarily by mature companies through M&A or private equity transactions with high average values.
Cross-cutting technologies are gaining the most momentum. We classified 3-D printing, virtual learning, design simulation, machine learning, and deep learning as “overarching,” given their applicability across different stages of the life cycle. While we found relatively few transactions in this category compared with construction and commissioning, the number of companies founded in this space over the past five years exceeds any other category, and the dollar value of transactions is quickly catching up with the rest of the categories. The average transaction amount is particularly high in capital-intensive use cases in this category such as 3-D printing.
There are two untapped markets: design/engineering and concept/feasibility.This may be because entrepreneurs have focused on life cycle stages that hold the majority of project value. Alternatively, the office-based nature of these phases also means their relevant solutions (such as CAD or BIM) may already be relatively mature and sophisticated. We foresee less disruption in these stages and more continuous improvement (for example, new features for existing software).
2. How will the market evolve in the next 2–3 years?
Mapping the number of transactions in each of the 38 use cases against the number of new companies in the past five years in that space reveals a detailed picture of the current construction market (Exhibit 5). Four archetypes emerge:
Talent acquisition. In the upper right quadrant, we find both a high concentration of new companies and a high number of transactions in machine learning, among several other use cases. This quadrant can be described as “talent grab,” which means that companies are using acquisitions to onboard new talent and skills.
Emerging. In the lower right quadrant, we find use cases, such as deep learning, where there are a lot of new companies but not a lot of transactions, suggesting these use cases are primed to emerge into the tech investment space in the next few years.
Maturing. In the upper left quadrant, we find use cases, such as document management, with a lot of transactions but relatively fewer new companies, suggesting that these use cases are dominated by relatively established companies operating in a fragmented market. These areas may thus be facing consolidation in the near future.
Established or unproven. Finally, in the lower left quadrant we find established or unproven use cases, such as enterprise resource planning, where few new companies and few transactions are underway. These markets may be saturated—but for the exception of some use cases, such as laser scanning, that have simply not yet realized momentum.
Increasing consolidation against a backdrop of continued fragmentation
The fragmentation of technology offerings will continue to be an issue. In last year’s analysis, just 13 percent of the companies we studied had engaged a technology solution that addressed more than one of the three clusters (on-site execution, digital collaboration, and back-office and adjacencies)—meaning that most companies are engaging solutions that address a very specific, narrow application rather than more integrated solutions.
Our new research confirms that more than half of companies are still engaging a solution that addresses just 1 or 2 use cases out of the 38 (Exhibit 6).
This fragmentation is one of the biggest challenges we’ve heard from companies that want to engage with technology solutions. Many are older, venerable companies using legacy systems and various information-collection methods. For these companies, integration may sound more like it’s yet another solution to layer in on the top of all the other processes and solutions on hand—when in fact, technology can be used to cut down on the number of solutions and methods being used.
The lack of use case integration is one of the drags on technology adoption at scale. As such, more companies are exploring the potential to consolidate solutions that address multiple use cases. While integration won’t “grease the wheels” of every aspect of technology adoption, it certainly represents a viable path forward to bring more layers up to speed. (See sidebar, “Integration plays.”)
The struggle to find talent
Finding digital talent is a prominent concern for executives across the industry, and it will be critical to digitization: according to research by McKinsey’s Digital Academy, investing in talent increases the odds of digitization success by 2.5 times. Investing in talent requires balancing the entrepreneurship DNA, industry knowledge, and business acumen to build business unit from scratch—but the talent pool is small when it comes to balancing these three skill sets.
3. How can the industry accelerate its transition to a digital future?
While technology has dramatically advanced in the E&C sector, there is much room for improvement. There are several actions that AEC firms, technology providers, and project owners can take to accelerate construction technology in the coming years.
Invest in talent and skill building: AEC leaders must begin to expand skill sets among existing employees as well as hire new candidates with technical expertise. To start, AEC firms can explore talent pools in digital native companies, even those outside the E&C industry; a particular focus should be given to candidates in other industries that have undergone a digital transition. These individuals can be paired with the right industry leaders and reach in the organization to integrate new and existing expertise. To upskill current employees, firms should bring in training programs in new technologies—for instance, to train employees in 3-D printing—or set aside funds for capability building.
Actively engage with the start-up ecosystem: This action can take a variety of forms, one of which is investing directly in start-ups through a corporate VC arm. Here, AEC firms may be challenged by entrepreneurs who are hesitant to accept capital from large players, as it compromises their ability to work with a funder’s competitor. AEC firms can manage this caution by exploring other, less risky forms of engaging with start-ups: for instance, investing indirectly through a VC fund or partnering selectively for piloting or codeveloping solutions.
Establish conditions of success for piloting and scaling: AEC firms can prime themselves to be early adopters of promising technology by setting aside funding for the purpose of experimentation. As pilot solutions prove their value, AEC firms can use a helpful acid test for evaluating the longer-term use of a technology: whether a project manager is willing to accommodate its cost in their project budget. AEC firms can also bring in outside start-up expertise as needed, as building an in-house development team is often labor intensive and time consuming. Partnering with start-ups that can bring specific capabilities (for example, product development through rapid iteration) can be particularly valuable.
Listen to the end user and adapt: Solutions in the ecosystem are often developed by looking for a problem. Indeed, we find passionate start-up founders looking for an application of their novel solution in the industry, instead of truly understanding the industry’s needs. To that end, start-ups—especially if teams are from outside the AEC industry—must listen closely to the needs of AEC firms and adapt product offerings. This effort will consist of focusing on validated customer needs; in this fragmented landscape, it is imperative to validate the real need (versus a “nice-to-have” application).
Plan for the journey to integration and consolidation: As described above, unlocking real value from the technology ecosystem will require integration across multiple use cases and clusters. As the industry evolves, start-ups must therefore forge a “co-opetition” strategy—that is, how to simultaneously collaborate and compete. This is especially true given the multiple pivots that start-ups undergo (for example, starting with one use case and shifting to a new one). Start-ups in the early stage will need to plan on an evolving go-to-market strategy.
Enforce a strong and sharable data foundation: All project participants need to work with one shared data backbone in one system, known as a common data environment (CDE). This data will need to be made available to all project participants, with up-front agreement from all.
Align on supportive contract strategies: Digital participation needs to be part of the bidding contracts for all project participants. Indeed, a digital project should emulate an integrated project delivery (IPD) setup, which can not only improve outcomes and accountability but also circumvent the hostility of an adversarial contractual environment.
Identify and focus on critical use cases: Owners need to focus on understanding their organization’s unique economic case for technology. While it may be appealing to pursue the most cutting-edge tools and applications, owners must identify and prioritize the use cases that will have both a long-term impact and a medium- to short-term impact to generate momentum. Only by developing a concrete and customized understanding of the return on investment, as well as the risk and disruption to existing functions, can they ensure that new technology adoption is optimized and sequenced according to pressing needs and their distinct circumstances.
Gone are the days when the construction industry can ignore the burgeoning set of technology solutions across the asset life cycle. We expect investment, competition, and consolidation to continue to accelerate as use cases and start-ups serving the industry proliferate. As predictions come to life and new capabilities infiltrate the field, team, and office, the winners will be the ones that adapt—sooner rather than later.
Move over meal deliveries and mobility startups: The construction industry has become a new focal point for venture capital funds and tech investment.
Investment in AEC firms—architecture, engineering, and construction—have blossomed in the last few years, as a once low-tech, staid industry begins to feel the full impact of digital technology, especially when it comes to collaboration software, worksite monitoring, safety, and new design tools.
Tech investment in construction has grown rapidly in the past decade—in 2008, global investment totaled $4.5 million across two deals—led by growing number of more active and specialized VC investors. According to data from CB Insights, the industry saw $882.3 million in investment last year across 103 deals, and has already bested that in 2018, racking up $1.38 billion across 61 deals.
While this year’s considerable investment is mostly due to a handful of sizable investmentsin companies such as Katerra, the Silicon Valley construction startup that received $865 million in a funding round that included the SoftBank Vision Fund, these mammoth deals only show the potential many see in these types of companies.
“Construction is one of the least digitized industries, so many startups are seizing the opportunity to build technology that would increase efficiency within this market,” says Michael Wholey, an intelligence analyst for CB Insights. “As a result, funding and deal activity in the construction technology space has been increasing steadily over the past few years.”
Kaustubh Pandya, a principal at Brick & Mortar Ventures, a three-year-old San Francisco-based investment fund focused on AEC companies, says the technology to digitize buildings, including affordable sensors and better mobile technology, has the potential to make an industry known for long timeframes and flexible deadlines more efficient.
“We now have technology available that wasn’t previously available for the construction specific environment,” says Pandya. “Just a few examples include sensors which we can now deploy at scale economically or a smart mobile device with increasingly computational power now in everyone’s hand at job site. That shift in enabling technologies is starting to make construction more attractive for solutions development.”
According to a recent Crunchbase article, a number of startups are on the rise, including Rhumbix, which raised $20 million for its mobile platform for the construction craft workforce, and Procore, which has built a cloud-based construction management software application and raised $229 million.
While there’s a desire to expand and diversify tech investment—”the world doesn’t need another general fund, there are plenty out there,” says Pandya—the size and scope of the construction and design field offers plenty of opportunities. A report from global consulting firm McKinsey found numerous areas for improvement and investment, especially in the realms of field productivity and site-performance management.
One of the main reasons investors see great potential is the relatively low growth in productivity in the building trades, relative to other industries. The McKinsey analysis found that construction labor productivity averaged 1 percent growth annually over the last two decades, compared to the 3 to 4 percent average found in other industries. If new technologies could help close that gap, that would add an estimated $1.6 trillion to the industry’s annual output.