One interesting thing about the construction industry is that it is extremely anecdotal. While smart contractors are seeking to move more of their revenue from the initial project to long-tail opportunities like maintenance and facilities management agreements, most contractors still rise and fall on their book of business. There is little durable intellectual property or overarching advantage the largest firms have to give them staying power in the market.
IFS conducted a study of 600 business decision makers globally and found that the construction industry—and field service, a lucrative expansion sector for many contractors—are the most attractive industries for challengers. These challengers can be small companies today, new entrants backed by aligned industries or existing major construction giants who are focusing on disrupting their own operations to drastically increase productivity.
Challenger status is really more about a mindset—of wanting to either gain market share or protect territory through proactive, business process and product innovation—than it is about revenue. For smaller and middle market companies, it is about the size of your ambition rather than the size of your annual turnover.
For larger businesses, it is about the realisation that it is very easy to inadvertently become a smaller company if you do not regularly reinvent yourself on a fundamental level in response to changes in the world outside your four walls. While these challengers view themselves as capable competitors to the market leaders in their space, they may not be as proactive when it comes to planning to use technology to truly disrupt the industry.
According to IFS’s study data, market leaders are more likely to plan to use artificial intelligence to add value to their market offering rather than just make workers more productive or replace existing workers. What this means is that challengers may make investments focused only on productivity, and find they are leapfrogged by market leaders who offer new information-based services that give them an almost insurmountable advantage.
The need to exploit BIM and other digital technologies is going to accelerate. Imagine a design and building team helping a project owner predict and model risk over the life of the built asset or forecast asset lifecycle cost as the projected cost of various inputs change. Imagine a contractor who can use an optimised project scheduling engine collaboratively with their subcontractors to radically collapse the construction timeline to mere days.
A shrinking construction sector means that engineers and contractors will need to double down on their investments in transformational technology and processes. Then, they can out-compete other contractors because they can profitably offer project owners a lower total cost, faster project delivery and higher quality.
- Challengers can be small companies, new entrants backed by aligned industries.
- Major construction giants who are focusing on disrupting their own operations to drastically increase productivity.
- Challenger status is really more about a mindset—of wanting to either gain market share or protect territory.
- For smaller and middle market companies, it is about the size of your ambition rather than the size of your annual turnover.