Is the AECO industry finally ready to embrace technology?
According to Autodesk CEO Andrew Anagnost, the architecture, engineering, construction and owner (AECO) industry will be the computer-aided design software company’s next “billion dollar business”. The prediction, made in a Forbes article last fall, is a sure sign that the worldwide AECO industry is finally ready to embrace technology. But what took so long – and how will digital adoption transform the business?
Much of the delay is due to the nature of the business itself. A high-risk industry with tight profit margins, the AECO space has historically been resistant to change. However, other industries continue to demonstrate that investment in technology not only increases efficiencies but also dramatically impacts the bottom line.
In 2019, more AECO executives and others are beginning to take note – making technology adoption a key piece of the conversation rippling throughout the industry.
Turn and face the strange
It’s well-documented that the AECO sector has struggled with technology. In fact, according to the McKinsey Global Institute (MGI), the industry as a whole possesses one of the lowest levels of digital adoption among all industries. In addition, McKinsey reports productivity growth in the space has averaged just 1% each year over the past 20 years, compared with a 2.8% growth rate for the global economy as a whole.
An acknowledgement of the need for technology investment is long overdue. In a 2018 Vistage CEO Confidence Index Survey of AECO industry executives, 51% of respondents said that the Internet of Things (IoT) and Artificial Intelligence (AI) were the two technologies most likely to impact their business in 2019.
In addition, respondents reported that software investments in customer relationship management (CRM, financial management and human capital management would lead their tech investments in the coming 12 months.
If these responses are accurate, the impact of technology adoption on construction customers will be widespread. Most notably, an incorporation of digital, cloud-based document management systems and data-driven AI will vastly improve the efficiency of projects, streamline processes and grow profits for all involved. Fewer missed deadlines and costly errors, as well as increased productivity, will benefit everyone.
How tech can make a profitable difference
In today’s AECO landscape, communications between site managers, architects, vendors, workers and others is conducted completely in silos. There’s no central source of information – and no data sharing across all parties working on any given job. It is a recipe for miscommunication. For example, a vendor shipping materials might not know about a work delay that makes the shipment unnecessary. Or, a site manager reviewing blueprints might be unaware that an architect has sent revised plans. This poor communication can create delays, errors and missed opportunities. The introduction of advanced technology will not only help AECO businesses, but will provide benefits across the board – to workers, architects, suppliers, owners and, yes, customers.
When information is shared across all parties and throughout the system, suppliers are notified when delays occur, site managers know when budgets change, workers can easily obtain a schedule of work times and progress on the job is intelligently tracked. An AI- and data-driven system creates a “single source of truth” enabling everyone to be on the same page at all times.
In 2019, more AECO companies (as well as their customers, partners and vendors) will be clamouring for this type of efficiency. According to Zion Market Research, AECO industry investments in AI are expected to grow at a compound annual growth rate of more than 38% between 2018 and 2024.
It’s been estimated that under conventional processes, site managers and other workers spend nearly six hours a week simply searching for proper documentation and correct information on multiple issues. Add to this the four hours estimated to be spent managing errors weekly and it becomes clear that improved communication will go a long way toward increased AECO profits.