In May, Procore Technologies launched its IPO and the shares jumped by 31%. The company, which operates a leading cloud-based platform to manage construction projects, has over 800 customers and the ARR (Annual Recurring Revenue) is more than $400 million.
But if you look at the S-1 filing, there are some interesting details about the construction industry. For example, the investment in technologies has generally lagged (this is based on research from McKinsey) and the levels are only more than for agriculture and hunting.
“The construction industry has historically been comprised of fragmented project teams which used complex work processes that were executed in siloed systems,” said Karthik Venkatasubramanian, who is the Global Vice President of Data Strategy and Development at Oracle Construction and Engineering. “Given the hands-on nature of construction work, the industry has traditionally relied on human experience and expertise to complete projects, and the potential benefits of adopting technologies were often overshadowed.”
Yet things are starting to change. One of the biggest catalysts has been the impact of the COVID-19 pandemic, which has meant much more urgency for adopting digital solutions.
“Venture capital investment continues to flow into the space,” said Lauren Weston, who is an associate at Thomvest Ventures.
But COVID-19 is just one of the factors. Some of the others include the increase in infrastructure investments from governments, the chronic labor shortages, the need for sustainable solutions, and supply-chain disruptions.
Yet traditional software is likely not to be enough. If anything, AI is poised to play a critical role in the transformation of the construction industry.
“AI can compute massive volumes of data that traditional approaches have not been able to previously,” said Vamshi Rachakonda, who is the Vice President and Sales Lead for Manufacturing, Auto and Life Sciences at Capgemini Americas. “This is especially true for processing and mining unstructured data such as photos, videos, and text and converting them to insights and intelligence.”
Another key to AI is that it allows for more proactive approaches. “Most of the current reports and dashboards are being used to focus on ‘what has happened’ or ‘what is happening’ on projects, typically after an event or task has occurred,” said Venkatasubramanian. “But with AI, you can ask ‘what might happen?’ This can be a total game-changer when done right, as it has the potential to help deliver projects ahead of time, improve profit margins, and reduce risks significantly.”
Innovative AI Startups
An interesting startup that is leveraging the power of AI in construction is OpenSpace. The company has a 360° camera—which attaches to a hardhat—that seamlessly collects data at a job site. The OpenSpace platform then processes the images to create a digital twin of the project, which makes it easier for tracking and collaboration.
“The company also recently launched a new product called ClearSight that uses AI to overlay images of framing, drywall, paint and more to allow for efficient project progress tracking via machine vision,” said Shawn Carolan, who is a Managing Partner at Menlo Ventures.
Another company that is successfully using AI for construction is Measure Square, which is a leader in measure estimating technology. Its platform manages 40,000 to 50,000 floorplans a month. With this data, its AI system is able to interpret paper-based floorplans and make them interactive.
“We have two key steps for this,” said Steven Wang, who is the CEO and founder of Measure Square. “First, we use takeoff data from the plans, which helps detect the walls, doorways and so on. Then we have a sophisticated computer vision model to improve the results.”
Again, AI is still in the early phases when it comes to the construction industry. But given the advances in this technology and the innovative ways to collect data, the prospects look bright for digital transformation.
“AI can help reduce or remove a very real tech barrier when working on one-off, bespoke projects,” said Paul Donnelly, who is the marketing director for engineering, procurement and construction for AspenTech. “By sorting through and leveraging data from previous projects and industry standards, AI can help streamline the tech set up for each new project. This makes the use of newer tech in construction viable compared to when the tech has to be set up manually for each project.”
Tom (@ttaulli) is an advisor/board member to startups and the author of Artificial Intelligence Basics: A Non-Technical Introduction, The Robotic Process Automation Handbook: A Guide to Implementing RPA Systems and Implementing AI Systems: Transform Your Business in 6 Steps.