The Future of the Construction Industry

Industry trends shaping future business opportunities

Analyst Perspective

Take a full view of the board and use all your pieces to win.

The construction industry has been among the slowest industries to adopt new technologies. However, technologies are continuing to advance, making them more applicable to practical use within the industry. As consumer demand continues to increase in volume and complexity, construction companies need to focus on a digital transformation that can support their organizational goals.

This report will inform companies of the innovative products and solutions on the horizon that can be adopted to allow for strategic growth and enhanced value for the company. It is the role of IT to help their company adopt technologies with an eye to long-term technical and business impacts.

Info-Tech’s approach focuses on an analyst’s investigation of strategic foresight, a methodology that helps the IT department process what is happening in the external environment to guide ideation and opportunity identification. As a methodology, strategic foresight flows from the identification of signals to clustering them together to form trends and uncovering what is driving the trends. This will determine which strategic initiatives are most likely to lead to success on an industry level.

Michael Adams Research Analyst Construction Industry Info-Tech Research Group

Executive summary

Your Challenge

There is a constant state of change in the industry due to the overwhelming number of unprecedented technology changes and disruptions.

There is a need to master internal IT capabilities while also productizing services and intellectual property.

Customers’ expectations grow at the pace of technology change, as does the number of competitors vying to earn existing accounts.

There are uncertainties about transforming the digital business, which will help in adopting rapidly changing technologies.

Common Obstacles

You need to turn IT into business opportunities. Delivering high-quality service is not part of a corporate cost center but a central profit generator.

You need to think ahead. Understanding and predicting the impacts of trends is your bread and butter, but you need to balance uncertainty with opportunity.

You need to innovate your business model. Core business delivery, customer relationships, and strategic partnerships are as crucial to success as technology innovation.

Info-Tech’s Approach

Perform a broader scan to highlight the demonstrated and relevant trends in technology services.

Help organizations understand the trends to navigate the opportunities and challenges of tomorrow.

Highlight the impacts of the trends on both provider businesses and their customers.

Guide organizations through actionable recommendations and next steps.

Info-Tech Insight

In a rapidly changing world, construction companies need to balance the fear of missing out, enthusiasm for new capabilities, and pragmatism to ensure long-term success for themselves and their customers.

Core opportunities are emerging for construction companies

Core opportunities are emerging for construction companies

Business Enablers

• Optimization

  Helps customers use data-driven tools to optimize processes within project planning and resource allocation to reduce costs and minimize delays.

• Automation

  Helps customers reduce need for manual labor while enhancing precision in operational tasks, increasing efficiency, and offering opportunities for strategic growth.

• Risk Reduction

  Helps customers use advanced technologies to automatically identify risks prior to human intervention to reduce errors and rework.

The evolution of the construction industry

The construction industry shapes infrastructure and communities by managing complex, large-scale projects and driving efficiencies through innovations in construction techniques.

The Past

• The construction industry had fragmented processes, where technology use was limited and activities were completed physically onsite.
• The construction industry has been among the slowest to digitize and innovate (McKinsey, 2023), due to the complexity and unique project-specific solutions needed.
• ERPs were introduced in the late 80s and early 90s, offering a solution to combine their functions, streamline operations, and aggregate important data (Procore, 2022).
• The door opened for technology integration, where they had a solution designed for their needs and a standardized operating behavior that laid the foundation for industry success (Procore, 2022).

The Present

• Technology has advanced and is able to complete more specialized tasks, which is fueling the digitization of the industry.
• Technology like BIMs, cloud-based technologies, and data-driven decision-making tools are leading the charge to enhance project efficiency through automation and optimization.
• These technologies are opening the door for accelerated innovation, which is enhancing the communities we know today.
• Innovations in sustainability are leading to a greener future, with IT fueling energy modeling, waste reduction, and carbon tracking to shape green buildings.

The Future

• The capabilities of these advanced technologies will continue to grow, making adopting and understanding them now essential for the future.
• Autonomous construction is becoming more prevalent as companies will use the strengths of these technologies together to reduce errors, optimize operations, and enhance precision.
• The future communities will be smarter, safer, and more sustainable through autonomous roadway and building construction from the collaboration of technological innovation and human design.

The future of the industry: What trends are shaping future business opportunities?

The future of the construction industry

Four trends are shaping the future:

• SUSTAINABILITY

  Contributing to a greener future for the greater population while improving your operations.

  Sustainability initiatives are often seen as bottlenecks, or mere benchmarks for companies, especially with the growing focus on green construction practices. Technology is pivotal in advancing these efforts, enabling companies to contribute to a greener future while uncovering cost-saving opportunities.
  • Opportunity
  • Differentiator

• EXTENDED REALITIES (XR)

  The capabilities continue to grow and are opening new doors for innovative changes within the project lifecycle.

  Extended realities leverage digital twins to enable better design, project visualization, and collaboration. XR allows companies to visualize, manipulate, and analyze complex construction systems in real time, without affecting the real product, which offers strategic benefits for optimization and risk reduction.
  • Opportunity
  • Differentiator

• ARTIFICIAL INTELLIGENCE (AI)

  AI is becoming an imperative asset for every business, and it is powering the next generation of business capabilities.

  AI, encompassing machine learning (ML), intelligent automation (IA), and generative AI, is helping to develop deeper insights into data-driven decision-making. These tools can be leveraged to automate and optimize components throughout the construction value chain, creating new strategic opportunities.
  • Opportunity
  • Business Enabler

• ROBOTICS & DRONES

  Customer demands are increasing and specializing; drones and robotics can be leveraged to fulfill these tasks.

  The capabilities of robotics and drones continue to evolve, offering ways for companies to automate safety and quality control tasks, which is a crucial component of construction. Furthermore, they are being used to assist to complete rigorous tasks, offering more time and area for human intervention.
  • Opportunity
  • Business Enabler

“Technology in construction is revolutionizing almost every aspect of the business. If you haven’t yet, it’s time to adopt some of the newest technologies driving construction forward. They’ll help you keep pace as your company benefits from industry growth.” (Source: Rhumbix, 2024)

Leverage capability maps to identify cost and competitive advantages for the construction industry

Note: Illustration of the Construction Business Reference Architecture

In business architecture, the primary view of an organization is known as a business capability map.

A business capability defines what a business does to enable value creation, rather than how. Business capabilities:

• Represent stable business functions.
• Are unique and independent of each other.
• Typically, will have a defined business outcome.

The business architecture practitioner can use this map to assess a specific area of the business.

Download the Construction Reference Architecture Template

HOW TO USE THIS REPORT

Leverage this trends report to develop your digital business strategy

This report is intended to act as a standalone report on the construction trends to effectively process signals in your environment, build an understanding of relevant trends, and serve as a research-based accelerated input to the Define Your Digital Business Strategy and IT Strategy blueprints and associated activities.

The Future of the Construction Industry Trends Report Leverage this trends report for priorities that drive measurable, top-line organizational outcomes and to unlock direct value.

Business Context & IT Strategy IT Strategy Digital Strategy The future will bring more trends and technologies. Your organization must establish itself as the disrupter, not the disrupted. You must establish a structured approach to innovation management that considers external trends and internal processes.

Sustainability

Trend 1

Sustainability is reshaping the construction industry. How can you harness it to build a greener future while optimizing your operations?

Sustainability is reshaping the industry and the way construction is viewed

The reduction of carbon emissions is a major challenge within the construction industry. Construction contributes nearly 40% of global carbon emissions and a similar proportion of energy usage (“The Future of Construction,” Forbes, 2024). The key impacts construction has on our environment can be tied to ecosystem disruption; air, noise, and water pollution; resource consumption; and lastly, waste generation (Oizom, 2024). The construction industry is growing rapidly and, given the various negative inputs the industry has, it is becoming increasingly important to adapt operations to contribute to a greener future.

Regulations and policies are ramping up for sustainability in construction. Twenty-five countries have made commitments to achieve carbon neutrality before or by 2050 (Rosa Galvez, 2023). To guide these efforts, there are a ton of underlying policies that are mandatory for companies to adhere to. For instance, certain building types in some US states need to monitor their energy and resource usage using government-backed Energy Star Certifications, while energy performance certificates are mandatory in EU countries (“Topic: Green and Energy-Efficient Buildings,” Statista, 2024). These regulations and policies are adjusting the way the industry is viewed, as environmental considerations will be a part of every process.

Customers are favoring companies who’ve adopted green practices. Thirty-four percent of companies have reported that clients show demand for green buildings, which is applying more pressure to companies to focus on sustainable practices (Compliance Chain, 2024). Fifty percent of construction firms believe that implementing sustainable practices into their projects will yield a competitive advantage (KPMG, 2023). Given the statistics, being a trailblazer is a differentiator for a company, which can help drive business.

54% — Percentage of organizations that fully envision the benefits of ESG and are aggressively pursuing maturity and improvement. (Source: KPMG, 2023)

Driven by regulations and customer demand, construction companies must elevate their sustainability efforts and strategically leverage them to drive operational excellence.

SUSTAINABILITY IS AN OPPORTUNITY, NOT JUST A REQUIREMENT

• 90% — Percentage of construction companies who derive revenue from sustainable solutions. (Source: Sustainalytics, 2023)
• 90% — Percentage of US construction companies who receive requests from customers to lower the amount of embodied carbon used in construction projects. (Source: Dodge Construction Network via Deloitte, 2023, “Customers’ Green Focus”)