In Abraham Maslow’s seminal paper “A Theory of Human Motivation,” he outlines a prioritization protocol for human needs known as Maslow’s Hierarchy. The theory of the hierarchy is, once humans’ most fundamental needs are met (i.e. being healthy and safe), they will seek to fulfill their needs on the next level up (i.e. love, belonging and esteem), and so on and so forth until they reach the zenith of human motivation: self-actualization.
A crucial, basic need in Maslow’s Hierarchy includes shelter, as it’s necessary for both sleep (a physiological need) and security of the body (a safety need). But while many people are fortunate to have a roof over their head, access to affordable housing remains a chronic challenge, both in the U.S. and abroad.
Current Industry Challenges
Mass urbanization is partly responsible for the current housing crisis. Only 40 percent of the U.S. population lived in cities in 1900, however now more than 80 percent do. The increased demand for urban living and people being closer to their places of work has led to a meteoric increase in rents, particularly as a percentage of spend for typical consumers. In fact, over the past 75 years, rental prices have increased up to three times faster than renters’ household income, according to research from Apartment List.
The resulting dearth of urban housing options has fueled the rapid growth of the urban residential construction market. But despite strong and steady demand growth, the industry hasn’t experienced innovative change in the past 75 years. Buildings are still largely built the same way they were constructed in the 1950s. And yet, in the last eight years alone, the national average cost of nonresidential construction has increased by 21 percent, even when adjusted for inflation. Worse, construction projects are notoriously and consistently completed over budget and behind schedule.
Increasing construction costs may come as a surprise, especially since technology has driven such incredible productivity gains in countless other industries. However the reality is, the construction market has actually experienced negative productivity in recent years, mostly due to enhanced safety protocols, heightened OSHA compliance requirements and an aging workforce. Additionally, construction labor shortages have forced an increase in the cost of wages (despite lower productivity), thereby further exacerbating the problem.
The Promise and Difficulty of Digitization
Technology entrepreneurs and startups may be the answer to the problems the construction industry is facing. For instance, there have been some successful startups developing software products that drive more efficient communications, enhanced project management, smarter design and data-driven insights on construction sites. Notable innovators include Procore, Viewpoint, Onshape and Flux.io, all of which are creating tangible value and being rapidly adopted across the industry.
That said, some skepticism is certainly warranted. In fact, McKinsey found that the construction industry ranked second to last (slightly edging out hunting and agriculture) when it performed an in-depth assessment of the relative “digitization” of 22 industries. Digitization is undoubtedly difficult in construction, primarily because of the following three truths:
- Each project is bespoke. Unlike in manufacturing, where individual products are continuously replicated in high volumes, nearly every single construction project is unique in its design and process.
- Requirements and specifications shift. Due to budget concerns, mistakes or unforeseen issues, build requirements almost always change over the course of the project. To complete the manufacturing analogy, imagine the additional complexity if a product’s design specifications changed throughout the manufacturing process.
- Workforce norms can hinder change. Keeping in mind the aging workforce dilemma, a 55 year-old carpenter with 30 years of practical experience may be resistant to adopting a new technology, especially if the supposed time or cost efficiencies remain unproven.
How to Advance Construction Tech
Still, even with the inevitable hurdles, technology has the potential to drive much-needed, meaningful change in the construction industry. Opportunities remain to make the market more productive, less expensive and safer for its workforce, which in turn would provide consumers with living options that are less expensive, more accessible and more flexible. To achieve these goals:
1.Borrow techniques from manufacturing.
Given the manufacturing industry’s ability to replicate products in high volumes and at high speeds, its techniques should be applied to the traditionally slower, more customized construction industry. For instance, instead of fabricating a building onsite from raw materials, there are new companies that pre-build “sub-assemblies” of the building and then “assemble” them on the jobsite. In fact, in 2015 a Chinese construction company erected a 57-story skyscraper in only 19 days, a project that would take the conventional construction process years to complete. In the U.S., companies like Plant Prefab are taking a similar approach with exceedingly positive results.
There’s also encouraging progress taking place regarding the 3D printing of buildings, although to date the most useful application has been for building disaster-relief housing, where speed-to-completion of basic structures is the critical requirement. As technology advances over time, expect to see a wider application of 3D printing in general construction.
2. Incorporate robotic technology.
Construction is a difficult and dangerous job, with workers’ compensation insurance often the second largest expense for contractors after payroll. By bringing together human workers with intelligent machines, however, the industry can create a safer work environment while also dramatically increasing productivity. For example, Built Robotics is bringing autonomous navigation and control to excavating equipment, allowing human operators to dig foundations without having to physically sit in the machines. Another example is Fastbrick Robotics, which is revolutionizing the bricklaying industry with robotics and automation, operating at over three times the speed of traditional techniques with enhanced accuracy and precision.
Lest any worries arise about robots replacing human workers, keep in mind that the role of “construction worker” evolving into the role of “construction robot trainer and operator” could result in a livelihood that’s safer, less physically demanding and potentially higher paying. Plus, the reframing of the profession could attract a new wave of younger, tech-savvy employees to the industry, thus ameliorating both the aforementioned aging workforce and labor shortage problems.
3. Leverage new construction innovations.
Constructing new buildings — even with more modern techniques and technologies — isn’t always the most productive or scalable option. In these scenarios, it can be more efficient to incorporate different paradigms. For example, WeWork has proven that renting office space can be easier and more flexible, while also creating a sense of community. And many young professionals are seeking similar arrangements in their living situations, too. In fact, Common, Ollie, and WeLive (a division of WeWork) offer students and young professionals co-living accommodations in prime urban locations with less stringent lease terms and lower down payments.
To stand a chance at conquering the widespread housing crisis, and to ensure the longevity of the entire construction industry, construction requires a new approach — one that’s more nimble, resourceful and creative. By embracing technology and perpetual innovation, construction companies, workers and entrepreneurs alike can benefit significantly. And most importantly, people’s most basic physiological and safety needs of having access to an affordable roof over their head can finally be fulfilled.
