Are Construction Sites Living in the Past?

New data on the European construction sector from Sifted, released today, illustrates a dire landscape for an industry with a huge and growing to-do list, and one responsible for a huge amount of GDP and emissions globally.

• Productivity has grown by only 1% in the past two decades.
• The industry accounts for 10.9% of European GDP
• Operational profitability is around 5%

This can be explained partly by a notable lack of investment in the critical start ups and technologies that can improve efficiency on the construction site. Even during a record year in construction tech investment, only 1.06% of global Venture Capital (VC) investment went toward construction in 2023.

This failure to back innovations capable of boosting capabilities and efficiencies is likely to have hamstrung the sector’s ability to meet spiralling demand. Construction globally, and particularly in the UK and EU, has a long and ever-growing to-do list; new homes, new data centres, and repaired, updated, and climate-resilient infrastructure are all desperately needed.

Money alone is not the cure, however; collaboration between major tech vendors and construction tech startups is key. These partnerships help startups help the industry – by improving the quality of the construction technologies that come to market, channelling innovation towards areas it’s needed most, and making funding more sustainable and consistent.

with many construction sites looking very similar to those a century ago

Chris Stern, Managing Director of Trimble Ventures, comments:

“Construction faces a double-edged sword. It must meet massive demand despite the many structural barriers preventing growth and limiting output – such as an ageing, shrinking workforce and industry fragmentation.

“Largely due to this fragmentation, new technologies and the data revolution have had a far more limited impact on construction than other sectors – with many construction sites looking very similar to those a century ago. A lack of venture capital investment into construction tech is both a cause and subsequent effect of this issue.

“More VC investment into innovative startups would certainly help boost productivity, but it is not a silver bullet. While it is relatively straightforward to adopt new technologies in controlled environments like manufacturing, construction sites are much less predictable, and involve far more stakeholders and sub-contractors of varying sizes, margins, and capacities. This makes standardisation and tech adoption that much more difficult.

“Industry collaboration between the big industry players and tech startups is needed more than ever to help scale the disruptive technologies being created and get them to market. The industry stands to see huge gains in productivity, efficiency and output.”

Source: Technology Reseller