The AEC (architecture, engineering & construction) industries can seem like a huge unwieldy beast for those approaching it for the first time. This slide deck is aimed at entrepreneurs, start-up employees and investors who are new to the industry. People with a strong desire to get up to speed on its history, challenges and opportunities within the industry going forward.

1. UK CONSTRUCTION
INDUSTRY PRIMER
BY WILL NEEDHAM
FOR INVESTORS, START-UP
EMPLOYEES AND ENTREPRENEURS
NEW TO THE INDUSTRY
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2. PURPOSE
Get up to speed, fast.
The AEC (architecture, engineering &
construction) industries can seem like a
huge unwieldy beast for those
approaching it for the first time.
This slide deck is aimed at
entrepreneurs, start-up employees and
investors who are new to the industry.
People with a strong desire to get up to
speed on its history, challenges and
opportunities within the industry going
forward.
UK CONSTRUCTION INDUSTRY PRIMER WN

3. WHY NOW?
Investment in construction
technology companies has doubled
in the last three years.
With this investment, comes new
investors, entrepreneurs, employees
looking at the industry with a fresh
pair of eyes.
I hope this document becomes a
useful asset in guiding these people
through the construction (tech)
landscape.
UK CONSTRUCTION INDUSTRY PRIMER WN

4. IN THE NEXT 20 MINUTES...
INDUSTRY
OVERVIEW
Core features
The 'project'
Targets
9 PAIN-POINTS
THAT WON'T
GO AWAY
An overview of 9 pain-
points that if we got
right, would make a
massive difference to
the industry.
INVESTMENT
AND STARTUP
LANDSCAPE
History of investments
and promising startups
in this space.
UK CONSTRUCTION INDUSTRY PRIMER WN

5. INDUSTRY OVERVIEW

6. What makes
construction
different?
Slow
innovation and
technology
procurement
cycles
Every project is
different
99.9% of
construction
employees work
for small
businesses
Low margins
Risk-averse
It's a project-led industry, and
projects can take years, or decades.
This slows the innovation cycle.
Construction professionals tend to be risk-
averse, which is a good trait for people
making a a reality these big structures of
concrete, timber and steel. This can
become a problem, however, when it
comes to technology adoption.
Standardisation of the design and construction
process is difficult, as every project is different.
This is an important dynamic when it
comes to driving technology adoption
and reaching the mass market.
In 2017, the top 100 construction
companies in the UK made an
average profit margin of 1.5%.
INDUSTRY OVERVIEW WN

7. THE 'PROJECT'
UK CONSTRUCTION INDUSTRY PRIMER WN
Construction businesses rely on projects. The main stakeholders
in a construction project are typically arranged in the
transactional structure (left). Recent efforts by Project 13 have
proposed the enterprise structure (right), a more collaborative
supply-chain model in order to minimise the pain-points
discussed later in this slide deck.
Source: P13 Blueprint (May 2018), page 6

8. LOWER COSTS
reduction in the initial
cost of construction and
whole life cost of built
assets
FASTER DELIVERY
reduction in the overall
time, from inception to
completion, for
newbuild and
refurbished assets
LOWER EMISSIONS
reduction in greehouse
gas emissions in the
built environment
INDUSTRY OVERVIEW: GOVERNMENT TARGETS WN
33% 50% 50%
In 2013, the UK Government set the industry ambitious
targets in their Construction 2025 report. These targets
focus on cost, delivery and greenhouse gas emissions.
We will need technological innovation in all three areas if
we are to achieve these targets by 2025.
GOVERNMENT
TARGETS
Source: Construction 2025 report, 2013

9. 9 INDUSTRY PAIN-POINTS
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SOLVE THESE, AND
WE'LL BE DOING WELL

10. 1
Moving towards a
manufacturing model
You'll hear many related terms like MMC (modern
methods of construction), DfMA (design for
manufacture & assembly) and off-site
construction.
Construction has been trying to be more like
manufacturing for decades, for obvious reasons
(more efficient, safer, can be quicker etc). This
typically involves 'modularising' aspects of your
design, building them in a factory and shipping
the modules onto site ready to be installed.
However, whilst there are some great case studies
about, the market is yet to mass-adopt this style
of delivery. This method requires a combination
of: (i) investment in manufacturing plants, (ii) a
forward-thinking client, and (iii) a workforce
receptive to change.
For more information, check out: Bryden Wood
(Rapid Engineering Model), Laing O'Rourke,
Katerra (startup) & Sekisui House.
10 INDUSTRY PAIN-POINTS WN
Source: Architects' Journal

11. 2
Putting data at the centre
of delivery - BIM
You might hear the phrase BIM (building
information modelling) used a lot. The
idea behind BIM is influenced by object
oriented programming in the software
industry.
In the early 2000s, the industry began to
shift from create designs with ‘dumb’ 2D
lines (i.e. CAD) to object-based models.
This means a door would be represented
as a Door object, rather than 4 joined up
lines. This was revolutionary, as it meant
we could attach metadata to each object
in the model to assist in specification &
drawing production, and the intelligent
data-rich models are used during the
construction & operations phases of a
building or asset.
9 INDUSTRY PAIN-POINTS WN
Source: BSI Group
continued...

12. 2
Putting data at the centre
of delivery - BIM (part 2)
You will also see BIM described as Better
Information Management.
The amount of information produced on a
design and construction project is large and
needs to be thoroughly coordinated
between the teams/ companies that
produce it. In 2012, the UK Government
mandated a set of standards that described
how this information should be produced
collaboratively on construction projects,
and how this information should be
handed-over and managed through the
operational period of the asset.
Despite notable progress since this
mandate was introduced, I would argue
there is long way to go, especially in the
areas of data interoperability between
software vendors, supply chain buy-in, and
automation of the information
management process.
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Source: ISO 19650 - the new International
standard for collaboratively managing data
and information on construction projects.
9 INDUSTRY PAIN-POINTS

13. 3
Late payment of sub-
contractors
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Source: UK Government, Insolvency Statistics – twelve
month period to Sept 2018
There are over 300,000 small construction businesses in the UK
alone. They rely on timely payment of invoices (from the larger
main contractors) to ensure they have the cashflow they need
to survive. Unfortunately, many of the large main contractors
don't pay within the 30-day agreed limit, causing nearly 3,000
smaller businesses to go insolvent each year.
Construction
Wholesale retail
Accommodation & food
Admin & support services
Transportation
Manufacturing
Professional, scientific, technical
Information & communication
Other
0
Sector
1,000 2,000 3,000
Number of insolvencies in 12-month period
Source: UK Government,
Insolvency Statistics, 12
months to end of Q4, 2018
9 INDUSTRY PAIN-POINTS

14. 4
Imminent skills shortage
A perfect storm of: (i) aging
workforce, (ii) lack of diversity
within the industry, (iii) failure to
attract young talent, and (iv)
Brexit, means the construction
industry faces a very real shortage
of talent required to build the
future of the country.
The industry desperately needs to
improve its image to attract and
retain a truly diverse mix of talent
that currently does not even
consider it a viable career path.
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Source: The Farmer Review of the UK Construction Labour Model, 2016
9 INDUSTRY PAIN-POINTS

15. 5
Delivering major projects
on time and budget
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Construction projects are complex,
uncertain and it can be difficult to
predict how much they're going to cost.
Because each project is unique, it can be
difficult to benchmark costs and duration
of tasks.
In fact, 69% construction projects are
delivered for more money than the
original budget. Further reasons that
might exacerbate this include: geological
risks, inclement weather causing
programme delays, defective
workmanship, indecisive clients.
Some startups are actively working on
this problem, including nPlan, ALICE
Technologies, GenieBelt and many more.
9 INDUSTRY PAIN-POINTS

16. 6
General productivity
It's no secret that construction
industry productivity has remained
pretty much flat for the last two
decades. The UK Government
recently set out a strategy to
combat this entitled Transforming
Infrastructure Performance (TIP).
With 2.7 million people employed in
the UK construction industry, small
gains in individual productivity
could have a huge effect.
For example, if we could save each
of these employees only 1 hour each
month, this adds up to a huge
amount of time savings; time which
could be spent improving quality or
talking with clients or the local
community.
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Source:The Farmer Review of the UK Construction
Labour Model, 2016
Source: Office for National Statistics
9 INDUSTRY PAIN-POINTS

17. 7
The health (and safety) of
our workforce
The construction industry has made great
progress in drastically reducing the rate
of injury and fatalities over the past
decade. However, as the graph below
suggests, the rate of related incidents has
remained largely the same. This includes
things like musculoskeletal disorders,
mental health and respiratory health.
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Source: Construction statistics in Great Britain, 2018
9 INDUSTRY PAIN-POINTS

18. 8
Our impact on our
environment
The built environment accounts for 45%
of total UK carbon emissions (27%
from domestic buildings and 18% from
non-domestic).
It is our imperative to minimise our
impact on the environment at every
stage stage of the process. From
designing out waste, procuring efficient
plant and building materials, measuring
the impact of our construction process
and then operating our infrastructure as
efficiently as possible.
Skanska recently announced its plans to
become 'carbon neutral' by 2045,
including all their supply chain partners.
For more information on how this can be
achieved, go to https://cetoptips.com/
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Source: Highways England
9 INDUSTRY PAIN-POINTS

19. 9
Build quality In 2017, the Chartered Institute of
Building launched the Construction
Quality Commission (CQC) to investigate
the issues of quality in the sector and
address what needs to be done to
improve it.
The CIOB report produced at the launch
of this commission claimed "Our research
identified (…) an underlying cultural issue
in the industry. Quality was being
sacrificed to achieve targets.".
For further reading on this topic, check
out the CQC, the Hackitt Report (post-
Grenfell and touches on build quality &
compliance),
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£5 billion
direct cost of avoidable errors,
every year.
Source: Get it Right Initiative, Improving value by
eliminating error: A Strategy For Change, 2016
9 INDUSTRY PAIN-POINTS

20. INVESTMENT ACTIVITY
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21. INVESTORS
(US)
MOST ACTIVE
CONSTRUCTION TECH
INVESTORS (to 2016)
Firms ranked by unique construction tech
investments, 2012 - end Nov 2016. Source:
CBInsights.
INVESTMENT ACTIVITY WN

22. INVESTORS
(UK)
MOST ACTIVE
CONSTRUCTION TECH
INVESTORS
Firms ranked by unique construction tech
investments, April 2019. Let me know if there
are more to be added here, thanks!
INVESTMENT ACTIVITY WILL NEEDHAM
Entrepreneur
First
PiLabs
ForceOverMass
INVESTORS INVESTMENTS
Concrete VC

23. CORPORATES
CONTRACTOR
ACTIVITY IN THE
PRIVATE MARKETS
Large contractors in
the construction
space typically
acquire
consultancies and
other
engineering/design
firms.
2010-2016
Source: CBInsights.
INVESTMENT ACTIVITY WN

24. SOFTWARE
VENDORS
CONSTRUCTION
SOFTWARE
CORPORATES IN
PRIVATE MARKETS
Incumbents in the
software construction
space are much more
active, with more than
119 transactions since
2010 between 6 firms.
Autodesk was the
most active and also
has its own venture
arm.
2010 - 2016
Source: CBInsights.
INVESTMENT ACTIVITY WN

25. START-UPS
Promising start-ups or small businesses listed under
each of the 9 industry pain-points from earlier in this
report.
CONSTRUCTION TECH START-UPS
On time, on budget
nPlan
ALICE Technologies
GenieBelt
Productivity
Doxel AI
buildots
XYZ Reality
Healthy & safety
smartvid.io
GuardHat
BuildSafe
Environment
Qualis Flow
alcemy
Build quality
OnSiteIQ
...
Promising start-ups listed under each of the 9
industry pain-points from earlier in this report.
Off-site manufacturing
Katerra
Sekisui House
Project Frog
Data-driven delivery
Morta
SensSat
3D Repo
Late payments
Skills shortage design engineer construct...
B1M
Landit
Know any? Get in touch!
MacRebur
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Any others?

26. THANKS FOR
READING!
WILL NEEDHAM
FEEL FREE TO REACH OUT IF YOU
THINK THIS CONSTRUCTION INDUSTRY
PRIMER COULD BE IMPROVED IN ANY
WAY -
WILL.NEEDHAM AT GMX DOT COM

27. ABOUT OUR
CREATOR
Will Needham is passionate about
the intersection of data,
technology and the AEC
industries.
Will is a Chartered Construction Manager (MCIOB) with
over 5 years experience leading technological change
on complex construction projects.
Will has worked at the UK's largest contractor (Balfour
Beatty) and the largest UK-owned engineering
consultancy (Mott MacDonald).
Will is currently researching machine learning @
University of London, and is active in the UK
construction tech startup scene.
https://www.linkedin.com/in/willneedham/
will.needham at gmx dot com
Contact