The presentation discusses the construction industry's demand for technology amid a structural labor shortage, emphasizing that technology must compensate for workforce gaps. It highlights the evolving role of IT departments in construction firms, focusing on strategic integration and cybersecurity as essential for competitive advantage. The document addresses the challenges and opportunities presented by emerging technologies and data-driven approaches in optimizing productivity and operational efficiency.

1. Construction
Technology Quarterly
Q2, 2021 Presentation
June 24th, 2021

2. Today’s Agenda
• Demand
• Quick Review
• Emerging IT
• Productivity vs. Quality
• Supply
• Density of Data: Computer Vision
• Ideas
• Five Forces Analysis
• Supporters

3. Demand For Tech

4. Labor Shortage is Structural, Not Cyclical
• It is not “coming back”
• Process and Technology will have to make up for lack of people
0
50
100
150
200
250
300
350
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
52.0
54.0
56.0
58.0
60.0
62.0
64.0
66.0
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
Labor Shortage in Construction Percent of Population Working

5. No One is In a $1.3 Trillion Market
(except maybe Microsoft Excel)
(C) Hugh Seaton 5
530
440
351
29
0 100 200 300 400 500 600
Residential
Commercial
Public/Local
Federal
Billion $

6. 470,732
112,709
67,572
43,558
13,004 6,162 1,358 391 155
< 5 5 to9 10 to 19 20 to 49 50 to 99 100 to 249 250 to 499 500 to 999 > 1,000
Distribution of Construction Firm Sizes
These Three Company types do not
behave the same way.
These Three Company types do not
behave the same way.
These three company
types do not behave the
same way.
6
(C) Hugh Seaton

7. 7
~155
~390
~1,360
~6,160
~13,000
~550
>500
~1,900
>250
~8,000
>100
~21,000
>50
Different go to market:
• 550
• 21,000
• 700,000+

8. Total Segment Employees
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
<5 5 -> 9 10 -> 19 20 -> 49 50 -> 99 100 -> 249 250 -> 499 500 -> 999 1,000+
US Census, 2019

9. Compensation/Employee By Segment
$49,341 $48,662
$56,226
$64,530
$70,986
$76,208
$77,876
$79,932
$75,492
$-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
<5 5 -> 9 10 -> 19 20 -> 49 50 -> 99 100 -> 249 250 -> 499 500 -> 999 1,000+
US Census, 2019

10. Specialty Contractors (number)
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
< 5 5 -> 9 10 -> 19 20 -> 49 50 -> 99 100 -> 249 250 -> 499 500 -> 999 1000+
Chart Title
US Census, 2019

11. Specialty Contractor Pay/Worker
$48,087
$46,939
$53,754
$61,026
$66,044
$70,533
$72,061
$73,598
$71,121
$-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
< 5 5 -> 9 10 -> 19 20 -> 49 50 -> 99 100 -> 249 250 -> 499 500 -> 999 1000+
US Census, 2019

12. TAM for Software Smaller Than Your Pitch
Decks
Back of Envelope Estimates
(C) Hugh Seaton 12
Established software that is highly competitive
(field management, project management) ~ $9 Billion
Emerging technology that is new addition to budgets
(Revit Plugins, IoT)
$2.6 – 11.5 Billion
Yet-to-be introduced technologies that create new markets
(labor enhancing/substituting)
~ $14 Billion
Note: Market Sizing is
Speculative Only
$25.6 – 34.5bn/year for
next 5 years

13. Changing Dynamic:
Sophisticated
IT Departments

14. Construction Company IT
Departments Are Changing
• Larger firms are establishing strategic IT departments, and these will lead to a very
different sales process.
• Often not quite ‘top down’ – IT processes are coming from Innovation teams, operations
teams, etc.
• These are likely to consolidate under CIOs who will be “at the table” in a way traditional
IT was not.

15. Drivers of Change
• Competition
• Cybersecurity
• Owner Requirements
• Internal operational frustrations

16. Construction IT Is
Very Effective Only
In In Vendor
Management, And
Service Desk
Functions
Source: Info-Tech Management and
Governance Diagnostic

17. Modern IT Departments Are
Strategic Enablers of the
Business

18. Integrating
Functions,
Connecting Data
Flows, Creating and
Integrating
Applications
Source: Info-Tech Management and
Governance Diagnostic

19. Evolution is Underway
Functional
IT Department:
- Vendor Management
- Email
- Baseline Application
Management
Strategic
IT Department:
- Company-wide integrations
- Rigid standards for security
- In-house development
- Enterprise bus data
management
- Sophisticated cybersecurity

20. Why This Matters
• Purchase process changes -> new and challenging
• Data privacy requirements change
• Cybersecurity requirements change

21. Startups and IT
“MVP” implies technical shallowness, but doesn’t have to:
1. Document your stack
2. Make sure each layer is secure
3. Avoid open source
4. Implement internal protocols for passwords,
cybersecurity training

22. Cybersecurity
Partnered with Egnyte to source real-world data
> 3,000 construction customers around the world

23. Construction Companies Are
Twice as Likely to Have
Ransomware Attacks
From Egnyte’s
3,000 Customer Database

24. ~ 44% of attacks were large Companies
~ 44% of attacks were small Companies
~ 10% of attacks were mid-tier Companies
From Egnyte’s
3,000 Customer Database

25. - Repeat Attacks Very Likely
- Up to six attacks in six months
From Egnyte’s
3,000 Customer Database

26. Cybersecurity isn’t only
about IT
FedRAMP, SOC II, other certifications focus on people & process, not just
tech.

27. Strategic IT is
Critical, and
Coming
Contractors need to up their
game to compete
Software and technology
providers need to up their game
to win business
Expect this to be segment driven
– larger companies will lead, but
ransomware and cybersecurity
will matter for everyone

28. Supply of Technology

29. What is Technology For?
• Productivity growth?
• Cutting costs?
• Improving quality of what’s delivered?
• Accomplishing entirely new things

30. Productivity Paradox
• Mid-1980’s, after a decade of IT investment, no one saw productivity
improvement
• This persisted for years
• Finally saw productivity growth in the 1990s

31. Classic Productivity
Measurement is Flawed
• What gets delivered is higher value for less money
• Safety, design difficulty, environmental regulations all erode measurable productivity
• Most importantly, technology distracts from much more effective productivity enhancers
– job engagement1 and manpower deployment.
1. https://digitalcommons.northgeorgia.edu/cgi/viewcontent.cgi?article=1003&context=honors_theses#:~:text=Research%20has%20found%20that%20an,Matz%2D%20Costa%2C%202008).

32. Stop Only Focusing on
Productivity
Enough with the McKinsey Article

33. “Once you get used to automating business processes with technologies
such as RPA, AI and machine learning, you’re not going to go back.
IT changes the way you do business. As much as doing things faster and
better, it allows you to do things that were not possible before. If you can
take a three week long mortgage application process and reduce that
task to five minutes, how can you go back?
You have changed the business model.
Suddenly it has become a differentiator for you.
- Prince Kohli, CTO, Automation Anywhere

34. How Can You Change The Business Model?
How Can You Differentiate?
• Compete for labor
• Compete for jobs
• Improve profitability

35. Deloitte Looked
at AI Spend
Companies look at technology
as a way to compete through
better decisions, better
products, better service

36. Efficiency Means Doing
More, Not Using Less
This is the general pattern of digital
transformation.

37. What Happens When
Technology Provides Orders
of Magnitude Better Data?

38. Supply: Machine Vision

39. A Wave of New Capability

40. Vast Quantities of Data are Different
• What would you do if you were 100% certain at all times about job
progress?
• What if you could predict exactly when you need materials?
• What if you could schedule work perfectly?
• What if you could take billions of points of job progress data and
analyze it for the next job?
• What if you could correlate that analysis with profitability, safety,
punchlist & closeout?

41. Example: Versatile’s Craneview
Sparse Jobsite
Information
• Operator logs
• Basic machine telemetry
High Density Jobsite
Data
• Live image every 5 seconds (9,600/day)
• Dynamic weight from load cell
• GPS location (x,y,z) capturing pick and
drop location for each lift
Qualitative, written
A few times/day
Quantitative, machine-generated
Continuous, high frequency

42. Example: StructionSite
Sparse Jobsite
Information
• Daily logs
• ~3,000 photos not mapped to exact
work location
• In a folder or iPad
High Density
Jobsite Data
• Up to 300,000 images
• Auto-tagged to exact location
• Cloud-based for analysis
• Tied to machine vision
Qualitative, written
A few times/day
Quantitative, machine-generated
Continuous, high frequency

43. A Fundamental Shift
Sparse Jobsite
Information
• Daily observations
• Primarily in Super/foreman’s head
• Pictures loosely reference work area
• Daily reports & updates
High Density
Jobsite Data
• Hourly, continuous images
• Perfectly correlated to work
• Computer-readable as content
Dozens of data points/day Tens of Thousands of data points/day

44. It’s not just Machine Vision
SmartBarrel automates and
significantly locks down jobsite
check in.
This gives vastly better data.
What if you could look at patterns
across the week and know when
folks leave early, when they get
there late?
0:00
1:12
2:24
3:36
4:48
6:00
7:12
8:24
9:36
Monday Tuesday Wednesday Thursday Friday Saturday Sunday
Average Shift by Weekday (active job)

45. The Next Wave:
What to Do With Data?
• This takes a little time
• Role for contractors as well as tech firms
• The key question – what does all this data make possible?
• Selling data products to owners
• Briefing architects in design-build projects
• Faster, safer, better projects
• New Business Models

46. Briefing: Risk of Sharing

47. CTQ Issue Briefing:
True Risks of Sharing Images & Models
• Available for Free
• Developed with Document Crunch’s Josh Levy
• Overview of what real court decisions impact
risk

48. Key Outcomes
• Privacy in some cases
• Process is often a bigger risk than models
per se
• Make sure that contract covers your teams
so they can work the best way
• Look to Consensus Docs Form 301
• Check out the full and podcast at
Constructedfutures.com

49. Industry Analysis:
Porter’s 5-Forces

50. 1980 – Revolutionized Business
Strategy
• Companies don’t compete for sales, they compete for profits
• This means the relative power of Five Players define the structure of an industry
and a given firm’s place in it:
• Suppliers
• Buyers
• Substitutes
• New entrants
• Existing competitors

51. Who Has The Most
Relative Power
Power defined by:
• How many of them and choices
counterparties have
• IP or other protections
• Uniqueness of offering
Supplier
Power
Threat of
New Entry
Buyer
Power
Threat of
Substitutes
Direct
Competition

52. Five Forces for Large
Contractors
Buyer Power Moderate
Supplier Power Moderate
Threat of Substitutes Low
Threat of New Entry High
Direct Competition High
Supplier
Power
Threat of
New Entry
Buyer
Power
Threat of
Substitutes
Direct
Competition

53. Five Forces for PM Software
Buyer Power Moderate
Supplier Power Low
Threat of Substitutes High
Threat of New Entry High
Direct Competition High
Supplier
Power
Threat of
New Entry
Buyer
Power
Threat of
Substitutes
Direct
Competition

54. How Does This Help
• The point of differentiation is to reduce choice amongst counterparties
• The point of a value chain is to drive unique value with less unique inputs
• Strategy is creating a business model that makes competition irrelevant
• Startups – answer investors more intelligently than a X,Y map of competitors with your
company in the upper right.
• Read Joan Magretta’s work on Porter

55. Partners & Supporters

56. No sponsorships
accepted
But we love data

59. Check out the Book &
Podcast!

60. Strong Community
Doing Amazing
Things
60
Many More
(C) Hugh Seaton

61. Thank you
hughseaton@gmail.com
www.HughSeaton.com

62. Census Sourcing
TABLE ID: CB1900CBP
SURVEY/PROGRAM: Economic Surveys
VINTAGE: 2019
DATASET: CBP2019
PRODUCT: ECNSVY Business Patterns County Business Patterns
UNIVERSE: None
FTP URL: https://www2.census.gov/programs-surveys/cbp/data/2019
API URL: https://api.census.gov/data/2019/cbp
USER SELECTIONS
NAICS 23 - Construction; 236 - Construction of buildings; 237 - Heavy and civil engineering construction; 238 - Specialty trade contractors
https://data.census.gov/cedsci/table?n=23%3A236%3A237%3A238&hidePreview=true&tid=CBP201
9.CB1900CBP