4 minute read
Since 1990, the real value added per construction labor hour has dropped by 23%. One fundamental reason is the opacity and fragmentation of construction workflows and activities - making sharing of information (aka communication) difficult.
“Remember that Time is Money.”
Benjamin Franklin, Advice to a Young Tradesman, 1748
The best way to achieve integration and transparency is letting information flow. However, in construction, the people working on the same project - from architect to crew - are in different places most of the time. As MIT professor Thomas J. Allen has proven in the 1970s: communication is highly correlated with physical proximity. It drops as a power law curve - after more than 10m distance, it ceases to happen. That’s why we remain bullish in solving the communications riddle in construction.
Here are my 10 slices on site comms:
1/ On mid-to-large construction sites in the US, Foremen spend 3-5 hours of their day on communication.
2/ On similar sites Project Managers and Supervisors spend 7-9 hours of their day on communication. These numbers were fairly robust day by day in our field research, i.e. they didn’t vary a lot by site or by day.
3/ And: Supervisor communication is still extremely non-digitally integrated. Want evidence?
Supervisor’s notes from a multi-million dollar site in California with which he hand-wrote the times he agreed with his supplier to deliver ready-mixed concrete with 18 trucks between 7:14 am and 12:17 pm
4/ We identified 4 types of Supervisor communication. Informing, Scheduling, Resolving and Reviewing.
- Informing means to provide - who would have guessed - information regarding eg. site parking, logistical details, or safety guidance.
- Scheduling is a tedious communication task between Supervisor and foremen, crews, subs and suppliers to find and confirm common availabilities and time slots. Below screenshot of a Supervisor’s phone we took during our field research gives a glance at how messy scheduling really is.
- Resolving is a Supervisor’s real value add: troubleshoot issues, provide experience to crews to fix issues, and react to unexpected changes.
- Reviewing is the Supervisor estimating change orders or documenting site progress or errors.
Real screenshot of a text-message group between a Supervisor and his crew of subs (19 people) from a multi-million dollar project in Michigan. 2018
5/ Informing and Scheduling together make up 50+% of a Supervisor’s daily communication. Informing and Scheduling communication are transactional + contain repeated information.
6/ Ergo: Informing and Scheduling communication is well automateable.
7/ And: We see a variety of tech companies from Asia-Pacific, North America and Europe attack the communication opportunity:
- Supplier scheduling tools, eg. Veyor or Voyage Control. One founder has described his solution “as a rule-based Google calendar for the project”.
- Field crew communication apps, eg. Eko, Mela or Cribber. These solutions tend to resemble Microsoft Teams for distributed workforces.
- Project management apps, of which there are dozens.
8/ But: We have yet to see a solution that has an intense product-problem fit and well-working network effects and virality. Many construction communication solutions we get to see as part of our work in Foundamental have the issue that the Supervisor doesn’t get instant value. We believe that any construction communication solution needs to provide an instant benefit to the Supervisor. In some ways the issue is similar to why enterprise knowledge management has historically been hard to solve: the ones who have knowledge (senior experts, leaders) are usually not the ones instantly benefiting from filling the system nor do they have the time to fill the system. In construction projects, execution revolves around the Supervisor. Any solution that does not provide the supervisor instant value in his/her busy day with extremely low barriers for usage is - in our experience - unlikely to achieve 1000x growth on construction sites.
9/ The good news: One thing I learnt by spending my own research time in the construction trenches is that construction teams are a community and proud for mastering their tools. Any solution that does provide instant value at low usage barriers has a good chance to pull in the Supervisor’s network. Again, this is something that a few tech companies have stumbled upon, but they haven’t cracked the code for virality.
10/ Founder opportunities:
- Multi-channel + automated text messaging: Text or WhatsApp are king for construction teams in NAM, Europe and SE Asia. In our estimate 40-50% of information today is exchanged via text, and another 20-30% by phone calls. Installation of an app is possible for a Supervisor who repeatedly works on the same site. However, for crews who tend to rotate from project to project, sometimes day by day, it is just impractical to be using a different app every day. The one channel that is today’s operating system for construction sites is text messaging. We would like to see more communication tech companies make use of low-barrier multi-channels, especially automated text.
- Codifying scheduling: Scheduling crews and suppliers can be tedious not because there is so much information to be shared, but because the same information has to be distributed to many people many times. Secondly, when changes occur - think: weather, traffic, crew not showing up - the same tedious communication starts all over. Similar to what the immensely talented folks around René Morkos over at our portfolio company Alice have done to construction activities with their ingenious recipes, we see an opportunity to codify scheduling of crews and supply jobs in standard code and in a (semi-) automated fashion.
- Careful though: the viral function is not as simple as it seems. We have had a project management company boast a 1:15 “viral” invitation rate, meaning one user invited 15 other users. Unless that is a Supervisor inviting a Supervisor - which happens much less often - this number in itself is a vanity metric. At closer glance, we realized that what matters are the second order and third order referrals. Supervisor invites crew member, crew member refers to another Supervisor. This is what matters and what communication tech companies have to crack in construction.
As always, credits for providing the data go to Mo, who leads the wizards in our Foundamental Insights group.*
Foundamental field research 2018, n >50
… a few more collected impressions from our field research. All the talk about construction workflows being “traditional” is not an exaggeration: