Insights from industry data on tech implementation & use for a smarter, safer jobsite
by Donna Laquidara-Carr and Peter Schermerhorn
June 4, 2019

New technologies continue to emerge to improve the jobsite, from wearables to virtual reality to robotics. Most of these hold the promise of improving productivity and ultimately profitability, but perhaps the biggest advantage they offer is their ability to help contractors address the high degree of risk inherent in the construction process. But is the construction industry poised to embrace these new technologies? That is the question posed in a new study from Dodge Data & Analytics and Triax Technologies, "Using Technology to Improve Risk Management in Construction SmartMarket Insight," and the answer is complicated.

The study, which includes responses from 135 contractors to an online survey and insights shared in in-depth interviews with 12 senior executives in the insurance industry, clearly reveals the need for helping contractors address risk. The findings show that over half of contractors have at least a moderate level of difficulty with ongoing management of project risks (66%), preparing critical assessments of project risks (63%), dealing with accounting issues (61%) and identifying project risks (51%).

The findings show that a key part of the challenge is in gathering data on which to base risk management strategies. Less than half of the contractors (45%) believe that there are clear ways to measure a project’s overall risk performance. Even fewer (43%) say that overall project risk performance is frequently measured at their companies. The insurance executives also observe in their interviews that most contractors are not currently using technology to effectively gather and analyze data to manage risk, although a few believe that contractor capabilities are beginning to improve in this area.

The challenges that contractors face in risk management, though, are not attributable to any undue skepticism about technology. The findings reveal that over half of contractors are already widely implementing technology for training, and they also commonly use technology for safety incident documentation and job hazard analysis.

Even more telling, though, are their expectations about the potential of emerging Internet of Things (IoT) technology to address risk. Nearly three quarters believe IoT technologies will reduce occupational risks, such as worker injuries, and well over half have similarly high expectations for them to mitigate risks to the general public and risks of property damage. Research done by Dodge Data & Analytics on other topics with contractors has generally shown them to be relatively skeptical in their expectations of unproven strategies, and thus, for this audience in particular, their expectations about technologies that many do not yet use demonstrate keen interest.

So, does this mean that the construction industry is on the verge of a major sea-change due to technology adoption? Possibly, but there are some hurdles to overcome. The biggest challenge revealed by the study is how to fund investments in technology.

Only 10% of contractors currently have dedicated innovation budgets, and most simply absorb the costs in expectation of future gains (44%) or pass on the costs to their clients (32%). Both approaches limit the degree to which they can invest, even in technologies they believe hold great potential. The lack of resources dedicated to technology adoption at most companies also makes ease of use the top factor that they consider when evaluating technology, scoring even higher on the survey than the cost of the technology, with 79% ranking ease-of-use among their top three considerations, compared with 73% for cost.

Clearly, cost will play an important role in their evaluation of technology in the future. The biggest driver that would encourage adoption for contractors is the prospect of negotiating lower insurance premiums. The insurance executives, though, do not see their companies offering lower insurance premiums for technology adopters in the near future because the decision to lower premiums must be based on hard data on how these technologies improve project performance. In fact, a few consider lower premiums for technology adopters unlikely to ever be implemented.

That said, though, there are other ways that insurers believe they can encourage wider adoption of risk-reducing technology for the jobsite. Those include everything from being able to make recommendations and provide data to contractors, to lower deductibles for those adopting proven technologies, to partnering in the initial investment in these technologies with some of their clients. Some even argue that as technology becomes more widely adopted, it may cost more for companies that drag their feet about investing, with higher rates for those seen to be riskier because they do not keep up with the best practices of technology use.

Contractors’ enthusiasm for the potential of IoT technology to reduce risk and insurers’ interest in encouraging their initiatives are positive signs, pointing to a safer and smarter jobsite in the near future.