Happy New Year! We looked back at 2017 in our last article so it seems only fair that we take out our AEC Labs-branded crystal ball and make some predictions for tech across the AEC landscape in 2018. We’ll come back in December and see how we did. Without further ado, here are five predictions for tech in the AEC industry in 2018:
Even more venture capital flows into AEC startups.
This feels like an easy one (our predictions get more aggressive below, we promise.) But 2017 really did feel like a year where construction tech went mainstream and industry-focused VCs like Brick & Mortar Ventures were very active. According to CB Insights, there were 56 contech deals totaling $433M in funding as of October 2017 (two of which were over $50M). These numbers are way up, from just $51M in 2010 to $254M in 2015. We expect this trend to continue, and accelerate, in 2018, drawing parallels to how the real estate tech/proptech space enjoyed a similar surge in funding (up 350% from 2010 to 2015, when it topped $1.5B. More on that convergence below.) So we expect to have plenty of new venture deals to discuss here at AEC Labs in 2018.
The insurtech world finally cracks construction markets.
If 2017 was the year for insurtech, then 2018 is going to be the year for insurance-driven contech. Already the insurtech world is leveraging data and risk management tools to connect with construction companies. And Internet of Things-driven principles in the field (tracking workers or equipment, say, for property insurance purposes) could change the way projects are underwritten forever. Drones, blockchain, and other technologies straddle the line between insurance, construction, real estate, and other markets. Already some in the industry see real estate and construction interests converging (just look at the number of contractors who are investing in their projects at the equity level, for example.) So it seems logical that as insurtech startups continue to scale in 2018 they will see opportunities in these aligned industries that they can exploit.
Trump’s infrastructure bill falls flat and tech picks up the gap.
Lots of people have been wrong in different ways about President Trump, but we’ll take a stab and predict that his eagerly anticipated infrastructure bill will fall apart in Congress. 2018 is going to be a tough year for the GOP and, with House and Senate Republicans focused on the midterms next fall, we think there will be little appetite among the rank-and-file to push through another piece of controversial legislation.
Coupled with tax reform (which capped state-and-local-tax deductions at $10K), state and municipal governments will be stretched to pay as they go for infrastructure projects. This is where we could see real opportunity for innovation – both through technology that can build infrastructure cheaper and faster or better ways of funding projects in order to bypass the legislative logjam in DC and creaky local budgets thanks to the tax bill. Necessity will be the mother of invention and innovation.
AI and deep learning tools will start focusing on construction industry forms and contracts.
There are lots of products in the market already that promise deep learning or AI solutions for contract reviews. In our experience, these have been marketed most heavily at law firms or investment banks in the M&A due diligence space. Construction contracts are a different beast. They incorporate myriad exhibits and other contracts by reference, are written on heavily modified industry forms, and review and analysis depends on the delivery model and the party performing the review in the first place. So any deep learning or AI solution for reviewing construction contracts faces a steep learning curve with uncertain returns in an industry that has been slow to embrace change. That all being said, we expect 2018 to be a big year for AI technologies generally. So we would expect to see solutions applied specifically to construction stood up on their own or emerge as part of a larger suite of AI products from a more established player.
3D printing will assert its potential, and the AEC industry will take notice.
It feels like 3D printing has been touted as a game-changing technology forever, but 2017 saw some interesting developments in the construction space. For example, in October, the first 3D-printed reinforced concrete bridge opened in The Netherlands. The roughly 20-foot span’s 800 layers of printed concrete were reinforced and pre-stressed, and the team behind the project (a joint effort between the Eindhoven University of Technology and BAM Infra, a construction firm) is already planning to print larger bridges (this one is meant for cyclists and can only support 2.2 tons).
3D printing could forever change how construction projects are procured and create a paradigmatic shift across the industry – from risk managers and insurers to attorneys and other professionals. Imagine a world without the Spearin doctrine and archaic procurement statutes like New York’s Wicks Law where an owner could just click and print a new bridge or a high-rise. Admittedly, that’s a simplistic view that’s a long way off from 2018, but there is little question in my mind that the technology is trending in that direction.
The management guru Gary Hamel talks about how many companies don’t even see new innovative competition that’s gunning for them before they’re wiped out (Nokia and Blackberry getting crushed by the iPhone is one of his examples.) I think 3D printing has the potential to do something similar to vast swaths of the construction industry. Companies that are looking around corners will see it coming but many will not. And I think 2018 could be the year where we get a first glimpse of who will survive.
What do you think of our predictions?