Construction IT Year-end Wrap & Look Ahead to 2023

This is the time of year for reflective pieces from the last 12 months to get published. Lists of top ten books, films, and events abound.
The Economist does an informative issue on events from 2022 and a look ahead into 2023. Given that 2022 was the 25th anniversary for Burger Consulting Group (BCG), I felt compelled to look at the top IT trends our industry is facing and what they mean for our contractor clients. Trends don’t fit neatly into one year or the next but span time, sometimes petering out and other times significantly impacting multiple years. Take this for what it is, one person’s view. Working with contractors all over the country, along with our team, on different aspects of automation has given me a certain broad and deep perspective.


Process Orientation

BCG has observed a decidedly increased emphasis by most contractors on processes rather than system. This sounds rather nuanced but in our opinion is probably a long overdue shift in thinking. Rather than simply buying more software, contractors are pausing to evaluate processes before taking the step to automate. They are looking at processes from end-to-end, like procure-to-pay or contract-to-cash. They are evaluating all the steps necessary to create efficient and controlled processes. When they do this, they are coming to realize that to streamline a given process they should be looking at the steps involved, movement of data, training, integrations, and other key aspects. Technology alone is not going to solve the problem. Further, automating one step in an otherwise interconnected process does not necessarily get the whole job done. BCG’s Best Practice Assessment Tool which is free to use, does a good job of helping contractors evaluate their own processes and measure against other contracting companies in the United States.
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The Best Practice Assessment Tool
Allows you to gauge where your organization stands against industry average and best-in-class contractors.

Recalibrating IT

With the movement to Cloud infrastructure and solutions (SaaS) over the last ten years or so, traditional IT departments are faced with a need to change structure, makeup, and focus. The common emphasis on infrastructure is no longer as relevant as it once was. Contractor IT remains understaffed and underfunded for the job ahead, but IT also requires some rethinking in terms of the type of staff and use of outsourced resources and leveraging shadow IT.

For larger contractors, BCG has observed greater emphasis on IT Governance, the process of controlling IT spend, application selection and rollout, and managing enterprise applications. IT is no longer leading business transformation but instead assisting it through valuable support services, as they should be. Many contractors are also upgrading their lead IT person to function more as a Chief Information Officer (CIO) or IT Director and less as manager of infrastructure or applications.

Three IT photos.

Human Resource and Payroll

The shortage of labor which has been an issue since we came out of the last downturn is having a dramatic effect on contractor strategy. Almost all contractors are focused on recruiting and developing their “human capital” as it is sometimes called. Contracting companies are now deploying larger Human Resource (HR) applications that include recruiting, onboarding, self-service portals, training administration, and sometimes even payroll. For BCG, the jury remains out on the viability of third-party payroll.

Some applications are evolving to oversee construction payroll while others are getting implemented to support specific payroll functions still done within the Enterprise Resource Planning (ERP) (e.g. certified payroll reporting). This is another good example of a process area which should be evaluated holistically, from recruiting through timesheets, payment, and benefits administration. When payroll is separated from the HR application, it will require a robust integration but that today seems easier than making do with an inadequate payroll solution that requires offline calculations or a lot of clumsy data movement. Timecard solutions are being divided as well, from those that are offered as bolt-on solutions from estimating solutions to stand-alone solutions that offer biometrics, time, date and Global Positioning System (GPS) stamping, and signature capture.

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BCG has observed a strong trend in the acquisition and deployment of middle- ware solutions (e.g. Boomi, MuleSoft, Ryvit). This is a class of software that has only been catching momentum over the last five years or so. This is another good example of the need to staff correctly in IT in order to support an enterprise application such as this.
Contractors still have large-scale systems like ERP in place but now also have to contend with as many as 10 or more point solutions that need to integrate back to ERP or each other with multiple exchanges during the day. This should no longer be handled manually but rather through an automated process which is controlled and offers data transformation to ensure clean reliable movement of data. Some companies are even at the point where they are implementing Master Data Management (MDM) strategy to maintain customers, jobs, employees and vendors in a single database and then share them to all systems that depend on those records.

Data and Analytics

The data and analytics movement remains in its early stages but gaining momentum. Interestingly, when contractors place a business intelligence (BI) solution (e.g. Tableau, Power BI) over their existing data they are realizing the condition of that data (i.e. inaccurate, incomplete, inadequate). Contractors are coming to the realization that a combination of their processes and current systems are not generating the kind of data necessary to get reliable analytics. The promise of machine learning use of BI will be hard to reach without better data, another argument for middleware which is now being used to not only move data from place to place but also cleanse the data as necessary. This also represents another important change in IT, as some firms are hiring data analysts and business analysts to begin the long work of improving a firm’s data. IT is also coming to the realization that not all of their legacy solutions were built with data access in mind, finding tables with arcane naming conventions, stored procedures, and other classic challenges for data mining. But the move is on and will continue steadily over the next ten years. Power BI and Tableau, as good as they are, are only part of the solution.


The industry remains saddled with a number of legacy ERP solutions. The movement to newer cloud-based architecture is slow going as the transition from one ERP to another is painful, expensive, and often dreaded. Some classic ERP solutions are working hard to “dress up” their tech stacks and add better user interfaces through mobile applications but the underlying stack remains client server based. This is where the term technical debt is most aptly applied. This is a change contractors will be forced to make and the longer they wait, the greater that debt becomes. Contractors are truly grappling with a decision now to either implement an all-in-one fully integrated solution or consider the benefits of a more modern ERP that has a smaller but stronger footprint and allows easier integration with best-in-class point solutions. This should be evaluated carefully and thought of as a ten year+ decision.
Various Cloud ERP icons with blue background.
The movement to newer cloud-based architecture is slow-going as the transition from one ERP to another is painful, expensive, and often dreaded.

Industry Acquisition and Investment

While not a solution trend per se, changing capital structure of construction is already having an impact and will likely continue. Capital has been flooding into the industry from publicly traded companies and private sources. There has been an unprecedented level of acquisition and startup funding from incubators, private equity firms, and even contractors with their own funding sources.

The feeling is, given the state of the industry (i.e. behind in automation, largely inefficient), there is tremendous opportunity to capitalize on this large fragmented and antiquated space we call home. This will ultimately create a marketplace with more competition, more point solutions, and some degree of risk (not all well-conceived new solutions will survive). Our traditional business partners will change as well, becoming more profit centered and costly. And services are not a priority for many of these new developers. They are more focused on product development, not deployment and will leave the implementations to the customers or third-party providers. Trimble, Oracle, Thoma Brava, and Autodesk are good examples of the larger publicly traded firms that are purchasing firms and products at a robust rate and trying to create more value than the sum of their newly acquired products.

3 images illustrating the use of technology in the construction industry.
The changing capital structure of Construction is already having an impact and will likely continue. Capital has been flooding into the industry from publicly traded companies and private sources.
Bird's eye view of two business men holding cell phones and reviewing plans.

Estimating and Bidding

Estimating and bidding solutions have been around for a long time. Many of those solutions remain staples of the industry. However, those tech stacks, like many of their kind in the ERP space are showing their age. While highly functional, they were and often are still client server based. Moving these types of solutions to a cloud platform has proven difficult. Some new solutions are being developed for cloud deployment, but it takes a while for those solutions to catch up with the mature functionality of the existing solutions. Also, Estimating seems to be a more entrenched group that, once they have a solution they like, they are reluctant to change. Digital takeoff, contractor prequalification, bid solicitation, and conceptual estimating are all adding complexity to the solution set estimating is using. Production and productivity reporting has been handled well by the estimating solutions offered to heavy civil but BCG has not seen the same development yet for the Mechanical, Electrical and Plumbing (MEP) contractors who also have a lot of interest in labor management.

Equipment and Trucking

Heavy Civil Contractors, those that produce aggregate materials and simply those that have large fleets of heavy equipment are busy automating the management of their equipment as well as trucking and fuel management. Telematic devices have been available for a number of years now, but most contractors did not have much in the way of solutions to manage that incoming data.

In the past the movement of equipment, fueling, tracking of trucking, and preventive maintenance scheduling was handled on spreadsheets, magnet boards, and pieces of paper.

Today, thankfully, we have much more automated and efficient solutions to process this data and provide visibility into equipment utilization, fuel tracking, and delivery of materials to jobs.
This includes the downstream processing of material billing, job charging and inventory control. BCG has evaluated both Tenna and Clue for equipment telematics and preventive maintenance management as well as integration back to the ERP. The adoption of fuel management systems is on the rise as well with the advent of solutions like FuelCloud, Gasboy and Samsara. This is a complex area and definitely benefits from an end-to-end or at least integrated strategy.

Backhoe loader.


Many specialty contractors, particularly those in MEP and drywall are moving quickly to develop their prefabrication capabilities. This is being driven by owners who see the value of prefabrication as well as the contactors themselves that grasp the efficiency inherent in fabricating in a controlled environment. This is impacting building information modeling (BIM), procurement, inventory control, and costing functions.

Most of today’s popular ERP solutions do not have all the necessary applications built in to manage a shopfloor’s operation. This will drive contractors to either evaluate ERP solutions that do (e.g. Acumatica, IFS, Dynamics) or find bolt-on solutions specifically made to control shop work orders, production control, logistics, and inventory management. Even General Contractors are feeling the need to develop some of their own prefabrication capabilities by doing panelization, prebuilt modular bathrooms or dorm rooms for example. This will require a greater leverage of Design for Manufacturing (DFMA) capabilities within their Virtual Design and Construction (VDC) departments.

There is so much more going on, but these feel like some of the larger more impactful trends at the moment. We could easily have added more on customer relationship management (CRM), safety, and BIM but the list would have grown and top ten lists have a strict limit. If your organization feels like it is standing still on many or most of these issues, it may be time to take a step back and assess where you are and where you want to be. An IT strategy, or more rightly a business transformation strategy, with a five-year vision, could be appropriate. Here’s to a successful 2023!