Lack of strong coordinating agents in construction industry reduces odds of implementation of structural innovations and disincentiveses R&D.

Construction productivity

Productivity is a fine indicator of industry’s technological progress. Judging by this measure construction is in trouble: output per employee in the industry has been declining over last decades.

BEA calculations, Labori. Alternative methodologies (NIST) yielded similar results.

Decreasing construction productivity looks striking by contrast to manufacturing. Many factors could negatively affect productivity, including rising labor costs, while technological advances should improve productivity.

Importance of Construction Technology

Most fundamental changes in architecture can be traced back to innovations in construction technologies.

For example, steel together with elevators resulted in high rise construction. Artificial air conditioning allowed creation of big box retail and malls. Most recently, invention of CAD allowed to create more complicated architecture.

1. Steel frame & elevators 2.Ivan Sutherland’s Digital Sketchpad (1963) 3.Zaha Hadid Building in Baku

Wide adoption of CAD and BIM in 70's-90's was last significant technological innovation in construction. Declining productivity over last decades correlates with lack of new technologies. Why has innovation in the industry slowed down?


R&D investment

First, let’s examine investment in R&D to get a better idea about relative attention dedicated to innovation in construction industry.

Turns out, the total dollar amount of construction R&D in US is 30 times smaller than manufacturing R&D investment. According to research by Civil Engineering Research Foundation and National Science Foundation:

National Science Foundation (2008), Labori, not to exact scale
  • $5,4 billion — Construction R&D investment in US 2008
  • $167 billion — Manufacturing R&D in US 2008

Total amount of R&D investment may be a poor proxy for quality of innovation (for example in case of Nokia vs Apple). But relative share of R&D does illustrate general attitude in the industry.

Key construction industry stakeholders invested in R&D at a rate of 0,5% of annual construction value (CERF & NSF). It’s a low rate.

Low R&D investment may be a symptom of deeper industry inefficiencies. If investing more in R&D would lead to higher productivity and profitability more companies would do it. So what stops them?

We should further explore what constrains commercial returns of R&D investment.

Disintegration and Lack of Coordinating Agents

“Introducing new technology can be more difficult in the construction industry than in other industries. Innovation barriers such as diverse standards, industry fragmentation, business cycles, risk aversion, and other factors can create an inhospitable climate for innovations… Due to such impediments, firms are naturally reluctant to try a new technology, especially if it amounts to putting the entire company on the line” (Haas, Borcherding, Allmon, & Goodrum, 1999, p. 6).

Building process faces vertical (design, construction, operations) and horizontal (specialisation by trade) disintegration. Additionally, production of construction materials, machinery, utilities, devices and indoor fixtures are all separated.

Eccles (1981), Dana Alice Sheffer (2011), Labori, Inc.

Over decades, some basic standars for modules and interfaces have evolved. Innovations in construction can be:

  • modular — seamlessly integrate in existing standards and processes
  • integral — require significant changes in existing standars and interfaces

Stanford researcher Dana Alice Sheffer dedicated her dissertation to studying barriers for integral innovation. She found that: “odds for integral innovations to be implemented are 84% lower than for modular innovations…”.

Eccles (1981), Sheffer (2011), Labori

In IT large companies like Apple or Google have enough power to act as industry coordinating agents. They can define and radically update platform standards for both hardware and software. In construction there’re no such major players.

Lack of strong coordinating agents in construction industry decreases odds of successful commercialisation, this creates a disincentive for R&D investment. Finally, lack of technical innovation contributes to declining construction productivity.


Buildings Will Be Asmbld.

Architectural Robotics

Fedor Novikov

Written by

@Asmbld Co-founder & CEO. Urban futures.

Buildings Will Be Asmbld.

Architectural Robotics

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