CONSTRUCTION MATERIAL

ADAPTING TO NEW TECHNOLOGY

ASHLIE CARLSON
ASHLIE CARLSON is a graduate of the University of North Carolina at Chapel Hill and a
contributing editor of Construction Accounting & Taxation. She can be contacted at
jcat@technicaeditorial.com.
With the market for technology constantly expanding, firms must find a way to incorporate new tools into their
workflow in order to improve efficiency and remain competitive, and construction companies are no exception. A
recent study by file-storing company Box, Inc. examines how the construction industry has managed to adapt cloud
technology relative to other industries that utilize their services. The results are discussed in this edition of
"Construction Material," as are current spending and employment trends and a new alloy that may play a large part in
future infrastructure projects.
If there is any topic or trend you would like to see addressed in the next issue of Construction Accounting & Taxation,
please email me your ideas at jcat@technicaeditorial.com.
Cloud and mobile technologies
Box, Inc., a file-sharing company that offers cloud-based storage to its customers, recently set itself the task of
analyzing how clients across five different industries manage and interact with online content. Box provides storage
and file-management services to approximately 225,000 companies whose employees utilize data more than 2.5
billion times per quarter.
1
They propose in their study that companies making use of technology to increase
collaboration and promote efficiency will be met with success, while those that refuse or are unable to adapt in a
rapidly advancing environment will fail. Their results showed that all five of the industries in the study, including
construction, have taken steps toward embracing new technology in their businesses, although the specific ways and
the extent to which content is spread and used varied in most cases.
Box's study was based on anonymous data from more than 300 companies using their service between J anuary and
December of 2013. The five industries accounted for were media and entertainment, construction, financial services,
manufacturing, and software, and each industry was represented by at least 33 companies. Company data were broken
down into the following five categories and analyzed separately.
1. Decentralization of information (What percentage of the company has access and the ability to disseminate
information?)


2. Mobility (Where is information being accessed?)
3. Frequency of collaborative actions (How often is information being shared internally?)
4. Levels of iteration on and consumption of content (How is content used? Is information being consumed more
frequently than it is being created?)
5. Levels of interaction with external parties (How frequently is information being shared with third parties in
relation to internal sharing?)

Here's what Box, Inc. found with regard to the construction industry.

Decentralization of information. According to the study results, industries that are more rigidly structured tend to
have fewer points from which content is distributed. Those in higher positions have more access to information and are
responsible for spreading content to others within the company. Of the five industries surveyed, financial services
firms had the smallest percentage of employees distributing information. Media and entertainment ranked the highest,
with construction directly behind. Because most construction projects require collaboration among several different
teams, it is essential to their productivity that members of all of those teams have access to, and the proper tools, to
share pertinent information.

Mobility Construction ranked the highest in the mobility category of the five participating industries. Since the
majority of construction tasks are performed on-site, the industry seems to have taken full advantage of innovative
ways to share project updates and specifications on the go. The Box study cites Constructech findings that the
percentage of general contractors who use tablets on the job has grown from 26 percent to 80 percent in the span of two
years.
2


Consumption of content. For the most part, the five industries Box, Inc. examined in its study created just as much
data as they consumed. The financial services industry did the least of both, the software industry did the most, and
construction fell in the middle.

Internal and external interactions. Construction once more ranked in the middle of the five industries for its overall
level of inter-industry interaction with content. Its trend of frequent external sharing, however, set it apart from the
other four; information was granted to outside parties nearly twice as often by construction firms as by any of the other


companies being examined. There are many stakeholders for any given construction project, and the cloud provides a
simple means of communicating with all of them as the project develops.

What it means. According to a forecast by technology research company Gartner, which is referred to in Box's study,
nearly 1.3 million people will be working without being tethered to a desktop computer by 2015. Further, the forecast
predicts that cloud spending will increase by 85 percent to total $244 billion by 2017.
3
There are, of course,
industry-specific obstacles that might limit companies' abilities to adopt mobile, file-sharing technologies, but most
industries seem to have at least acknowledged how helpful tools like the cloud can be, and the construction industry is
adopting new work opportunities more quickly than both the manufacturing and financial services industries. Of
course, the rapid technological growth of the digital age has its disadvantages for construction as well. Management
consultant and investment banker FMI has offered technology as one reason that their prediction for the year's increase
in construction put-in-place has fallen to 7 percent since the first quarter. Their outlook report speculates that the
increasing number of people who are able shop via websites, work from home, and entertain themselves online will
result in nonresidential construction (i.e., commercial, travel, recreation, office, etc.) gradually seeing less growth
overall.
4

Newly engineered alloy could become useful building material
Researchers at the Swiss Federal Laboratories for Material Science and Technology, or Empa, have recently
discovered a new iron-based shape memory alloy (SMA) that could prove highly useful for the construction industry.
SMAs would be particularly suited to the building of structures that need to be pre-stressed, since they can return to
their original shapes after being deformed manually by heat. SMAs that are produced from nickel titanium alloys are
expensive and cannot feasibly be incorporated into construction projects, but iron-based alloys like those created at
Empa would be much cheaper to widely produce. The other unique characteristic of the Swiss-discovered SMA is the
temperature at which the material is forced out of its shape. Typically, temperatures above 752 degrees Fahrenheit
must be applied to warp SMA, which could be highly damaging to the other materials involved in building and has
rendered SMA use in construction impractical. The new SMA, however, can be activated at a much more reasonable
320 degrees Fahrenheit.
5

A manufacturing process for the alloys has been developed by Empa, Austria's University of Leoben, Germany's
Technical University Bergakademie Freiberg, and G.RAU GmbH, also in Germany. A startup company called re-Fer
AG will begin initial distribution of the product at roughly the cost of materials made from stainless steel.
6



The current state of things

Spending. The U.S. Commerce Department reported in J une that annual construction spending in April reached
$935.5 billion, seasonally adjusted. Although little growth was reported, the new figure is still the best the industry has
seen since early 2009.
7
On the whole, construction spending this year has surpassed last year's totals by 8.6 percent.
This is largely due to the 17.2 percent increase in residential construction spending, but both nonresidential and
government spending has also increased in 2014, by 5.6 percent and 1.2 percent, respectively.
8


Job gains (and losses). The Bureau of Labor Statistics reported on J uly 3 that on the national level, the construction
industry added 6,000 jobs in J une. The gain was largely thanks to the residential construction industry, as small
comparative gains in non-residential construction jobs were nearly negated by a loss in heavy and civil engineering
jobs. Anirban Basu, the chief economist of the Associated Builders and Contractors, saw little reason for concern,
noting that "non-residential construction tends to lag that of the overall economy." Basu also noted that the national
unemployment rate for the industry is 8.2 percent, but that is not consistent across all regions. Some locations are
experiencing even higher rates of unemployment, while others, particularly in the south, are facing construction labor
shortages.
9

One endeavor that may help with the shortage of labor in some areas is the Associated General Contractors (AGC) of
America goal to hire 100,000 veterans for construction positions within a span of five years; to facilitate that goal, they
have joined the U.S. Chamber of Commerce Foundation's Hiring Our Heroes program, through which they will be
able to easily identify and recruit veterans for open spots through job fairs and other resources.
10

On a smaller scale, 30 states and the District of Columbia added construction jobs between April and May of this year,
with 40 states managing to add jobs in the last twelve months. AGC has noted that the only state to have surpassed
peak employment levels predating the recession is North Dakota. For comparison, the states with the most significant
job creation in one month's time are listed here:

Minnesota (3,800 jobs);
New York (3,000 jobs);
Colorado (2,800 jobs); and
Pennsylvania (2,200 jobs).
The states suffering the largest job losses in the same month-long period were:



Florida (6,100 jobs);
Arizona (4,400 jobs);
Ohio (3,600 jobs); and
Missouri (3,500 jobs).
For the year (May 2013-May 2014), Nevada, Florida, Minnesota, Kansas, California, Texas, and New York all
reported the most significant gains in construction employment. Among the states that lost construction jobs, West
Virginia, New J ersey, Montana, New Mexico, Arizona, and Virginia reported the worst slips.
11

AGC of America's CEO, Stephen E. Sandherr, acknowledges that although the demand for construction services has
been on the rise recently, the industry would not be immune to a slowdown in the rest of the economy's recovery.
Positive construction employment trends may find themselves reversed with changes in the pace of growth.
1
The information economy: A study of five industries, Box, Inc. (J une 2014). Available at:
https://cloud.app.box.com/information-economy-report.
2
Ibid.
3
Op. cit. note 1.
4
Digital innovation slows construction forecast according to FMI Q2-2014 Outlook (press release), FMI
Corporation (J une 4, 2014). Available at: http://www.fminet.com/news/outlook2q2014.
5
Shape memory alloys could bend the rules for the construction industry, Engineering.com (J uly 10, 2014).
Available at:
http://news.thomasnet.com/IMT/2014/07/10/shape-memory-alloys-could-bend-the-rules-for-construction-industry/.
6
Ibid.
7
The Associated Press, Construction spending reaches its highest level since 2009, The New York Times (J une 2,
2014). Available at:
http://www.nytimes.com/2014/06/03/business/economy/construction-spending-reaches-its-highest-levels-since-2009
.html?_r=0.
8
Ibid.
9
Construction industry adds 6,000 jobs in J une, BusinessWest (J uly 7, 2014). Available at:
http://businesswest.com/blog/construction-industry-adds-6000-jobs-in-june/.
10
National construction association joins Hiring Our Heroes program as part of effort to add 100,000 veterans to
workforce in five years (press release), AGC of America (J une 10, 2014). Available at:
http://www.agc.org/cs/news_media/press_room/press_release?pressrelease.id=1580.
11
Construction employment increased in 40 states and D.C. from a year ago and in 30 states and D.C. from April to
May as sector slowly rebuilds (press release), AGC of America (J une 20, 2014). Available at:
http://www.agc.org/cs/news_media/press_room/press_release?pressrelease.id=1589.



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