Tech Solutions for City Affordability

The Growing Affordability Challenges in U.S. Cities

American urban centers are currently grappling with a significant affordability problem. Between May 2020 and May 2021 alone, residential property values experienced their largest year-over-year surge in over two decades, coupled with a 24% increase in the cost of building materials.

Rental expenses have been outpacing income growth for renters for the past two decades. The construction sector is vital to addressing these critical issues, but is it adequately prepared to do so?

A Global Industry Lagging in Productivity

The Scale of Construction

The construction industry represents a $10 trillion global economic force, providing employment for over 200 million individuals worldwide. Despite its substantial size and importance, the industry’s annual labor productivity has only seen a marginal increase of 0.1% each year since 1947.

Comparing Productivity Gains

Since 1947, remarkable advancements have been made in both technology and scientific understanding. Sectors like agriculture, manufacturing, and retail have achieved substantial productivity improvements through innovations such as advanced bioengineering and streamlined logistics, resulting in more affordable goods for consumers.

These industries witnessed labor productivity increases exceeding 8x between 1947 and 2010, a stark contrast to the 1x increase observed in construction.

Underinvestment in Construction Technology

The Persistence of Manual Processes

Considering all this progress, why do a significant number of construction professionals in the U.S. continue to depend on manual, paper-based methods for essential aspects of their work?

Historical Neglect

There has been a considerable lack of investment in technologies that could mitigate the current crisis. Historically, entrepreneurs, technology developers, and investors have not dedicated sufficient time to fully grasp the unique requirements and operational procedures within the construction industry.

Low Technology Spending

Currently, over $800 billion is spent annually on commercial construction projects, yet only a small percentage of this investment is directed towards construction technology. In recent years, construction has consistently ranked lowest among all industries in terms of technology expenditure as a proportion of revenue.

At just 1.5%, this figure is significantly lower than the overall industry average of 3.3%, and considerably behind sectors like banking, which allocates 7.2% of its revenue to technology.

The Cost of Materials and Inefficient Processes

Material Costs

A substantial portion of annual construction spending—exceeding $250 billion—is allocated to construction materials, and these costs are continually rising. Materials typically account for approximately one-third of a project’s total expenses.

However, many contractors still rely on outdated, manual workarounds—predating the invention of smartphones—to manage material orders.

Burden on Workers

This situation places a heavy burden on both on-site and office personnel, who spend excessive time on paperwork, tracking down materials, and resolving errors.

Inefficient Request Management

Office teams receive hundreds, even thousands, of material requests from the field, often submitted in various formats—including handwritten notes on readily available surfaces. These requests must be manually converted into purchase orders and sent to suppliers via email, spreadsheets, and PDFs.

Order information is then re-entered into accounting systems, and constant communication is required with suppliers and field teams to monitor order status.

Consequences of Chaos

This disorganization frequently leads to errors, missed opportunities for cost savings, and project delays.

Accounting Challenges

Accounting teams struggle to reconcile invoices and verify payment accuracy, as well as track rebates and payment terms across multiple vendors.

Foreman Time Allocation

Foremen, whose time is particularly valuable given the current labor shortage, often spend less than 30% of their time on their core responsibility: building. The lack of a streamlined system for selecting and tracking materials results in frequent instances of incorrect materials being delivered to the wrong location, disrupting project timelines and generating significant waste.

The Potential of Technology

Technology can significantly simplify the ordering and management of materials, enabling both on-site and office personnel to concentrate on more critical tasks. It can also help contractors identify and correct common errors before they impact projects and promote more sustainable building practices.

Building for the Future

Buildings are fundamental to our communities, serving as hospitals, schools, homes, and businesses. They shape our daily lives. If maintaining and constructing these essential structures were more affordable and efficient, the benefits would be substantial.

A New Generation of Workers

A new generation of construction professionals, accustomed to mobile technology, is entering the industry and expects modernization. By improving the supply chain, we can make construction faster, cheaper, and more efficient.

Addressing Societal Needs

We can effectively address pressing societal needs—such as building affordable housing and upgrading our nation’s infrastructure—and create more accessible and affordable cities for everyone.