The tech revolution is here, why is the construction industry reluctant to adapt?
The construction industry is one of the oldest in the world, alongside others such as mining, agriculture and steel. You would expect that such an ancient industry that has expanded through the years in a constantly changing world would be very quick to adapt to change. On the contrary, this sector is often accused of being stubbornly rigid and slow to embrace change.
The construction industry is one of the oldest in the world, alongside others such as mining, agriculture and steel.
You would expect that such an ancient industry that has expanded through the years in a constantly changing world would be very quick to adapt to change.
On the contrary, this sector is often accused of being stubbornly rigid and slow to embrace change. We are currently going through the third digital revolution and every other industry, from media to banking, tech, entertainment and creative arts is rushing to digitise processes. But guess who’s not ready to embrace tech yet?
Linus Wahome, an IT expert and the Founder of Manpro Systems LTD, joined the construction industry four years ago after noticing that quite a number of contractors were constantly busy running cash-flow-heavy businesses, yet complaining of low profitability and lack of money.
Though many contractors would have pinned the low profitability to the high cost of materials, diminishing profits in the industry or other unavoidable circumstances, Wahome saw a strong link with information management issues. Projects were managed manually, and by the time the contractors realised they were making losses, there was no way to recoup.
“The industry is very reactive on decision making because projects are managed manually. I think with technology, contractors can easily detect potential losses, delays and variances and therefore act in time to save money,” says Wahome.
With this knowledge, he designed Manpro, a tech solution tailored for the African construction market. The construction management system, Manpro, is an award-winning tool lauded for its ability to control cost. The tool helps contractors avoid cost overruns through real-time tracking and reconciliation of actual construction costs, material usage and labour productivity with alerts on any potential deviation from estimates before they happen.
Shocking Reception
“This being my first tech product for the construction industry and having deployed tech solutions in other industries such as the finance sector where technology is easily adopted, I expected a warm reception from construction stakeholders where the business case for the technology is very apparent, but I was wrong,” says Wahome, noting that perhaps this is because this industry is one of the oldest in the world, therefore certain things have been cast in stone. In addition, decisions typically involve multiple stakeholders, which makes getting everyone on board quite challenging.
Linus Wahome is an IT expert and the Founder of Manpro Systems Ltd.
The biggest excuse most contractors present is that technology is an extra cost, but they do not realise that they lose more without the right technology in place. For instance, it is very difficult to curb the theft of materials and avoid ghost workers or idle labour when tracking things manually.
“The winners in this industry will be those who use technology to become more efficient in cost management and resource utilisation because then they can be competitive in their pricing,” argues Wahome.
Warming up?
But despite all these challenges, he notes that there are significant wins as the industry warms up to tech, albeit slowly - over 1,000 projects have been managed through Manpro since the business started in 2018, leading to significant cost savings.
Having a locally innovative tech solution is no doubt a big win for the industry. For a long time, tech-savvy professionals have had to look for foreign tech solutions which may be too expensive. Besides, Kenya’s industry is unique, especially since a big percentage of it is dominated by informal service providers, foremen or store managers.
Having a locally innovative tech solution is no doubt a big win for the industry. For a long time, tech-savvy professionals have had to look for foreign tech solutions which may be too expensive.
“My challenge is to universities and colleges to be deliberate in equipping the new crop of construction professionals with construction-related tech skills to change the general mindset of the industry”.
He concludes by pointing out that though certain challenges that affect profitability such as fluctuation of the prices of building materials may not be addressed by tech, as long as the bigger problem is due to lack of transparency, control and accountability, technology can play a huge role in cleaning up the industry.
Chaotic informal sector
Like Wahome, Alex Kamanga, Founder and CEO, Fundis Inc., also gained interest in the construction industry after noting glaring inefficiencies in this space. Kamanga trained as a legal professional but later transitioned to entrepreneurship. His first business involved labour subcontracting, and entailed linking contractors with casual labourers, popularly known as fundis.
The inspiration to set up this business came from seeing big construction projects being contracted to foreign contractors between 2015 and 2016. He often wondered whether the informal fundis had a chance of surviving these changes, and along the way, he decided to try and formalise the informal construction sector, which accounts for the biggest percentage of labour in the industry.
“Fundis are hired and fired casually, which makes their professions, be it plumbing, painting, masonry, roofing or woodwork, unpredictable,” says Kamanga.
Being in the construction industry as a sub-contractor was like a lens that would help him further identify other shortcomings in the industry.
“I noticed that most were hired on site and the contractors or project managers did not have time to verify their expertise since they don’t show up with their CVs. Should they hire inexperienced workers, they will only realise this hours later, after wasting time and construction materials.”
But this is not the only shortcoming he observed.
“A technician can be contracted to work in Kileleshwa, when he lives in, say, Membley. This means they have missed lots of jobs simply because there is no platform that alerts them of projects near them,” observes Kamanga.
That is how his app, Fundis Inc, came about. He wanted to create a platform that addresses these shortcomings. The platform targets contractors, homeowners looking for specific technicians, and service providers relying on the informal construction sector. The artisans are identified, trained, and certified and their credentials are captured under their profiles on the app, such that those looking to hire can make informed choices.
Just like Wahome, Kamanga too had high expectations coming into the industry with such a brilliant solution.
Suspicion
“We thought we would hit the market and those we were targeting would embrace the solution excitedly. We expected the same kind of reception that tech got in the finance and transport industry,” says Kamanga.
As it turned out, those they approached were unwilling to pay for the solution. They realised then that the construction industry viewed those in tech with suspicion.
Explains Kamanga, “Some wondered whether we were just data mining to report to the tax collection authority. In addition, the industry is closed, with a lot of barriers to entry. I think it will take an ‘outsider’ to pinpoint challenges that slow down the industry's growth, but unfortunately, the industry is not very welcoming.”
Though the commercial real estate sector and tier-one contractors with big projects have been very receptive to the platform so far, Kamanga notes that smaller contractors have been the hardest nut to crack, yet they are the most critical decision-makers.
Alex Kamanga is the Founder and CEO, Fundis Inc.
Perhaps due to limited resources, they cannot afford to maintain a regular payroll. The common attitude is that tech is an extra cost. On the contrary, tech solutions can cut down costs.
“If a contractor has a project in Nakuru for instance, they don’t need to bring fundis all the way from Nairobi and provide shelter in addition to wages, while they can find accredited workers through apps. We’ve been working on changing these mindsets for the last six years now.”
The silver lining
On the bright side, fundis, especially the younger crop, have been very receptive to the app. Kamanga and his team have further focused on working with 18 to 35 years-olds, while creating more opportunities for young women, and providing digital literacy skills to the older folk, whom, he says, have an underappreciated wealth of skills and knowledge.
The app is not only providing a tech solution but is also bringing some order into the informal sector that has been disregarded for a long time.
“It is surprising that fundis who make up a big percentage of the workforce in construction do not have formal bodies representing them or a unified voice, yet the other stakeholders are not embracing the idea of a formal way of hiring. With the app, the fundis are experiencing an organised way of working, they are networking and sharing work opportunities,” says Kamanga.
Kamanga is confident that the tech revolution will eventually be accepted, especially after markets outside of Kenya began expressing interest in their platform. For now, Fundis Inc. will focus on the Kenyan market, with the aim to provide well-trained labourers who understand the market’s standards.
The most exciting milestone so far, as Kamanga puts it, is the recognition for prior learning in Kenya.
“This began with the previous government which recognised master craftsmen. Many fundis do not have formal training even though they are good at their work. With recognition for prior learning, they are embracing their work as a career, and this makes them more receptive to formal tech tools. We’ve also gotten into dual upskilling - we’ve managed to bring fundis on the same page as manufacturers, since they have the experience and knowledge that can help manufacturers improve what they put out in the market.”
Embrace tech
Looking ahead, Kamanga says the construction and the larger property industry should be more open to technology.
“It still baffles me that we have failed to efficiently digitise the land selling and buying industry. There is a lot technology has to offer. For instance, geo-tagging can help triangulate and locate parcels of land remotely. Approvals for buildings can also be digitised easily. Buying property and building should not be as scary as it is now in Kenya.”
Kamanga has been reading a book that was written in 1984 by S.M Wamae, titled, How to win in the coming Jua Kali Boom. The author predicted how the Kenyan economy would shift in six phases - Kamanga thinks Kenya is in the sixth phase.
This is where people are shifting from the formal to the informal sector due to unemployment, but are bringing systems into the industry.
“More and more people are coming into the industry to solve needs that have existed for a long time, therefore, those in this space cannot afford to sit back and risk being rendered irrelevant,” concludes Kamanga.
