Construction tech startups eye big break in post-Covid-19 'new normal'

Singapore

CONSTRUCTION technology has rarely caught the spotlight in South-east Asia's startup boom, but entrepreneurs in this oft-neglected segment may finally get their chance to shine, as the Covid-19 pandemic forces the age-old industry to digitalise.

Startups told The Business Times that they have stepped up outreach efforts to acquire new customers, as Covid-19 pushes contractors to consider remote-collaboration technologies, as well as to explore new tools that could reduce the need for manual labour.

But even with the prospect of new demand, the startups also acknowledge that they must first survive the near-term sales drought, as construction firms tighten their budgets amid the downturn.

Construction tech startups have a vital role in "emerging with solutions that industry insiders would struggle to come up with", said Mukund Sridhar, a McKinsey partner who leads the capital projects and infrastructure practice in South-east Asia.

Singapore's "whole new breed" of construction tech startups has received some support from ecosystem players. "For Singapore, we are seeing a range of support measures in the form of grants, venture capital from public entities, and more intangible sponsorship, in terms of network access," Mr Sridhar said.

But changing attitudes towards digitalisation is still a challenge, noted Matthew Dewees, Asean head of architecture, engineering and construction at Autodesk, which provides the industry with critical software solutions.

"Singapore construction companies are facing challenges such as data security, effective risk management and outdated technologies. In fact, only 2 per cent of organisations have automated most of their manual processes despite strong governmental and industry push for digitalisation," he said, citing a recent study by Autodesk and IDC.

Could post-pandemic conditions create the perfect opportunity for construction tech startups to convert tech-wary contractors into new customers?

Field management app provider Novade is optimistic. The startup is seeing strong interest from contractors for its enterprise app, which can enable remote collaboration between managers and onsite workers, its chief executive Denis Branthonne told BT.

Novade's clients found that they were better able to cope with the circuit breaker measures, as managers could still monitor their resources and project completion via the app, said Mr Branthonne, whose six-year-old firm counts Samsung C&T and Boustead Projects as clients.

"Construction firms' teams will be able to restart work, while the managers can stay home and make decisions without going onsite. We are going to see the emergence of contactless construction. Data capture and analytics are very clearly accelerating," he said.

Another startup that enables remote collaboration, VRcollab, likewise sees post-pandemic conditions as an opportunity to attract new customers. The four-year-old startup's software suite enables contractors to "walk" through Virtual Reality (VR) simulations of building projects even before they are started.

"The construction industry is all about communication, from the design intent all the way down to the downstream firms," VRcollab's chief executive Tee Jia Hen said.

Pre-pandemic, many contractors did not see VR as more than a shiny plaything. Now, sentiment could shift, as contractors see the value of having a VR setup where they can predict onsite conditions, and even have virtual meetings with architects and sub-contractors.

"They are forced to work remotely now, so it's a lot easier for a tech companies like us to be effective. Previously we were a good to have. Now it's do or die," Mr Tee said.

Besides startups that enable remote coordination, those providing automation solutions could also benefit. One such startup is Ackcio, which has built a software suite, Ackcio Beam, that can monitor geotechnical indicators at construction sites, especially in challenging environments like deep tunnelling works.

Traditionally, sub-contractors would deploy workers to manually collect the data from the instruments and process it, creating a time lag and inserting human errors.

But if construction firms are forced to downsize their labour, that "opens doors" for startups like Ackcio to present cost-effective alternatives, reckons its co-founder and chief technology officer Mobashir Mohammad.

Startups that help construction firms slash costs in other ways could also gain more attention, such as Hydroleap, which provides construction sites with electrical water treatment technology to manage on-site wastewater.

Typically, firms would use chemical products to treat such wastewater, which can be costly and harmful to the environment. Hydropleap is two to three times more cost-effective, and can also cut down space requirements, said its chief executive Mohammad Sherafatmand.

To be sure, with the current financial pressures, construction firms may be resistant towards adopting new technologies. To counter this, Hydroleap has stepped up its outreach strategy.

"We find distributors or resellers that are smaller construction companies which have a fantastic relationship with the main and sub-contractors. We get our systems promoted via that. That's one of the best ways to approach them," he said.

In a similar vein, VRcollab is conducting webinars to educate firms on its product. Ackcio has used the lull in deployments during the circuit breaker period to invest more in improving its systems.

However, the risk of construction tech startups dying off amid the downturn is real, as pressures could flow down from their clients.

"At least for the next six to 12 months, the financials of the clients are going to be impacted; the truth is the clients right now are suffering," said Mr Branthonne of Novade.

But angel investor Steve Melhuish, who has backed Hydroleap among other construction tech startups, sees a silver lining.

The proptech startup scene boomed when Singapore implemented cooling measures that forced the industry to improve productivity. The same could now happen with construction, said Mr Melhuish, who is co-founder and former chief executive of PropertyGuru.

"I think some (construction) projects could be accelerated, and there will be more pressure on companies to deliver quickly, and with fewer people onsite. I think this is going to be the pressure that should lead to some changes," he said.

But until the skies clear for the construction industry, he suggests that construction tech startups seek support from existing shareholders or turn to venture debt providers to survive the winter.