Procure CEO: how today’s tech can make jobs easier for contractors

Construction’s relatively slow uptake of digital technology has been a chicken and egg problem, says Tooey Courtemanche, founder and chief executive of contech specialist Procore. Lem Bingley listens

The construction industry has long been pegged as one of the slowest adopters of digital technology. In a 2016 report on digitisation across Europe, consulting firm McKinsey said the sector bumped along the bottom in digital terms, well behind the likes of media, finance, insurance, retail and manufacturing. But the sector’s appetite appears to be growing. Over the past two years, Construction News has tracked how the challenges of the pandemic have increased the uptake of project management and planning tools, as well as back-office digital payments systems.

Investment trends also suggest growing belief that construction is ripe for digitisation. In the US, investment tracker Crunchbase measured a 100 per cent year-on-year increase in funding for contech start-ups in the first half of 2021, amounting to $2.1bn (£1.6bn). Analysis firm Axeleo has measured similar growth in Europe, with venture capital for contech and proptech firms ballooning from €200m (£167m) in Q1 to €435m in Q2 and €625m in Q3 of 2021.

To discuss these trends, and the future of technology in the sector, CN caught up with Tooey Courtemanche, founder and chief executive of California-based Procore – a construction software specialist founded in 2002, which underwent a successful IPO last May.

Technology is changing

Courtemanche agrees that adoption may have been slow in the past, but he adds: “The industry has been underserved by technology, not because they are Luddites or behind the curve – there just wasn’t good technology for them to adopt.”

He describes initial generations of project management software, for example, as nothing but “CYA” tools. For those not familiar with US acronyms, CYA stands for ‘cover your ass’ – tools focused on collecting evidence for fending off lawsuits, rather than doing a better job.

The arrival of the iPhone in 2007 and iPad in 2011 were turning points towards better software, Courtemanche says. “People started bringing their iPhones to the job site [and] downloading siloed, individual apps – like a punch list or a snag list app,” he says. That trend, in turn, created the problem of isolated data, and brought to the fore the challenge of reconciling different revisions of information. That hurdle was cleared only when apps began drawing on pooled and consolidated data, managed in real time by a web-based platform.

“Live data allows everybody to be connected to a single source of truth, which was where the real value for project delivery comes from”

“Live data allows everybody to be connected to a single source of truth, which was where the real value for project delivery comes from,” says Courtemanche. “Now, the state of the art is throwing BI [business information] tools on top of that, so you can start doing predictive analytics, and you can see issues before they arise. You can see opportunities that you normally wouldn’t see, based on the ability to look at lots and lots of data.”

That whistlestop tour of the past 20 years brings us to where Courtemanche sees digital technology heading in the future. “Data in the systems will hopefully melt into the background more and more,” he says. “We will be notified, through artificial intelligence (AI), about things that are about to happen – or are happening – that need our attention. It will be much more exception-based, as opposed to combing through lots of data and trying to figure out where you are.”

The promise of being alerted to problems before they surface is a compelling one. But today, contractors are focused on more prosaic concerns, such as the rising cost of materials and the need to raise productivity in the face of wafer-thin margins. In such circumstances, investing in newfangled tech might seem like a stretch.

“We’re not a low-cost product,” Courtemanche says. “We have to provide a lot of value to our customers. Construction companies tend to be a low-margin business [where even] prime contractors run at about a 2 per cent gross margin. That means you’re always one decision away from risking the business – of going bankrupt. There’s no margin for error. A lot of the way that the industry has looked at technology over time was as a risk management tool.”

Not much can be done about external risks, such as a sudden rise in the commodity price of steel, Courtemanche argues, but firms can tackle internal factors that put profits in jeopardy. Quoting a figure of $500bn (£380bn) for the cost of waste and rework across the global construction industry, he says driving that figure down requires “getting the right information to the right people at the right time”, as opposed to sending “the wrong people to the wrong job at the wrong time with the wrong material, and maybe they install it anyway and you have to rip it out”. And if reduced error can yield a better gross margin, a firm can then become less risk averse, take on a bigger volume of work and grow, he argues.

Providing insights

Another factor at play is the sector’s perennial skills shortage and the ageing workforce in many construction disciplines. “The biggest problem we’re all trying to solve is: how do I attract and retain top talent, right?” says Courtemanche. “And the tech that you run is a big part of it.”

In the US, Procore provides software to university courses and Courtemanche says more than eight in 10 construction management graduates emerge familiar with his firm’s tools.

“Our hope is that we’re going to be able to expand that programme into the UK and it does help prime the pump when people graduate,” he adds.

Procore says it has 12,000 customers worldwide and offers a suite of 13 products. “The primary problem is co-ordination,” says Courtemanche, “so most people start with project management. The second product they buy generally is our financial management tool, [because] the prime contractor and subbies can make a lot of margin out of change orders, so you really want to track them effectively.” He adds that partner organisations provide add-ons to the core Procore tools. “We have 300 partners in our app marketplace that do crazy stuff with things like drones and using AI to count how many steel bars are delivered to a job site.”

He adds that forecasting is a “huge” concern for the sector, citing the example of a developer that has used the firm’s BI tools to link the Primavera P6 scheduling system with Procore financials, enabling it to track the progress of projects. “[Now] they know, even though the contractor says they’re on schedule, there is no way they’re on schedule because they can see their spending is way behind the curve. And that’s the beauty of bringing two separate systems [together],” he says.

“You can start looking at things early on in the job using AI… Is the job set up for success?”

This seems a particularly upbeat assessment of what could potentially be a tricky systems integration project. Courtemanche says connections are eased by Microsoft’s underlying Power BI technology, which he says provides a standardised means for splicing separate information systems. He appears most excited by the possibilities opening up by bringing together data in this way and then using AI to spot patterns.

“You can start looking at things early on in the job using AI,” he explains. For example: “Is the job set up for success? We can do cohort analysis against other jobs that are anonymised in our system, and tell you [if] your job is probably not set up for success, or things are moving slowly.”

Asked what cohort analysis means in practice, he says that Procore can draw on its “entire customer base” for trend data. “It’s truly anonymised, so there’s no tracing back to any sort of source,” he adds. “We can just give you better information based off of other folks that are similar to you, but without you knowing who they are.”

Some of the insights that emerge may not be earth shattering, Courtemanche warns. It is obvious that slip and fall accidents spike after rain, he notes, but if a system can check the weather forecast and remind project managers to warn their teams when relevant, that could be helpful. Other connections made by AI could prove more profound.

“We’ve looked at how daily diaries are filled out by field personnel,” Courtemanche says. “If they’re filled out with punctuation and spelling errors and grammatical mistakes, or if they’re filled out late in the week and not on a daily basis, we can predict schedule and budget overruns, and in some cases safety issues.” Another example he cites relates to requests for information (RFIs). “Based on where you are [in the programme] and the length of your schedule, [if] you have way too many RFIs [it] means that your drawings are crap, which means you’re going to run into problems,” he says.

While relying on AI to give project insights might seem like science fiction, Courtemanche insists it is not and suggests that the approach will quickly become routine. “Ten years ago, what was the cloud?” he asks. “[People] didn’t trust the internet, but that’s not the case anymore.”

New opportunities

Looking ahead for his own business, Courtemanche sketches out some surprising opportunities unlocked by the anonymised data Procore is amassing through its cloud-based project management tools.

One, described as a “very small, incubated project inside Procore”, would see the company tackle another pain point for contractors: insurance. Courtemanche says his company is looking to partner with an underwriter, “and start providing lower rates to contractors and subbies, because we actually know what risk profiles look like”.

He adds: “This is less because Procore wants to be an insurance company; it’s more because we found that anywhere from 4 to 5 per cent of the construction costs goes to all the different forms of insurance and we think that’s ridiculous.” In turn, he suggests, this is because insurance companies struggle to model construction risks accurately, because almost every new project is unique in some meaningful way.

Indeed, the seed for this insurance project was sown when big insurance underwriters began approaching Procore looking for project insights. “They said: we want access to the data so we can write better policies,” Courtemanche says. “And then we realised: why don’t we just do that?”

That kind of disruptive thinking is the hallmark of California’s tech sector. If construction has indeed been poorly served by tech in the past, it now seems set for a future of new ideas and new possibilities.