Why Construction Firms Fall Behind — And How to Fix It
The construction industry today is often described as “the industry that technology left behind” (Harvard Business Review, 2023). If you're a project lead or operations manager, you’ve likely felt this firsthand. While other sectors have raced ahead with digital tools, many construction firms remain bogged down by outdated systems and a leadership mindset of “if it isn’t broken, don’t fix it.” Company heads who resist change are inadvertently keeping their organizations stuck in the past. The result? Siloed tools that don’t talk to each other, inefficient processes, and a ripple effect on productivity, costs, and client satisfaction. In this post, we’ll unpack these challenges with data and insights from McKinsey, Autodesk, Dodge, GlobalData, and HBR – and explore how embracing the right digital systems (like those from Holistc™) can finally pull construction operations into the 21st century.
Outdated Systems and “We’ve Always Done It This Way”
In far too many construction companies, the technology backbone is decades old. It’s common to find project teams juggling Excel spreadsheets, clunky legacy software, or even pen-and-paper workflows. This technological inertia often starts at the top. Many construction executives came up in the industry long before cloud apps and AI – their comfort zone is the familiar status quo. As one observer put it, a prevalent attitude is “if it isn’t broken, don’t fix it,” which leads firms to prioritize short-term comfort over long-term innovation (PBC Today, 2024). The irony is that while those old systems might “work” in a basic sense, they’re failing the business.
Consider the hidden costs of legacy IT. Organizations across industries spend as much as 60–80% of IT budgets just to maintain old systems, leaving little room for new investments (Gartner, 2023). Construction is no exception – maintaining an outdated project management platform or server-based filing system eats up resources and creates technical debt. And as systems age, they become harder to integrate or upgrade. Critical data often ends up trapped in a patchwork of software that doesn’t integrate, or in scattered files that require manual updates. In short, outdated systems act like an anchor, dragging down efficiency and agility. A former U.S. government CIO likened legacy systems to “barnacles on the hull of a ship – they slow everything down” (Tony Scott, 2019). For construction firms, those barnacles take the form of slow reporting, duplicate data entry, and lack of real-time visibility. It’s a drag you can’t afford in today’s fast-paced environment.
Leadership Resistance: When Company Culture Blocks Change
Why do these problems persist? A major factor is resistance to change at the leadership level. It’s frustratingly common: upper management says they want improvement, but balks when it comes to investing in new digital tools or changing processes. In a recent global survey, 77% of construction companies admitted they find adopting new technologies challenging (PlanRadar, 2023). The human side of this resistance is even more telling – in over half of the countries surveyed, “entrenched stakeholder perspectives” (essentially, stubborn mindsets) were cited as the primary obstacle to tech adoption. In many firms, the stakeholder with the entrenched perspective is the very person at the top.
Construction has long been a tradition-bound industry, often led by executives who built their careers on experience and intuition rather than digital savvy. It’s no surprise that the sector’s workforce skews older – many professionals are nearing retirement – and this demographic is often less inclined to embrace new technologies that require retraining or a new approach (PBC Today, 2024). If the CEO or owner isn’t enthusiastic about a digital transformation, that skepticism cascades down the ranks. Middle managers get the message that “our leadership doesn’t really buy into this,” and employees stick to the familiar ways. Culture comes from the top. A company head who dismisses cloud collaboration tools in favor of phone calls and paper reports sets a tone that technology is not a priority.
The cost of this mindset can be severe. McKinsey has noted that construction is one of the least digitized sectors, and companies that lag in digital adoption risk falling behind more agile competitors. In one Harvard Business Review analysis, the author observed that construction is routinely derided for its “lack of technological sophistication” (HBR, 2023). This reputation exists for a reason: too many leaders have been slow to champion change. And yet, interestingly, most industry leaders know the future is digital – 79% of AEC executives say their firm’s growth depends on digital tools (Autodesk, 2024). The will to change is there in theory; it’s the execution that’s faltering. Leaders who do take the plunge on digital initiatives often find that change management is hard – workers push back, pilots stall, ROI is unclear – and some end up abandoning the effort prematurely. But giving up only perpetuates the cycle of inefficiency.
Siloed Tools = Siloed Teams
Even when construction companies use modern software, it’s often in silos. Perhaps the estimating department uses one application, the scheduling team another, and field supervisors rely on emails and WhatsApp – none of which sync in real time. Data becomes fragmented across these tools. One consequence is that people spend an absurd amount of time just transferring or searching for information. Studies have found that construction professionals waste about 35% of their time on non-productive activities like looking for the latest drawings, updating outdated spreadsheets, or resolving data discrepancies (FMI/PlanGrid, 2018). That’s roughly 14 hours per week per person lost to tasks that add no value. When systems don’t talk to each other, humans become the middleware – manually inputting the same data in multiple places, emailing updates, and piecing together the puzzle of “what’s actually going on” in a project. This not only saps productivity, it opens the door wide to human error.
The cost of these disconnects shows up dramatically in project outcomes. Poor data and miscommunication – inevitable byproducts of siloed systems – are responsible for nearly half of all rework in U.S. construction (Autodesk/FMI, 2021). Rework is one of the biggest profit-killers in construction, and if 48% of it stems from bad information flow, that’s a huge inefficiency directly tied to tech shortcomings. Globally, “bad data” is estimated to have cost the construction industry a staggering $1.8 trillion in 2020 (Autodesk, 2021) when you factor in avoidable rework, delays, and lost productivity. These aren’t just IT problems – they are business problems. Siloed, outdated tools lead to teams working with inaccurate or late information, causing mistakes that have to be fixed at additional cost. One Dodge Construction Network report found that 39% of contractors still rely primarily on spreadsheets and manual methods for critical project planning, and as a result about 20% of their time is spent on low-value tasks like chasing down information (Dodge, 2022). Think about that: one day every week lost to work that could be streamlined or automated with better systems.
Communication breakdowns are another symptom. Without a connected platform, a simple status update can require numerous phone calls and meetings. It’s no wonder 59% of project owners report frequent communication breakdowns with contractors (Dodge, 2022). When each stakeholder is using different tools and tracking their own version of the truth, everyone has a different story. This lack of a single source of truth makes it extremely difficult for stakeholders to get reliable, up-to-date information about project status. Important details fall through the cracks, and issues aren’t discovered until they’ve become expensive problems. In short, siloed tools create siloed teams, and the whole project suffers from the left hand not knowing what the right is doing.
Eroding Productivity, Rising Costs
The combination of hesitant leadership and disjointed systems has led to a well-documented productivity slump in construction. Productivity in the construction sector has essentially flatlined for decades, even as other industries have made great strides. A McKinsey analysis found that globally, construction labor productivity increased a mere 0.4% per year from 2000 to 2022 – only 10% total over two decades (McKinsey, 2023)m. By contrast, the overall economy’s productivity grew 50% in that time, and manufacturing by 90%, thanks in large part to technology adoption. Alarmingly, McKinsey also noted that in the early 2020s, construction productivity went into reverse, declining by 8% globally from 2020 to 2022 (McKinsey, 2023). This stagnation carries a hefty price tag. Projects take longer and cost more than they should. Indeed, large construction projects typically run 20% longer than scheduled and up to 80% over budget (McKinsey, 2016) – a statistic that has hardly improved in recent years. When people are tied up doing duplicate work or fixing avoidable errors, that’s wasted labor which drives up costs with no value added.
In practical terms, a stagnant productivity rate means tight margins and frequent overruns. Time is money in construction, and inefficiency costs time. Manual processes and lack of real-time data lead to delays in decision-making – site crews might be waiting on approvals or updated plans because information isn’t flowing fast enough from the office. Or consider how a lack of integration between budgeting software and field reports can delay the detection of a cost overrun until it’s too late to correct. All these little inefficiencies aggregate to shocking totals. For example, one study calculated that avoidable rework, conflicts, and data hunting cost U.S. construction $177 billion a year (Autodesk/FMI, 2018). Globally, delays and budget overruns stemming from poor productivity are holding the industry back from meeting growing demand.
Crucially, these inefficiencies also hurt the client experience. When a project runs late or over budget due to disorganization, the client ultimately pays the price – literally and figuratively. Clients today, whether they are public project owners or private developers, expect a higher level of transparency and professionalism. They are used to tracking deliveries and status updates in real time in other areas of life, and construction is no different. If your company can’t provide a client with a clear digital trail of where a project stands (e.g. up-to-date dashboards, online reports, instant answers), that client’s confidence erodes. Even worse, some clients now demand digital workflows as a condition of doing business. Over two-thirds of project owners now contractually require contractors to use digital documentation and practices on the job (Dodge, 2022). They do this because they know digital processes yield better outcomes and data. A contractor that is stuck in analog mode risks looking like a liability to a savvy client. In the end, poor technology adoption doesn’t just lead to internal cost overruns – it can cost you future business. Missed deadlines, surprise change orders, and communication lapses all tarnish client satisfaction and your reputation. In an industry built on relationships and repeat business, failing to meet modern expectations can be devastating.
A Path Forward: Embrace Digital (Wisely) or Fall Behind
The picture may look grim, but there is a clear way out: true digital transformation, led from the top. This doesn’t mean chasing every shiny new app or automating for automation’s sake. It means leadership recognizing that investing in integrated, custom-fit digital systems is as crucial as investing in equipment or talent. The goal is to reduce human error, eliminate time wastage, and create visibility across operations – all the things your outdated setup is lacking. As one GlobalData survey highlighted, the top drivers for technology investment in construction are improving productivity (cited by 61% of firms), competitiveness, and cost reduction (GlobalData, 2023). Those are exactly the areas where the right digital tools deliver results. In fact, companies that have embraced digital solutions report an average 23% improvement in overall efficiency and 17% reduction in costs on projects (Deloitte, 2023). The benefits are real: fewer mistakes, faster communication, and data-driven decision making that keeps projects on track.
However, to get these benefits, leadership must champion the change. This means breaking down the silo mentality and choosing platforms that connect your entire organization – from field to office, across departments. The ideal scenario is a unified system that handles project management, scheduling, budgeting, and communication in one place (or seamlessly integrated places). Off-the-shelf software can help, but often construction companies find that one-size-fits-all tools don’t match their unique processes, leading to workarounds and user frustration. That’s where custom-built solutions come in. Holistc™, for example, offers tailored business automation systems designed for real-world operations. The right custom system can adapt to your workflows instead of forcing you to change everything overnight. It can pull together data from formerly siloed tools into a single source of truth. The payoff is immediate: when your PMs, engineers, and field supervisors are all on one platform, information flows without friction. No more re-keying data or hunting down status updates – everyone sees the same dashboard in real time. This kind of visibility means issues are spotted and addressed sooner, schedules and budgets become more predictable, and your team can focus on building, not paperwork.
Implementing a new system isn’t trivial – it requires training, process adjustments, and patience. But the alternative is to continue drowning in emails, spreadsheets, and confusion. Strong leadership will anticipate the change management aspect: involve end-users early, provide training, and set clear expectations that the old ways are ending. It’s also wise to start with high-impact areas (maybe document control or RFIs) as a pilot, prove the value, and then scale up. Celebrate quick wins – for instance, when a digital RFI workflow saves a week on approvals, or automated reporting cuts manual work by 5 hours a week, make sure the whole company hears about it. This builds buy-in. The cultural shift is just as important as the tech itself. Leaders need to send the message that digital is not optional; it’s the new standard. As one insightful quote goes: “You do not rise to the level of your goals; you fall to the level of your systems.” If your goal is to deliver projects better, faster, and cheaper, you must elevate the level of your systems.
Conclusion: Lead the Change or Be Left Behind
The construction industry’s productivity woes and inefficiencies are not mysteries – they are the direct outcome of decisions (or indecision) at the leadership level. Outdated systems and a resistance to change have acted like a ball-and-chain on the sector, but it doesn’t have to remain this way. The data is overwhelming that digital tools – when properly implemented – drive efficiency, reduce costs, and improve project outcomes. Perhaps more importantly, they relieve your people from drudgery and set your business up to meet the expectations of modern clients and a younger workforce. In an era where nearly 80% of construction leaders acknowledge digital is key to growth (Autodesk, 2024), the real leadership test is who will take action and who will lag behind. For operations managers and project leads tired of fighting against the current, it’s time to push your executives to see that digital transformation is not a risk – it’s an opportunity and a competitive necessity.
Firms that fail to modernize will continue to see low productivity, high rework costs, unhappy clients, and talented staff drifting to more forward-thinking competitors. On the flip side, those that invest in the right custom-built systems and foster a culture open to innovation will reap the rewards: less wasted time, fewer errors, and projects that consistently hit their marks. The choice for any construction company today is clear – lead the change or get left behind with rising costs and shrinking margins. The tools, technologies, and providers like Holistc™ are ready to help you build a connected, efficient operation. All that’s needed is the leadership will to pull the industry out of its outdated habits and into a more productive future. The companies that make this leap will not only thrive in terms of profit and performance, but will also set a new standard for client experience in construction. It’s time to break the cycle of “we’ve always done it this way” – the future of construction is digital, and it’s already here for those ready to lead.