Almost every construction project comes with two unavoidable truths: unexpected delays, and extra costs.
But while construction projects facing procurement snags while running up labor costs are nothing new, the solutions for the $1.7 trillion global construction materials sector are.
“Identifying the right products and materials for the particular needs of a construction project is a pretty cumbersome process,” Forest Flager, CEO and co-founder at Parspec, told PYMNTS.
That’s because many of the delays faced by construction firms stem from the need for practitioners, when selecting products, to manually compare design specifications for the products they need to technical product documentation hosted across thousands of manufacturer websites.
This process, particularly when repeated for every construction material needed for a job, can be both time consuming and error prone. Procurement costs in construction are nearly double those in other, comparable industries, Flager explained.
“The way contractors typically interact with the supply chain is they basically send drawings and specifications to a distributor, who is essentially the middleman in that supply chain. And the distributor has the responsibility to match suitable products available to design requirements,” he said, noting that contractors will typically entertain bids from a handful of distributors for every project.
The construction industry relies heavily on commercial distribution, with about 85% of construction products being sold through this channel and the remaining 15% coming from retail sales.
Parsec’s focus is on lighting and electrical components, Flager said, pointing out that over 4 million different product families exist in the vertical, each with unique technical requirements and dimensions — a strong proving ground for Parsec’s intelligent product selection platform.
The company, which just announced its $11.5 million seed round Feb. 27, aims to leverage artificial intelligence (AI) to address the challenges faced by architects and structural engineers in finding the most suitable products for their projects, considering technical requirements, cost, and availability, and also works with distributors to make the matching process easier and more efficient.
AI and other technologies can reduce the time spent on product selection and quoting by up to 80%, Flager said. This efficiency improvement enables distributors to respond faster, interact with more buyers, and make better recommendations for projects.
Construction projects involve collaboration among different teams, and traditionally, information exchange has been challenging due to the reliance on documents like PDFs and Excel sheets.
When asked about the impact of AI on the construction industry, Flager highlighted the opportunity for AI to bring efficiency and transparency to the field. Construction projects involve collaboration among different teams, and traditionally, information exchange has been challenging due to the reliance on documents like PDFs and Excel sheets. But with advancements in AI, new solutions are well positioned to make data more accessible and useful to the construction community.
“Like many industries, COVID highlighted logistical challenges for construction,” Flager explained. “Long lead times on construction materials and products was a real issue. Transparency around that information was also a challenge.
“As we move forward, particularly related to the material supply chain, we’re going to see a lot better information exchange, collaboration and real-time data around things like pricing and lead time.”
Still, the impact of many an innovation has suffered failures due to poor timing and a lack of ability to scale.
Regarding the readiness and willingness of the construction sector to embrace AI-driven tools, Flager rated the industry as a whole at around a 5 or 6 on a scale of 1 to 10, noting that despite the acknowledged need for improved access to information, the construction sector still remains highly fragmented and lacks large companies that can enact top-down change.
“Construction is project based, so different teams are working together, typically on different projects. And because of this, everyone diverts down to the lowest common denominator for exchanging information. Traditionally, that has made it really hard for the data to be structured enough to do analytics on,” he explained. “Despite the fact that the information exists … it is just time-consuming to access it.”
That’s why, from a need perspective as it relates to AI tools, Flager said he would rate the construction industry at “a 9 or a 10.”
“There’s an opportunity to bring more accessible product data to other stakeholders in the process, including designers who would like information about availability and pricing when they’re setting their requirements; contractors who are interested in those same attributes. And manufacturers today would love better information about what is being demanded in the marketplace and understanding, project by project, what are the different criteria that customers are most interested in,” Flager explained.
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