The Bleedover Between Proptech and Contech

A built asset, whether it is a home, a commercial building, a school, a power plant, a cell tower or fiber optic network--anything--goes through several phases in its lifecycle.

• Planning

• Design

• Construction

• Handoff

• Productive Life

• Decommissioning

• Replacement

For decades, software vendors have talked about the importance of addressing this entire lifecycle. ARC Advisory Group coined the term Design, Operate and Maintain to refer in simpler, three-letter-acronym terms, to this lifecycle. the ISO 55000 Standard provides guidance for optimizing value over this lifecycle, with the requirement that data from across the lifecycle be contained in a single database (or, these days, at least a federated system of databases). This is really the underlying thought process between TLAs like DOM, Asset Lifecycle Management and even four-letter acronyms like CALM (Collaborative Asset Lifecycle Management).

The goal of this thinking and the ISO standard is to optimize value of the asset and asset data while reducing cost. If data on a finished project is handed over to the project owners in a binder or in an unstructured series of digital files, even ordering replacement components or consumables required to sustain the asset will be difficult. Call it a digital twin if you like, but if data on the asset is in a well-rationalized series of databases or nested tables:

• Maintenance requirements for a building or other asset and its constituent components can be ported directly to a maintenance management solution

• Contractors engaged in lifecycle extensions, interior buildouts or remodeling will have precise data on the project to work from, including insights on what is enclosed by drywall, or mechanical specifications and tolerances of HVAC or production equipment.

• Maintenance technicians get access to as-designed data and as-built data, and augment that with as-maintained data as a roof membrane is replaced with a different system, facades are improved or mechanical systems are upsized or components are replaced.

• As the asset gets to end of life, designers can assess how the asset has changed over its lifecycle, how it performed from an energy, cost or even a revenue standpoint, and take these insights into consideration in designing a replacement or a next generation asset.

Given this conventional wisdom, the convergence of emerging software categories Proptech and Construction Technology seems necessary, and we are seeing some movements in the market to bring them together.

Contech vs Proptech

Per ProptechBuzz, proptech is defined as:

"The intersection of real estate and technology. It encompasses using technology, software, and digital platforms to streamline, innovate, and enhance various aspects of the real estate industry. This proptech definition encompasses various applications, from online platforms for property searches and virtual tours to software solutions for property management and investment analysis."

Asset Management Software

I would expand this definition to include specific technology product categories that have to do with the physical plant:

• Field service management and asset management software for property maintenance

• Lidar scanning and other reality capture used to document as-built and as-maintained status for instance in preparation for a refit or lifecycle extension

• IoT-driven technology for asset condition monitoring--an example being the Wint plumbing leak detection system

The above technologies also have application in construction, most notably for remodeling or larger projects undertaken on a built structure. 

Asset Design Software

Software used for architectural design or engineering also has a role to play across the DOM continuum. Data from design should pass freely into project management tools used in construction to support accurate execution. In value engineering and in design-build delivery systems, there will be a good deal of interplay between design and construction.

After project hand off, the design and the as-built should ideally be available as a digital twin--really, a nested series of tables or confederated databases that describe the asset to support operations and maintenance phases.

And then during construction, the components, materials and systems specified are sometimes passed over for others that are more available and affordable. The difference between specifier and buyer--between designer and contractor--should be addressed by software capable of capturing and memorializing an as-built record of what was actually delivered to the project owner.

Over time, this digital twin should be updated as an as-maintained record--documenting changes or improvements, reliability of asset components and structural or interior building changes made over is productive use.

Asset Planning Software

Regardless whether a contractor and the developer are the same entity, the developer will need to balance construction cost with the market value of the project. This extends beyond the need to ensure that the project can be profitable, to the desire to maximize profitability given a specific property and project type.

Intelligently making decisions of this nature requires software that can combine historical construction costs with forecasted property value and revenue data. Zebel has perhaps the first offering in this space.*

The Case for Combining Proptech and Contech

Business software has long recognized the bleedover between construction and property management--Sage 300 Construction and Real Estate, for instance, targets contractors who maintain ownership of projects post-completion. There are differences in the general ledger and charts of accounts when a contractor is also the developer and owner.

But more often, a built asset is designed by one entity, constructed by another and occupied by another. Sometimes, one entity owns and operates the asset and other companies occupy it, often with multiple buildouts and refits over the life of that commercial building.

Here are three reasons we may see an increasing number of software products that either encompass more phases of the asset lifecycle across Proptech and Contech or allow for integrations to enable asset data to flow freely between stakeholders in different parts of the lifecycle.

1. Shrinking margins and the cost of money could drive vertical consolidation and a return to the owner/builder model that was common up until a few decades ago. Panatonni is going this route, acquiring warehouses to convert into data centers for an attractive margin. Build to suit is also gaining traction in major markets like Chicago and vertical markets like data centers.

2. Building performance will be an increasing priority, and porting energy consumption, daylighting and other data into design software will become increasingly important to optimize designs for next generation structures.

3. As complex assets like wind power generation plants come online, we may see more operations, maintenance and service contracts which would incent a contractor to consider cost of operation during design and construction.

4. In the U.S., 98 percent of large architectural firms and 72 percent of contractors use BIM, but what remains to be seen is how quickly this data will be exposed to the operational phase as a digital twin or other well-structured file, provided at handoff.

*Disclosure: Rathmann Insights has performed consulting work for Zebel.