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Construction as a Mature Technological System

The Construction Industry Technological System – Part 2

When viewing the construction industry as a technological system the age of the system is the most obvious feature. Most of the various elements of the modern industry came together over the nineteenth century, pushed along by ever larger and more complex projects building canals, roads, bridges and tunnels, railways, factories, offices and housing. During the 1800s the world was urbanising as population rapidly increased and major cities attracted migrants and businesses. Heavy industry and manufacturing spread around the world, from England and Western Europe to America then Japan.

The three megatrends in construction in the nineteenth century were industrialisation, mechanisation and organisation:

  1. Industrialisation of production methods with standardisation of components and mechanised mass production, and the development of new materials like steel, plate glass and plastics. This led to a new design aesthetic, with more modular components and internal services, and separated the envelope from the structure for the first time. The infrastructure of materials suppliers and equipment producers developed, and scientific R&D joined the industry’s traditional trial and error approach to problem solving.

  2. Mechanisation of work based on steam power, with cranes, shovels and excavators common by the mid-1800s. This in turn led to a reorganisation of project management, with the new form based around logistics and site coordination to maximise the efficiency of the machinery and equipment.

  3. Organisation of the modern construction technological system was clearly in place by the mid-1800s. Large general contractors had emerged by the 1820s, undertaking projects on a fixed-price contract often won through competitive bidding. This system of procurement was supported by the new professions of architects, engineers and quantity surveyors, which had emerged during the eighteenth century and were institutionalising in early nineteenth century London.

It’s a remarkable fact that the construction industry we have today is a technological system that is over 150 years old. As a mature technological system, this can be expected to be in many places a quite concentrated industry, run mainly by finance and management types, and having a high degree of technological lock in due to the age of the system. Many of the industry’s global leaders are well-established, Bechtel for example is over 100 years old, and others like Hochtief, Skanska, and AECOMcan trace their origin stories back over a similar period. Shimizu is over 200 years old.

Building and construction as an industry cluster has quite different characteristics to the industries studied by Thomas Hughes, and how the modern form of the industry developed over the twentieth century is another interesting story in its own right. The most obvious difference to the industries used as examples by Hughes is the size and diversity of the building and construction industry, because the industry includes the enormous number of firms and people engaged in the alteration, repair and maintenance of the built environment as well as contractors and suppliers for new builds. The broad base of small firms is a distinctive feature of the overall construction industry as we define it. However, the part of the industry that is engaged in delivering projects (that is part of a problem-solving technological system) is made up of larger firms than these small, typically family-owned, businesses.

The contractors who delivered major projects ended up as the core of the construction technological system at the end of the twentieth century. By this stage the system had a clear outline, and a very clear structure, for bringing together the producers, suppliers and materials needed for building and engineering projects. It’s problem-solving prowess in delivering increasingly challenging and complex projects had never been greater, and the system had stabilised around a very particular form of procuring, financing and managing those projects. In many respects the industry is an exemplar, as with its flexibility in adjusting to changing levels of demand and managing temporary organisations. On the other hand, as a mature system, it is conservative. To quote Thomas Hughes again:

A grievous flaw in the reasoning of enthusiasts for radically new technology, as contrasted with that of the advocates of postmodern architecture, lies in the former’s failure to take into account how deeply organisations, principles, attitudes, and intentions, as well as technical components, are embedded within technological systems. (1989: 459).

With the various combinations found of the complex array of professional institutes and organisations, government regulations and licensing, standards and codes, insurance and finance, the ‘embeddedness’ of the construction technological system is also wide and deep. Nevertheless, towards the end of the second decade of the twenty-first century there are signs that a new wave of technological change is coming to affect the construction industry. Just how radical these new inventions will be remains to be seen, in Hughes’ sense of radical. Despite the extent of technological change expected over the next few decades, it’s unlikely some entirely new industry will appear to take the place of building and construction. There’s no obvious opportunity for a system builder to reinvent an industry as old as time.

What is likely is a series of interconnected technological advances that will fundamentally change many aspects of the current technological system over time. Many of the market niches currently occupied by major manufacturing firms may disappear over the next two decades, replaced by new production technologies, for example. However, because the system is mature the effect of new technology and the changes it brings will happen slowly across the industry as a whole, and unevenly because of the many small and medium size firms. There may, however, be a class of more nimble, faster growing small firms around the frontiers of the technological system.

How firms utilise technological capabilities will increasingly differentiate firms within a diverse, location-based industry. It is widely recognised that there are differences between industries in the way that technology is adopted, adapted and applied, but the differences within industries has generally got less attention. For building and construction this is a far more significant driver of change than many people seem to think. Not only because of the number of small and medium size firms, but also because of the size and reach of the major firms. A global contractor will have 50,000 employees (give or take), suppliers of basic materials and sophisticated components are large industrial firms, many publicly listed, and so on. These firms have the management and financial resources required to invest in twenty-first century technology, if and when they decide to do so.

While construction is a mature system and thus a conservative industry, it has also become used to a constant flow of new and upgraded products and services from suppliers. There is a quite efficient system in place to promote and distribute these new products and services, and many have to survive in quite competitive markets. This is an interesting dichotomy, at the system level the industry is in the consolidation and rationalisation phase of Hughes' Cycle 2, but many firms in the system are heavily engaged in Cycle 1 R&D and innovation as they seek growth and competitiveness. As the underlying pace of technological change will continue to increase, due to the constantly expanding range of new scientific discoveries and recombinations of existing knowledge, this type of Cycle 1 churn will be typical of most industries. For both industry majors and frontier firms this ongoing Cycle 1 churn offers many possibilities.

How this will play out is interesting question. The only previous comparable period of disruptive change in the construction industry occurred during the nineteenth century, and if that is any guide we can expect technological changes to operate today over the same three areas of industrialisation of production, mechanisation of work, and organisation of projects that they did then. And, just as in 1800 when no-one knew what the industry would look like in 1900, today we can’t really see the industry in 2100. That is a long way out, and we can only guess at the level of future technology. We can, however, use what we already know from both history and the present in a sensible way, to form a view of what is possible over the next few decades based on what is understood to be technologically feasible.

Hughes, T.P. 1989. American Genesis: A Century of Invention and Technological Enthusiasm 1870-1970. Chicago: University of Chicago Press. New ed. 2003.

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About the Blog

This blog is concerned with the organisation of the building and construction industry, in the economic sense of combining factors of production to create output.


The modern industry's origins in the 19th century can still be seen in many of its characteristic features, and many contemporary issues are also found in projects from the past.


Like many industries, it is being reshaped by unprecedented rapid and widespread advances in materials, technology and capability.

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