Andy Verone

Well, hello and welcome back to another Contruent True Talks. My name is Andy Varone, and I will be the host for today’s episode. Joining me is a dear friend, Steve Jones from Dodge Data.

Steve, good morning. 

Steve Jones

Hello, Andy, how are you doing? It’s good to have you, good to see you. Appreciate you taking some time with us.

Andy Verone

Steve, let’s start off with just a brief introduction of who you are and what you’ve been doing. We get a worldwide audience on True Talks, so I’d appreciate you spending some time with us. Sure, sure, yeah.

Steve Jones

I’ve been in this crazy AEC industry my whole career. I did five or six years as a design build contractor, and I decided, you know, the build part’s the hard part, where all the trouble is, man. The design part’s the fun part.

So I just focused fully on design and was with a few different AE firms and ended up as a principal with a real big firm up in the Northeast that then became the main component of Stantec when they came into the US. I still got a bunch of buddies over in the Stantec organization. But I kind of thought, you know, that’ll be my career until my phone rang one day and I was invited to come and meet the founders of Primavera because they wanted to do this whole web thing.

And a buddy of mine got hired to do that. He knew the tech side, but he said, you know, I know nothing about the business. Why don’t you come over and meet them? They’d like that.

And I jumped into Primavera. We did some really fun stuff there, getting that stuff out onto the web. And then I kept bumping into an old buddy of mine who was another recovering architect named Norbert Young at these industry conferences.

And he recruited me to come over to what was McGraw Hill Construction at the time, which is now Dodge, to start a research group because, you know, this is the biggest industry on the planet Earth by quite a large measure. But because it’s so fragmented, hardly anybody knows what’s going on right next door. And so I’ve just had a lot of fun over the last 20 years now, being able to go out and do this real structured research into all the things going on all over the world and share it in a way that’s just neutral and independent.

You know, I don’t have a dog in a fight. I’m just trying to show you what all your friends and peers are doing that’s actually working and maybe some stuff that is a waste of time for you or kind of like where you are on a maturity curve and things like that. It’s just been a lot of fun to do these smart market reports.

Andy Verone

Yeah, Steven, and you do a wonderful job of them and I love your independence. And part of True Talks is really driving out truths, right? And sometimes the industry needs it, right? It needs that. 

Steve Jones

Oh yeah, because there’s enough noise and hype to go around, right? Not to find the objects out there.

Exactly. But you’re our paths have crossed for many years and my background, again, started in industry and went to tech for a while and here we are. So it’s been great having a friend and someone that really does have the passion for the industry that you need to cover.

 

So appreciate that. Steve, today’s episode, you know, we’re going to double click on the rise of the owner. And I think in my 40 year career now, I think there’s an opportunity for the owners to step up.

And because the data is so valuable now to them, to really start making some decisions on what they want from their supply chain. What’s your thoughts on that, bud? Let’s get into what you’re seeing from a perspective of the owner. And then let’s push out some truths of why it might not happen.

Steve Jones

Yeah, it’s interesting because from my background in all those years, decades in AE, I mean, the owner was everything, man. You know, the sun rose, the sun set, the owner. The owner said, jump.

You just said, how high? And that was it, you know? And then when it came into tech, especially Primavera, you know, it just seemed like, and Meridian and all these companies at the time, it was all about the GC, get the GC, get the GC, get the GC. And I’m like, okay. And then the thing which we developed at Primavera was this, it was cloud-based, but nobody used cloud at that time.

 

It was ASP, right? Application Service Provider. But basically it was a cloud-based document management system, which would allow you then to do multi-party workflows. You could assign in advance how any document was supposed to go, who was supposed to review it, and get transparency to that process.

And it was very cool. Early 2000s, they brought that out. And the people at Primavera were thinking, all right, now how do we get our GC customers, who are now using P3 at the time, to use this? And I’m going, guys, I think this is something owners are really gonna like.

 

But okay, well, you know, we belong to Curt. Why don’t you go start talking to some owners? And lo and behold, you know, boom, we had great success immediately with Intel. They plugged us into every one of their projects all over the world, about $5 billion worth a year.

 

And then J&J followed suit, and they used a consulting firm to sort of build out these workflows and stuff. And they were just rocking and rolling with the thing for about another $5 billion. And then the other Primavera sales guys got involved, and one of them got us in with NavFaq.

 

That was like $10.5 billion, you know? So it ended up that that was really what drove it, was the owners, you know? And it’s been interesting since I’ve now moved over to Dodge and been doing this research, and looking at, all right, how can owners play? The first thing that we looked at tech-wise was BIM. All the way back in 2008, Autodesk had us do the first BIM study in North America. All right, who’s using it? What are they using it for? Where are they getting the value? What’s working? What’s not working, right? It’s kind of a roadmap for everybody else to try and follow to get into.

 

And we would interview the AEs, yes. We’d interview the GCs and all that, and the owners. And the owners were like, oh, no, no, this isn’t, oh, no, no, this is for AEs.

 

Oh, no, this is for our contractor. And we got to the point, actually, a couple of years later, in 2008, we actually did a standalone deep dive report just into BIM for owners. What’s the business value of BIM for owners? Largely because we wanted the US owners to be aware of what was happening in the UK.

 

Because the UK had took five years to build out this whole structured framework of what BIM 2.0 is, and how to do it, and what to do it, what tools to use, and all that. Because they were going to say, all right, any central government funded project, which is like 35 or something percent of the whole industry over there, is going to have to do BIM 2.0. So we got to get you ready for it. And we just wanted people in the US to know the difference, right? And so we were doing studies, comparing the UK owners with the US owners, and how many of them were requiring BIM, how many of them were receiving it, how to policies about it, you know? And the UK was really into it, tiny little fragments of it.

 

But the job that I have, and my team has, is to inform, and hopefully inspire, and then ultimately influence people’s behavior to do things in better ways, right? And so if nothing else, we at least wanted the US owners to know that that existed. And then a couple of years later, Renee Tijan from the VA came to us, and she was this lone wolf over there, trying to get BIM implemented as a standard of the VA, because all those complicated projects that they’re doing, the renovations and everything else, right, mission critical stuff. And she was beating her head against the wall.

 

So again, she came to us to say, you know, give me some ammo here. And so we did a deep dive study into just what’s happening with BIM, and how valuable it is on complex projects, like healthcare, right? And that’s the kind of role that the work that we do serves very well, is it gives somebody ammo. It’s, hey, this isn’t me, right? This is a whole bunch of other owners, and big GC is doing these complex projects, saying this stuff is real, and it actually has the value.

 

And, you know, we kept rolling after that. We, and every time we would do one of these studies, we would do Australia, China, Europe, and we did the Middle East, and then we did just a slice for infrastructure, and we did just a slice for water projects. And every time we would also ask owners what was going on.

 

And we began to see that owners were starting to get some of the value, right? And, you know, as you well know, the crazy thing that we’re dealing with today is the fact that we were almost kind of too successful in this big first wave of automation technology, in that, okay, now we have very well-entrenched set of 10,000 point apps, point solutions, that don’t talk to anything else, but boy, do they do a great job for Eddie and Sally in that little department. And Eddie and Sally are gonna, you know, out of my cold dead hands, they’re gonna rip my little point solution versus more integrated platforms. That’s a whole separate struggle we could talk about another time.

 

Well, what’s interesting is that, that AE side, right, that the Bentleys and the Autodesk were driving, the visualization of that turned out to be really, really interesting to owners. Hey, could I see that BIM again? You know, I gotta show these people that BIM again. Show me that BIM again, right? Because they could actually see it now, and they could walk through it.

 

It was like magic. And for AEs, that was incredibly valuable. It was, you know, a lot of people don’t understand that architects don’t get just paid by the hour endlessly to do a design.

 

No, man, you got a fee that you put in as competitively as any contractor did, and you got a certain amount of money to get the yes. You gotta get the yes, right? And boy, did that help getting the yes. Ooh, wow, and it would make it stick too.

 

Not like, you know, we were thinking over the weekend and boom, because they could see it, right? Super powerful stuff. And then we began to see some trends where they were starting to pick up on the value of what the GCs and their kind of point solution stuff around project controls and project management, figuring out like, hey, this is actually kind of cool. And I gotta give a lot of credit to the Antevi brothers.

 

Way back when everybody else was focused on contractors, they came out with eBuilder and said, you know what, we’re gonna focus on something for owners that they could actually run a whole platform on. And it didn’t get a lot of traction early on. McGraw-Hill, my company, is actually one of the first investors in it, but it has really proven out to be a smart place to be, right? It’s like, all right, give the owners the ability to actually have transparency to the whole process.

 

Give the owners the ability to write some of this. Because what’s interesting when you deal with owners as I did for 20 years in AE, the larger organizations, these guys running these projects, they largely came from big contractors. You know, they came out of here.

 

They’re not some VP of administration. So I’m like, hey, you’re now in charge of the headquarters. They’re like, what? You can’t hold a blueprint.

 

You don’t know what to write. No, man, these guys are really savvy. They get it.

 

You give them a tool, they’re on it, right? And so that has been a very interesting transition that we’ve been watching happen up until now, the last four or five years, where they’re now not only as a rebuilder, of course, there’s Kahua and Project Meats and PMWeb and all sorts of you guys. A lot of folks are out there really trying to service that owner and give that owner the ability to process transparency, which is just a magical thing because it reduces the uncertainty in the whole situation. Because as every study tells you, people in this industry spend half their time looking for the information of what to do.

 

And so much of the time, it’s not even right. So all that stuff has really come now to give owners the ability, should they choose to, to be in a much more powerful place. And we used to do, I don’t know, maybe one owner study every few years.

 

We’ve done seven in the last 12 months because everybody’s realizing now is a time that the owner is going to and is actually taking charge. And the kinds of ways we’re seeing that play out is it began early on with just deliverables. Okay, this is the digital deliverable that we want, right? Now it’s kind of the UK model too.

 

It wasn’t so much on a process. It was when you finalize either a phase or the project, here’s the digital deliverable, the standards for that. It’s beginning to now get more into the process itself.

 

And you’re seeing a growing number of owners saying, all right, not only am I going to tell you what the digital deliverable is, I’m going to tell you what the multi-party digital project delivery process is going to look like, right? And the next wave after that, which is beginning to happen, and it’s not a majority yet, but none of these trends were majorities when they started, were they, right? Is, oh, you use XYZ for your project management? That’s cute. Here’s your login to mine and all your key trades are going to use mine, right? And so it’s, that is interesting in that you can clearly see the benefit to the owner because they’re now, every study that we do of them, they’re reporting those who can actually get their teams to use theirs. The quality of the data is just magnitudes above getting a chunk of junk dropped on your desk from ABC application at the end of that project and a chunk of junk dropped from some other one, you know, they just really love that, right? Having that quality because the other, that other trend that’s coming along and pulling is the digital twin, right? I need good, clean data to put into these digital twins because now I can see how I can tie capital planning to actual design and construction to decades and decades of really optimizing my management for it.

 

So it, the tools are there. We’re seeing an increasing number of owners taking hold of that and getting in the driver’s seat. It ain’t everybody yet by any means, right? But again, as with all these things, they will get simpler to use.

 

They will get more comprehensive in terms of their functionality. They’ll get to where they can talk to other systems that owners have internally that they need in order to get on the financial systems and things like that. That will happen, right? You know that well, you’re able to drive that, right? That’s gonna be the way, right? Now that I’m a granddad, I think about what kind of world my grandchildren and Keith Richards are gonna have if we’re leaving for them.

 

It’ll be unrecognizable in terms of the process of where it begins. And it’ll almost be like owners can press an easy button and take advantage of what will happen also, which is a whole lot more factory built, modular and offsite construction, right? But the process will just be so much more defined and regular standardized. We’re doing a big owner study now for the folks at the National Institute of Building Sciences, NIBS, because they’re in charge of rolling out the BIM standard, right? And they’ve got the brand new on 4.0 coming out and they really wanna get owners to say, yeah, okay, you’re gonna do this project for me.

 

You’re gonna do it with this BIM standard, not whatever you came up with on your own. That’s cute and all, but no, this is it, right? And so we’re out there right now doing a study of owners across the US to say, all right, you’ve been generating and collecting this tsunami sea of data for all this time. What are you really doing with it? How valuable is it? How consistent is it? To what degree have you ever applied standards to it? Do you see the benefits of having it when it’s much more consistent? Yeah, I know we’re gonna get the big thumbs up stuff on that when it comes through to say, yeah, man, this data standard, please, thank you, right? Let’s all get behind that one.

 

And that’s all gonna push towards basically owners being fully back in the driver’s seat on at least the larger ones, the serial owners, the guys who do enough to make a dent. 

 

Andy Verone

Steve, a couple of questions. Yeah, yeah, go ahead.

 

I mean, just let’s double click on a couple of these points. Is it time for the owners to rise because of the complexity of contracts? And how is that helping them avoid risk? I mean, do you think that’s part of it? I mean, every project you see today, if it’s a complex data center or maybe a biopharma, right? Is part of this, I gotta have that transparency because of the complexity or and or the contracting, right? The actual risk that’s in the contract. What’s your thoughts on that? 

 

Steve Jones

You know, it’s interesting because the traditional contracting, the years where you’re designed to build approach to contracting was all about cascading risk, right? Cause the owner could kick everything to the GC.

 

The GC tried to kick everything possible they could find under the couch down to the trades. The trades tried to kick it down to their suppliers and distributors and everything else. I mean, everybody’s trying to kick it down to somebody else.

 

At the end of the day though, we do a fair amount of work with the sureties and the insurance companies. And we’re doing a big project for Liberty Mutual right now just to try and measure the positive impact that tech is having on this. They’re all for helping owners to consolidate that risk and go ahead and assume it as long as you can take the damned uncertainty out of the process.

 

That’s the thing that kills everybody. On paper, this is a simple business. Hey, here’s a design, go build it.

 

I’ll move in on Wednesday. No problem with that, right? But it’s all that baked in uncertainty. You know, and then there’s things that are difficult for anybody to control like the supply chain.

 

But then again, the supply chain is built on that old model of what the architect expects this sink. And then the GC actually has a better deal through the distributor for that sink. And can the architect then look at some paper and approve it? And then we’ll do that change.

 

As opposed to, oh, I’m buying this kind of nicely sophisticated chunk of a building from factory B over there. And they’re being assembled on the job site and all that. We have just finished a big study for the Department of Energy because they love the energy efficiency of modular buildings.

 

But putting federal money behind it, the labor unions get right up in their face going, you’re taking jobs off my job site. What is all that about? And they didn’t have any ammo to go back with. And so we just finished this study for them looking at, all right, the spend, right? The capital money that’s getting spent, where is it getting spent? How is it getting spent? And what factories are people now building these things? And what’s that look like in terms of pay scales? And then the improved safety and the improved environmental impact of all that too.

 

You know, this is really a net benefit for the whole industry, that kind of thing. But I do believe that owners will increasingly, and the insurance guys and the surety guys that we talked to were behind helping them do that. Just assume more of it right at the center, practically where it belongs, instead of having attorneys kick it down stream to everybody else who can barely handle it.

 

Let’s keep it where it belongs, right? With the owner. Hey, I’m putting my capital risk to build this new factory or whatever it is. I’ll assume the risk because I now have a platform that I can see and control.

 

I can run what the process is supposed to look like when you do it for me, right? And I’m much more comfortable doing it because I get much more reliable results than I ever did. I think that that contracting world is going to simplify and consolidate. I mean, those of us, you know, you and I have talked about over the years have been expecting that there would be a great deal more consolidation among the service providers.

 

There’d be fewer, bigger AEs. And they may even be melding with the CMs, right? And that the CMs would be becoming much more dominant and almost like owner’s reps and that there’d be fewer, bigger trades. And frankly, for an awful lot of work, people would just hire a trade to do it because they’re the ones turning the wrench anyway at the end of the day.

 

I don’t need a bunch of guys in a trailer moving paper around all day. And that necessarily hasn’t happened, okay? We still have a pretty highly fragmented set of companies providing this. I don’t know whether or not this simplified contracting may help to do that.

 

Some of this stuff is generational as you know, right? If I’m a guy in my fifties and I got to where I am by making sure I bid the heck out of everything, get the low bidder and my shareholder value and all that, okay? You’re, as I say, with anything innovative in this industry, everybody wants to be first to be third. You try it, totally bollocks it out, right? Get somebody else in there to figure out what you did wrong. Hey, call me, baby.

 

I’m all in. But until then, I’m doing it the old tried and true way. Yeah, it could be better.

 

Yeah, it’s probably a little burnt and around the edges, but hey, it gets it done, right? Okay, so I got to get those people off to Florida. And what we’re seeing now is an awful lot of the, especially like in the BDC groups, there are now people in their twenties and thirties and early forties and they really are ready to drive different processes and they’re open to almost anything, right? They’re not bringing so much of that baggage of the old ways of doing things have to be the best ways of doing things. So some of this is going to be generational.

 

I mean, this is a people business at the end of the day. As much tech as we want to throw at it, it ends up being a people business, right? I think we may begin to see some company structure changes and some player changes, especially as we get more of these offsite and factory built type manufacturers playing in there. What’s that going to do to the whole supply chain and everything else? So there’s a lot of interesting stuff that’s going to be happening in the next 10 years.

 

Andy Verone

Yeah, it’s really good. I think for me, and I just smile because you and I are kind of the same generation. I think back into my early days, the art of the change order, right? That’s what you did.

 

You signed a contract and you were so happy when you had your first change order approved. So that’s right. And you got it on a fax machine.

 

We’ll see if that changes. But Steve, I think for me, like you, fascinated with the technologies that are out there. But at the same time, I think cost is so important to all of those models, right? Even in the earliest days of building information management and if cost was that one dimension that was kind of always left on the side, right? You said it this morning, beautiful visualizations.

 

I need to see that again, pull it up. You got to have that cost dimension in there as well because by the way, the pretty picture comes with a cost, right? So of course, yes. I’m super excited about what we’re doing from empowering the owner with that visibility on cost and change, most importantly, the change aspect of it.

 

So I think once we see that, those coming together, again, like you said, more platform-based. It doesn’t have to be everyone. One company doesn’t have to own the platform.

 

You just have to be plugged into the platform. You got to be- That’s right. Yes.

 

Steve Jones

Yes. It’s like any kind of cloud application. You just want to have access to it.

 

You don’t have to own SQuAD. No, you just want to be a player at the table. 

 

Andy Verone

One thing that just, to me, it’s, you know, I had my year anniversary a few weeks ago here at Contrium.

 

The thing that, and you said it earlier, like our business, if you look at our business in the UK, right? We’ve worked on some amazing projects, London Underground, HS2, National Highways, but it went back to your point. It was owner-driven standards, right? Why haven’t we seen that more in the US? Why haven’t we seen the government agencies say, you shall use these techniques. We can leave technology by the side.

 

These programs, these people processing technologies to drive more efficiency. I’m puzzled by it because I think if I look at my business in Australia, New Zealand, or even in Europe, even in South America, there seems to be more standardization around what we do in the US. It’s just wide open.

 

Yeah. I think some of this has to do with fear of owning the problem means that then you are liable for it. Now, it was part of the pushback that we saw from owners very early on in BIM.

 

If I tell, if I mandate it, if I tell people they have to use BIM, if they don’t have licenses, I got to pay for their licenses. If they don’t have training, I got to pay for their training. If they kind of mess it up and it doesn’t work as well as it should, which it never does the first time, I kind of own that problem.

 

And that whole thing we just talked about in terms of, oh, no, any kind of risk, I could, it smells like risk, I’ll push it down, right? And that headset has to change. But the only thing that is going to change that headset is comfort and more certainty, right? And I think that the kind of the trend that we’re seeing is that as transparency to a process increases, certainty increases and comfort increases, right? But they kind of have to go with each other. And then, you know, what our job is, is to go out and collect what the best things that are happening and then get that out there in our neutral format in front of people so they can see.

 

They don’t have to wait till it happens on their project to trust it. If they can say, well, here’s 50 other, 100 other people that look a lot like me, they’re, a lot of them are having this good success. I can trust this going forward, you know? But it’s the problem we face is that the downsides are pretty big, right? If your company is counting on you to get that plant done because you need to have those, you know, whatever the units are that you got to produce next year and there’s a problem and you don’t get that plant done because you tried to do something cool and different and new, it’s not good for your career.

 

I remember back in my days when I used to go to a lot of Curt meetings and, you know, that’s the organization of the big owners and I was back there evangelizing all this tech stuff and I became good friends with one of these guys. He was a top, I’ll call him the fortune 50 company, okay? And he goes, Steve, listen, I can see a door at the end of the corridor I got to get to. As I’m moving down that corridor, a rabid wolverine can come out of a side door anytime and attack me and as long as I got my feet on the ground, I think I know how to deal with it.

 

But now you want to get me on some jet propelled rocket spaceship thing to go down that hallway, you know, and I don’t have that trust anymore. You’re adding to my risk. And I went, wow, here we are all thinking that, oh no, look, we’re going to reduce your risk.

 

But the implementation of that in an organization that’s used to doing things a certain way, that actually adds risk and so an awful lot of what we’re trying to focus on now and help people understand is, okay, here’s this thing. How do I actually do it in my organization? Right? What’s that toolkit? What’s that how-to manual look like? Do I pilot it? Do I pilot it in parallel with traditional processes so I can make sure? And then that, yes, that’s an additional. It’s that, how do I actually make that change and drive that change management process within my organization? I think that’s something that has been a little bit neglected in the shiny object glamour of bringing in new technology.

 

It’s all right. How do I actually do this thing in my org? And so we’re trying to put some focus on that in some of the studies that we’re doing. What looks like the right successful process for doing that? Because I think that’s what a lot of people would like to change, but they’re afraid of effing up because if they eff up, it’s on them.

 

Andy Verone

Change management aspect of that is huge. I try to coach up my team every day because it’s easy to put benefits analysis together. It’s benefits realization.

 

In a perfect world. You know, exactly. These are so many factors in that.

 

I mean, by the way, the adoption, just the adoption rate. And so things I like to do is, you know, now that you’re on system, how many workflows have you produced? How many change orders have you actually automated, right? Those are little things, but back to your comment on change. That helps because it makes it believable, right? It makes it.

 

Steve Jones

Yes. Actually, it’s real. It’s tangible.

 

Andy Verone

Yes. Steve, listen, we’re running up here on the top of the hour. I do want, so three things for me.

 

In a couple sentences. State of US infrastructure. A lot of money was earmarked.

 

Where do you see that? What is it? Is it, are we going full speed in investing in US infrastructure? Is that money still turning colors or getting down to projects? What’s your personal opinion on that?

 

Steve Jones

Yeah, we use a graphic like the united fund, like a thermometer, right? Across the 5 types of different projects it’s earmarked for, in terms of how much has actually been released. We are, big picture, kind of halfway through releasing those funds. I mean if any of you guys drive around a lot you see this stuff is at work. I live in New York City, and it’s at work in NYC, as well as other places that I go. Yes, it is happening. 

 

The reality is that even that amount of huge money wasn’t enough to take care of the actual infrastructure problem that we have here. So, it’s not as if that is going to be a one and done. It’s very important to get that going, but unfortunately, we’re going to have to start investing pretty significantly in things to even keep up with where certain other countries are. In terms of rail, I was in Japan recently. It just makes you ashamed when you see how completely totally together that is. In other parts of the world, they prioritize it and it was more important to them all along, so there you have it. 

 

I think right now, we’re seeing a reasonable amount of flow. When we do our economic forecast projections for each one of the sectors of the economy, infrastructure is still a really smart place to be. It’s good business. There are nice long term projects. It’s going to continue to be robust, but we are showing it tailing off when that five year funding wraps. So, somewhere we are going to have to figure out how to keep affording investing in it, because its not going to – it doesn’t fix the problem. 

 

Andy Verone

To your point, my daughter spent 6-7 weeks studying in Italy, and her first feedback to me is why don’t we have trains in the U.S. She took trains everywhere. 

 

Steve Jones

Its what you do

 

Andy Verone

Steve, I want to have you back in early 2025. I want to go deep on modular offsite. Something that I did a lot of studying on. The pandemic actually really slowed it down. The supply changes kind of put a pause on that. 

 

Thank you, man.