Construction is second worst investor in IT

The amount of money that construction firms spend on IT still falls short of most other British industry sectors, despite doubling in real terms over the past 20 years, according to a report by Construct IT.

The industry’s spending on IT stands at £2,556 per head. By comparison, retail spends £2,951, transport £4,800, and manufacturing £2,790.

However, there is evidence that the industry is beginning to make up for decades of technophobia. Total annual spending on IT in 2009 was £1.2bn compared with £600m in 1989. According to the National Computing Centre, the increase moved construction from bottom place in terms of spending per head to second bottom, ahead of the health sector (£1,364).

The figures are due to be published in the first detailed report into construction’s IT expenditure in 18 years, and have been released exclusively to Building. The report is based on a survey of construction’s top 200 companies, including building and civil contractors, developers, housebuilders and designers.

According to the survey’s director, Ken France of consultancy the Knowledge Practice, contractors and consultants such as architects spend the least (£2,685), and housebuilders and developers spend the most, with an average of £4,390.

A spokesperson for the National Federation of Builders blamed the fact the industry was still one of the worst performers on the downturn: “Contractors are aware of the benefits IT can bring to their businesses, particularly in terms of increased efficiencies, but the biggest barrier at the moment is finding the capital to invest in upgrades. This is particularly true for SMEs, even those with full order books.”

Many firms who took part in the survey reported a bleak outlook for IT spending in the next three years. Ninety per cent of firms predict no increase in their IT budgets in 2010.

The squeeze has already been felt by many, with capital spending on IT having dropped by an average of 33% in 2009, and some firms implementing a total freeze on all but the most essential investments.

According to the report, so far, four out of five firms have reduced staffing and reviewed support contracts.

Sixty per cent of firms have put hardware renewal and desktop upgrade projects on hold, the study found. France said the trend now emerging was one where firms would no longer manage increasingly complex

IT assets in-house but would instead use a range of commoditised hardware and data storage services that are delivered via the internet, giving savings of 20% to 30% on current levels.

Software was the only area where the level of IT expenditure was predicted to rise, with 33% of all respondents predicting increases of 10% for 2010. Newer technologies being looked at to cut costs include “cloud computing” – shared resources that can be accessed by any internet device – and “virtual desktop infrastructure”, where all the computer applications are held on a central server remotely.

The Building IT 2010 report will be published by Construct IT on 10 May.