Mar/Apr 2013

When Associate Senior Editor Laura Black approached me with the idea of covering the heavy M&A (merger and acquisition) amongst the software community as of late, I knew it was going to be a great story.

Not simply because I knew Laura would attack the story with the same passion and tenacity she does with every piece she writes for Constructech, but beacause I knew this was a story that need to be told. And I am not simply talking about tallying up the number of M&As that have occurred as of late and applying some blanket statement. No; I knew Laura was ready to dig deep into the details and come out on the other side to describe what all of this software wheeling and dealing actually meant to you—our readers—and how it will influence your business plans ahead.

The way I see it is we are witnessing a fundamental shift in the way technology for construction will be structured for years to come. And this will no doubt have a direct impact on the way your company operates from here on out.

Let’s me explain by examining one of the more recent deals in the space. Now, I must admit that not much surprises me when it comes to technology. However, even I was taken a bit back when I heard the news last September that MC2 was being acquired. Kevitt Adler’s company is a stalwart when it comes to construction estimating, and much credit needs to go to all who have been involved with making MC2’s ICE the powerful system it is today.

But now it will be a part of German-based RIB Software, which brings a very intriguing product to market, iTWO. This 5D planning and construction solution is built for an interactive modeling process. The company, which has big plans to migrate U.S. construction firms to its product, is one we have had on our radar for a while now. This move announces its presence with a bang, as it underscores a great shift occurring in the way estimating will be carried out in this brave new world of BIM (building information modeling).

The pure idea of 5D estimating necessitates tying the model to the cost estimate and being able to take all objects defined in a model and accurately estimate the entire cost of the project. As software providers move toward completing the full landscape of BIM, they are going to need the process of translating that model to the schedule (4D) and estimate (5D) to be as seamless as possible. And every one of you has a war story involving costly integration bridges, so it makes sense that if software providers are going to sell you on the concept of this fully integrated model there can be no hiccups along the way. So that leads to acquisition.

Therein lies the rub. Suddenly we are in this environment where larger companies are acquiring every piece of the puzzle they can gobble up where even the estimating stalwarts like MC2 and WinEst (acquired by Trimble last July) are being scooped up. I see both positives and potential negatives.

In a sense such deals are now making the decision to fully embrace BIM end-to-end for you. Whether you are fully on board or not, the software community is aligning to become that full-fledged BIM provider.

Is it good for the market now that traditional standalone estimating packages are part of bigger integrated systems? To the big boys, perhaps. But what about those companies that simply want to estimate better? For the latter, the full concept-to-completion might not be in the plans. But then again is the market telling you that this should be in your plans? Much is up for debate, and I am all in favor of the market moving forward, but I just hope its direction is being dictated by the end users and not the software providers. If anything, it makes for a great backdrop to our annual Top Products.

Mike Carrozzo
Chief Editor

M&A: Say What?

When I launched Constructech in 1987 the tech industry was made up of just a handful of companies. But over time, more companies emerged seeing the opportunities and possibilities to make a lot of money in supplying tech to contractors, builders, and owners. Well, more than a decade later it’s a different story. During the past 12 months alone, we have witnessed a heavy dose of mergers and acquisitions. Some industry experts say this consolidation will be good for the industry because the big tech providers can offer really good integrated solutions.

For instance, let’s look at the hospital arena and the heavy consolidation it has just experienced. We’ve also observed a lot of growth there too, but hospital M&As in 2012 are believed to be the highest water marks of nearly a decade according to industry watchers. Now some of that could be attributed to healthcare reform and a host of other things, but you simply can’t rule out traditional factors such as economies of scale and marketshare, let alone not having access to real cash.

These are real issues that corporate owners, GCs, and builders face every day. So taking these factors into account, what’s in store for the technology sector that supplies the construction industry?

From where we sit, brace yourself. It looks like M&As will continue to make for a bumpy ride for 2013. And yes, you will be affected. Be it good or bad, consolidation is almost always felt one way or the other. I’m not saying consolidation is bad, but don’t let your vendor tell you that you won’t notice. That’s like saying the Chicago Cubs can win the World Series … It’s possible, but just not probable, at least not anytime soon.

Happy Reading!

Peggy Smedley
Editorial Director

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