Digitalization of construction (Russian market)

2024

Results of 2023, the situation in 2024 and the prospects for the digitalization of construction market

Turning year

The past 2023 was for the digitalization market of the construction of Russia a year of changes and new prospects, significant transformations. On the one hand, state support and the introduction of innovative technologies have stimulated progress in this area. On the other hand, an increase in the credit rate, the upcoming abolition of preferential mortgages, a shortage of highly qualified personnel, an increase in the number of contractor bankruptcies and other factors forced developers to postpone some investment projects, or reduce the pace of their implementation.

The companies studied changes in the composition of vendors in the market and updates of their products, formulated new and refined old functional requirements, taking into account both import substitution and ongoing changes in legislation.

The state continued to play an active role in the digital transformation of the industry, providing various support programs, benefits and incentives. And the prepared regulatory framework significantly influenced the functional requirements for software for the transition to electronic document management.

Deputy General Director for Science of SiSoft Development JSC Mikhail Bocharov:

A big role here is assigned to the development of state information systems, including the GISOGD of Russia and the regions, as well as the ISUP. In addition, the information had a great impact on the industry that the date of the start of the mandatory application of the information model in housing construction - July 1, 2024 - will no longer be postponed.

The development of information modeling of construction facilities (BIM), artificial intelligence, machine learning, digital building twins and other technologies has helped companies improve project management, optimize existing business processes, reduce time and resource costs, improve work quality and labor safety.

Dmitry Kiselev, CEO of Qlever Solutions:

The emergence and spread of new technologies in the construction industry, such as BIM, process automation, the use of drones, etc., all contributed to increasing the efficiency of projects and reducing costs.

At the same time, negative factors were observed on the market. The shortage of personnel remained an acute problem, especially in the IT sector. And the associated increase in wages further influenced the inability to invest in digitalization.

Dmitry Samozhkin, SEO "Airplane 10D" (group "Airplane"):

It is especially worth noting the fierce competition for IT specialists, the level of which has grown significantly over the past two years, when the supply in the senior and middle segments has decreased. The market for professional expertise has narrowed significantly, and given the global demand for digitalization in various areas of the economy, a change in the trend should not be expected in the near future.

On the contrary, the growing interest in digitalization has attracted new professionals to the industry, which has led to an increase in the popularity of educational programs and digital courses in construction.

Competition in the market intensified, which stimulated companies to improve processes and more actively introduce new technologies.

In light of the withdrawal of foreign companies from the market, import substitution has become one of the key triggers of development. Domestic IT companies have actively developed and offered their solutions that can replace foreign counterparts and ensure data security.

Kirill Kirilenko, business analyst at Netrika:

If in 2022 everyone mainly only talked about the need for an intensive transition of the construction industry to domestic software and about design in TIMs, then 2023 actually became a year of real progress in import substitution and mass creation and implementation by companies of domestic developments.

However, it is too early to assess the results of import substitution, since the process continues, and the future is not obvious.

Evgeny Yurevich, CEO of Project Point:

Some market participants do not understand how digitalization affects business profitability, strive to realize only the necessary minimum that is required by law or focus on other areas for digitalization that more linearly affect profitability, for example, sales digitalization.

The strengthening of ties between market participants - representatives of development, developers, contractors, manufacturers of building materials and developers of Russian engineering software - contributed to synergy to create truly demanded products necessary for the industry.

Andrey Shakhramanyan, General Director of SODIS Lab Group of Companies:

The demand from developers and industrial enterprises for digital services aimed at automating and optimizing the processes of managing investment and construction projects, construction and operation management processes continued to grow.

Despite the difficulties, the market has great potential. Government support, innovation and import substitution can be catalysts for its growth.

It is possible to create a sustainable and prosperous digital ecosystem in the construction industry through the joint efforts of the state, business and the IT community. However, to achieve long-term success, a number of problems need to be solved, such as unwillingness to invest in digitalization.

Evgeny Yurevich, CEO of Project Point: {{quote 'In industrial construction, the situation is different from industry to industry. Some retain or increase investment programs, some have practically curtailed them. But even industries and companies that have not reduced their investment programs are in no hurry to allocate money for the digitalization of construction. This is due to the fact that there are more critical processes related to operational activities, where you need to engage in import substitution.}}

Boris Hapachev, CEO of PropTech Group:

Digitalization is actively gaining momentum. The past year is characterized by the active interest of construction companies in digital products for managing the design, construction, sale and operation of buildings. Developers are increasingly paying attention not only to solutions aimed at working with final buyers, but also bring the figure to the construction site. The main drivers of the industry's interest in new technological innovations are the increasing needs of residents for the speed of construction and the quality of housing and the requirements of legislation aimed at improving the efficiency and safety of construction processes.

Kirill Kirilenko, business analyst at Netrika:

The dynamically changing regulatory framework governing the digitalization of construction has led to a situation where the software market did not have ready-made, so to speak, "boxed" software that meets the latest requirements. Therefore, many developers and state authorities of the entities acting in the construction sector were forced to independently quickly finalize the solutions they use in the construction industry.

Import substitution comes to the fore

2023 was a turning point in the development of information technologies for the construction sector of Russia. The issue of import substitution came to the forefront, stimulating the state and private companies to invest in the development and implementation of domestic software products in virtually all areas of the construction industry.

Igor Pidtykany, Aibim Implementation Project Manager:

If in 2022 there was some confusion in the construction sector, in connection with the departure of foreign vendors, then in 2023 large Russian companies entered the market with deliberate formalized requirements for Russian software. We received dozens of technical assignments for the comprehensive digitalization of enterprises, taking into account import substitution.

Kirill Kirilenko, business analyst at Netrika:

Despite the fact that foreign platforms are in no hurry to leave the Russian market, at the end of 2023, more than 350 software products were registered in the list of Russian software for urban planning of the Ministry of Construction of Russia.

Experts state a steady trend towards a decrease in dependence on imported software (the share of which, by the way, in the field of digitalization of the development cycle was not so large), although it may take at least 5 years to completely "close the gestalt" of import substitution, according to certain optimistic forecasts.

The fact is that some foreign solutions with unique capabilities or technical features cannot be immediately replaced with domestic counterparts without losing functionality.

At the moment, several dozen titles cover a significant share of the processes of developers and developers. Russian IT companies actively offer competitive solutions that meet the specific requirements of the industry.

Boris Hapachev, CEO of PropTech Group:

Some of them completely copy the departed products, but there is a large layer of solutions that are based on Russian construction practice, our processes, NTD requirements and build solutions initially on the methodology of our construction projects and our realities, which makes the introduction of such products faster and easier.

Andrey Shakhramanyan, General Director of SODIS Lab Group of Companies:

As for the products related to design, here we are slightly behind the foreign ones in terms of functionality, but, nevertheless, we are increasing this potential. As for products related to the management of investment and construction projects, as a rule, our products are more economically profitable and more functional in terms of adaptation to the specifics of the Russian construction industry.

Despite the successes achieved, import substitution has a number of problems. Lack of qualified personnel and experience, limited functionality of some products, resource intensity and duration of software development and implementation/replacement, as well as compatibility problems when transferring models from imported programs - all this requires a systematic approach.

Director of the BIM ASCON division Dmitry Demin:

As a developer and integrator of software for digitalization of construction, we see that in 2023, solutions for organizing pig launchers and CAD systems with the ability to inherit information from closed formats are still in demand. We are faced with tremendous demand for replacing foreign solutions, especially software for the general data environment (SOD). For the company, this is a challenge - to "digest" so many projects, since each replacement is a full-fledged implementation project. We increase our integrator resources, recruit specialists in the BIM division and in regional centers.

The difficulties faced by the business arise due to outdated technical infrastructure, the need to invest in its modernization, and the restructuring of many internal processes.

The greatest difficulties are associated with the implementation of BIM technologies, the introduction of ERP into business processes, the use of Big Data tools.

Unfortunately, a significant amount of domestic solutions today do not take into account the specifics of the industry (regulatory requirements, peculiarities of relations with contractors, etc.), offering the functionality of working with typical business processes (procurement, work with documentation).

Some of the largest construction companies, without waiting for a market response, have chosen their own development path, creating their own interoperable products (IT companies aimed at promising development also follow this path).

Dmitry Samozhkin, SEO "Airplane 10D" (group "Airplane"):

A significant number of developers who a few years ago faced the lack of the necessary software began to develop it independently. "Aircraft" also followed this path, and we immediately made a strategic choice - not to create separate solutions for each process, but to build a single platform that will easily allow end-to-end data transfer. This is how the 10D Aircraft system appeared - a platform of IT products for controlling and automating the entire construction cycle. Today, these are already 38 related modules or 7 large complex products, each of which closes the turnkey task: AI Monitoring, "Quality of construction and acceptance of apartments"; Procurement Management, Security, Development Management, Documentation, Engineering.

This approach allows you to optimize the IT landscape: do not work with a puzzle of several dozen sometimes poorly suited solutions from different vendors. This is a big plus, since there are no failures and data loss in the chain, the burden on the IT staff is significantly reduced.

The choice of complex products simplifies implementation, training and further support.

In 2023, the fuel and energy complex enterprises approached the use of Russian products very actively, as regards both projects related to production management and the direction of industrial construction.

In the field of civil engineering, a pool of leaders is allocated, gradually switching to Russian software or testing it, but so far it is impossible to talk about the mass nature of this process.

At the same time, there are small companies that use not complex domestic solutions, but services for individual processes - for example, document management or monitoring work at the construction site.

Some companies are simply not ready to part with foreign software, in which they invested heavily and, based on its use, built their business processes and trained specialists.

Evgeny Yurevich, CEO of Project Point:

Those who decide on the choice of software for digitalization face a large number of solution providers. Many vendors and products appeared literally in the last 1-2 years. Large developers have also brought their solutions to market. The choice is complicated by an overabundance of solutions, the declared functionality of which needs to be checked, and ultimately postponed.

Those who may not make a choice and renew foreign cloud software, or support purchased licenses, use this and are in no hurry to allocate resources for the transition to domestic software.

Deputy General Director for Science of SiSoft Development JSC Mikhail Bocharov:

The main difficulty continues to be the resource intensity of the implementation of complex solutions. Russian developers take this into account and create product configurations that have, possibly, less functionality, but are available for implementation now. Systemic support for the state is still crucial. An important role is played by innovative sites - SEZ, IT and industrial parks and similar projects that provide preferences to residents, as well as creating cluster synergistic interaction.

Dmitry Kiselev, CEO of Qlever Solutions:

In 2024, import substitution in the field of digitalization of construction will continue to gain momentum. Increased government support will contribute to the growth and expansion of the influence of national IT companies. Infrastructure and ecosystem development will continue to support domestic projects, including the creation of innovation centers, accelerators and incubators.

To solve difficulties, companies can cooperate with scientific and research centers, attract qualified specialists, actively participate in government support programs and invest in the development of their own competencies.

A New Stage for the IT Construction Market

Since 2020, digitalization of the industry has continued to develop, and by now more and more developers are thinking about digitalization, especially due to the factors that influenced the industry in 2023.

2024 marks a new phase for the construction IT solutions market. In a changing economic environment, companies are focusing more on sustainability and innovation. New technologies are used to improve energy efficiency, preserve the environment, and develop new materials and construction methods.

AI for design and construction, import substitution are still in focus. Digitalization of sales continues to actively develop, which can be indirectly judged by the growth of online transactions for the purchase of real estate.

However, with the digitalization of the construction cycle, so far not everything is so rosy: most companies are limited to the design stage. Thus, this area should be outlined as one of the next important stages of market development.

Companies should remember that today developers have the opportunity to adopt the best digital practices from other industries.

Boris Hapachev, CEO of PropTech Group:

The tasks of optimizing internal processes, which are aimed at achieving global goals, including the volume of construction, come to the fore of digitalization. To build a lot and quality, companies must keep up with the times, test and implement best practices and products that not only improve individual processes, but also provide a synergistic effect in the long term.

Dmitry Samozhkin, SEO "Airplane 10D" (group "Airplane"):

Development, so historically, has a low level of digital maturity: the industry later engaged in digitalization, and, in addition, there is no player who would occupy a significant market share and act as a driver for the development of the entire industry. The largest developer today occupies no more than 7% of the market, according to experts. But the situation is changing and changing very quickly: developers are actively introducing IT solutions and creating their own IT products.

The expert notes that not only leading federal companies, but also regional ones are developing development and investing in this area. In 2019, there was no digitalization in the industry, with the exception of corporate IT functions and office technical support. Now most companies have realized that without digitalization it is impossible to effectively compete in the market.

In addition, the state is also pushing the industry towards digitalization. For example, from July 1, 2024, developers will have to use TIM in the implementation of capital equity construction projects.

Dmitry Kiselev, CEO of Qlever Solutions:

Companies have become more active in introducing digital technologies in various areas of their activities, including the use of cloud solutions, project management systems and IoT technologies to optimize production processes. In 2024, there can be an increase in interest in construction using 3D printing, the use of drones to monitor construction projects, as well as the introduction of artificial intelligence for project management.

One of the key trends today is the end-to-end flow of information in all enterprise processes from design to operation of the construction site to make effective management decisions.

There is an increasing focus in the construction industry on data collection, BI analysis and use. Construction and engineering companies have all the data necessary to make effective decisions, but there is a problem with the aggregation of information, since it is often stored in disparate systems, applications and databases: from BIM and ERP to CRM and HR.

Companies do not cope with the collection and processing of Big Data, so 96% of all data in the industry remains unused, which makes it difficult to get a single, complete idea of ​ ​ the projects.

Products that offer a single platform for all business processes and integration solutions that connect different systems come to the fore.

Andrey Shakhramanyan, General Director of SODIS Lab Group of Companies:

In Russia, including, taking into account the restrictions, the issue related to the automation of investment and construction project management processes (ICP) becomes more relevant. Thus, ICP management systems that ensure the continuity of information between all stages of the life cycle of objects (design, construction, operation), a datacentric approach to management, the creation of digital twins with the history of the implementation of ICP, as well as ensuring the management of business processes in the context of the stages of the life cycle of objects - all this becomes more popular in the Russian market.

The large demand for artificial intelligence tools also affects the development of the industry. AI optimizes processes in terms of data analysis and creating more accurate calculations and forecasts for construction projects, allows monitoring and analyzing the situation at construction sites.

Andrey Uramaev, Head of the Construction Management Group of Aibim:

The construction industry is very conservative, but even in it it will be extremely difficult to resist the introduction of AI, since approaches using AI give an instant result after implementation. This does not mean that artificial intelligence will replace the usual specialties in the near future. So far, we can only talk about optimizing some processes.

The encouragement from the state is manifested in the niches of innovative technologies vacated after the departure of Western vendors in the form of providing tax incentives, supporting educational programs and standardizing approaches to the introduction of digital technologies.

Evgeny Yurevich, CEO of Project Point:

The number of players has increased, the market is highly fragmented. At the same time, vendors implement the same type of functions, and compete due to pricing policy, diversification in the format of solving different problems with one product, as well as partnerships and narrow specialization.

According to the expert, the requirements for supporting proprietary closed CAD formats and BIM systems remained, and the illusions of quickly abandoning them were gone. Such support becomes both a priority and a competitive advantage.

The demand for system integrators and consultants that can perform comprehensive digitalization taking into account the specifics of a particular client is increasing.

The Russian construction digitalization market in 2024 demonstrates a steady trend towards the integration of innovative technologies, which is evidence of its development.

Igor Pidtykany, Aibim Implementation Project Manager:

The current year will be the year of improvement of Russian products, which is already evident in the example of real implementations that started in 2023. Russian software products of the 2022 and late 2024 sample are completely different stories.

Dmitry Samozhkin, SEO "Airplane 10D" (group "Airplane"):

The main priority for the industry, in my opinion, will be to increase the level of digital maturity. The most important goals and objectives of digitalization are to increase the transparency of business processes and achieve financial efficiency (increasing EBITDA, reducing costs, etc.).

Are developers and developers who have more and more new obligations related to the introduction of domestic information technologies able to get specialized support and incentive measures?

Deputy General Director for Science of SiSoft Development JSC Mikhail Bocharov:

We and our colleagues from specialized associations and committees advocate such support, which we consider necessary not even for the development of the Russian software market, but for its very existence. In 2024, we will continue to work in this direction.

Director of the BIM ASCON division Dmitry Demin:

The main trends of 2024: strengthening the communication "design - construction - operation," the development of software functionality, an increase in the requirements API for the systems being implemented,, and information security data inheritance.

Estimates and Perspectives

There are no exact and objective figures for the market volume, but, according to the Samolet group, the current size of the construction digitalization market is about 26 billion rubles, and by 2028 it may grow to 130 billion rubles.

Dmitry Samozhkin, SEO "Airplane 10D" (group "Airplane"):

Since 2021, there have been no comprehensive studies, and today it is quite difficult to estimate the total volume of the construction digitalization market. On average, the largest companies allocate up to 3% of income for the development of IT per year. For example, the Samolet group invested 10 billion rubles in IT in 2023. According to our estimates, today the market size is 26 billion rubles. (0.05% of revenue for all companies). We expect growth by 2028 to 130 billion (1% of revenue).

Development prospects:

• Rapid pace of technological change and rapid development of digital solutions.
• The share of BIM is expected to grow, as this technology demonstrates significant advantages.
• Digital building twin technology will play an increasingly important role.
• As the volume of information increases, the importance of the pig will increase.
• With the development of IoT and smart technologies, there will be new opportunities for monitoring and management.

Dmitry Kiselev, CEO of Qlever Solutions:

One of the key areas of the market will be the use of data analytics and artificial intelligence in the field of construction. Using data helps companies predict and prevent potential problems, streamline processes, and make informed management decisions.

Key areas:

• Seamless ecosystem that consolidates solutions of domestic developers, a pool of clients and government agencies.
• The widespread use of TIM: management of the operation of facilities, integrated modeling of the development of territories.
• Standardization of requirements at the expense of professional communities, experience of successful consulting integrators.
• Market enlargement: "boxed" solutions, typical integrations, lack of programming and long-term adjustment.
• Move to cloud-based digital solutions that work with big data.

Deputy General Director for Science of SiSoft Development JSC Mikhail Bocharov:

We expect that in the future, one of the most important phenomena on the Russian market will be a seamless ecosystem that consolidates various solutions of domestic developers, a pool of clients and government agencies. The widespread adoption of TIM as a tool for managing the operation of facilities, as well as the implementation of integrated modeling of the development of territories, will be achieved.

Evgeny Yurevich, CEO of Project Point:

The requirements will be standardized mainly through professional communities and the experience of the most successful consulting integrators. The market will enlarge. Solutions will become more boxed, supporting typical integrations that do not require programming and long-term adjustment.

Andrey Shakhramanyan, General Director of SODIS Lab Group of Companies:

From the point of view of the systems providing management of investment and construction projects, long-term expectations are associated primarily with the transition to cloud digital solutions that work with big data, with the transition to expert systems that provide decision support at all levels, with the use of machine learning methods, as well as with solutions that provide datacentric, continuity of information, operational access and real-time work.

From the point of view of design, the transition to Solutions SaaS, that is, to service, cloud products, where the user is provided with only an interface for work, can be promising.

See also

• Digitalization of construction. TAdviser 2024 review
• Digital Technologies in Construction
• IT in Real Estate
• Real estate technologies (Russian market), PropTech, Property Technologies
• BIM - Information modeling of buildings and structures
• BIM technologies (Russian market)
• BIM technologies (global market)