Top Priorities for Digitzation and Collaboration in Construction
When talking about digitization in the construction industry there is one fairly consistent theme that emerges – the need to catch up. Construction has been behind the digitization curve for a while now and has been suffering, often publicly and occasionally catastrophically, due to the missed opportunities for efficiency and improvements which digitization can and does provide. According to McKinsey, R&D spending is less then 1% of revenues compared to 3.5% and 4.5% in industries such as auto and aerospace. Whilst other industries are experiencing a boom in productivity levels thanks to the advent of industry 4.0 and innovation, construction lags well behind even declining in some sectors. However, things look soon set to change, and in a big way. The tipping point appears to be close and businesses must move fast if they want to keep pace.
Two questions immediately arise, what will the change look like and why now? Well to answer the second question first, McKinsey estimates that the world will have to spend $57 trillion on construction by 2030 to keep up with GDP growth.
That is a pretty big prize, however the construction industry has been held back, certainly in part, because of its fragmentation meaning that small businesses are often subcontracted to deliver projects. Why is this relevant to digitisation, well small businesses traditionally haven’t had the cash to invest in what has historically been, prohibitively expensive license fees for software based solutions, despite the potential benefits the single outlay has often proved unachievable. However, with the ever increasing drive towards cloud based solutions this problem is solving itself. The manageable cost model, often paid monthly, and the increased flexibility around infrastructure and IT requirements is meaning that the initial outlay is far more achievable and ROI on those investments can happen much quicker. Couple this change with the broader landscape in which all businesses are now operating and you have another driver.
Data drives our world, we live very digital lives, a huge portion of our time is now spent in a digital environment, be that at work or at home. The giants of today don’t own assets, they own data. Facebook, Google, even Airbnb, Uber, business models are changing and with it move our habits, behaviours and expectations. Not to mention that some of these data giants, Facebook, Google even Amazon have been making noises about moving into Real Estate, this could have a hugely disruptive impact on all adjacent industries and construction needs to move fast. The new generation now moving into the workforce expect and in fact will excel in a digital environment. The Digital Workplace is real. Digitization may have once upon a time have been a radical change for the workforce and adoption might have been a challenge, this is changing and perhaps even reversing. Other industries are already capitalising and Construction must now start its journey.
What about the next question, what will the change look like? That is a slightly harder question to answer but we can take examples from other industries. Construction is one of the least digitised industries with only Agriculture and Hunting featuring lower on the McKinsey Global Institute Industry Digitzation Index. Similarly complex industries such as Oil and Gas, Advanced Manufacturing even Mining or parallel industries such as Real Estate all feature significantly better on this index. So where will this change come for the construction industry? Terms like Big Data, Digitization, IoT (Internet of Things) and BIM (Building Information Modelling) frequent discussions, these are all complex topic, each expansive and all closely interlinked or even interdependent.
Big data similar to digitization is not a term unique to Construction, capturing this data at scale has allowed other industries to achieve incredible efficiencies and indeed has led to the shift in traditional business models that we have seen over recent years. Construction has decades of data. Digitizing this data and sharing it broadly will no doubt lead to significant insights as it has elsewhere. But digitization means more then data capture, it is a change in how we work. Working in the digital space, with digital tools and digital touchpoints has been and continues to be a dramatic change. High levels of end user adoption is essential to the success of this transition and this requires commitment from all levels of an organisation, training and support must be provided where required and there must be an openness to adapt.
Increased digitization should, in theory, go hand in hand with increased opportunities for collaboration and in-turn, efficiencies. From management of digital assets to the digital management of physical assets everything can be connected. The availability of information within a digitalized workplace in construction allows a single version of the truth, Owners and contractors should be able to communicate and collaborate in real time. Removing the reliance on paper and manual processes and replacing that with digital documents and workflows should not only make things faster but also reduce occurrences of mismanagement of information.
The connection of information from various digital sources is effectively the foundation of the ‘Internet of Things’. The idea that ‘smart’ sites will generate real time data automatically on progress, performance and issues arising, this data is captured and connected all leading to improvements in not just efficiency but also quality, safety and environmental performance. Efficiency not just in the current projects but in all future projects. Capturing all of this data, much of which is already produced but simply underutilised, will provide the basis for future improvements and can be incorporated at the front end of design.
This leads onto the next major trend, Building Information Modelling, or more precisely what is now being called 5-D BIM. This process takes the traditional 3-D spatial design and adds environmental variables and the ability to make better predications of costs, timelines and scheduling and how this might be affected by changes or delays. Combine these enhancements with the rapidly progressing virtual and augmented reality technologies and the potential for intelligent, predictive and future proof design becomes very exciting.
All of this adds up to a clear conclusion, things are changing and although slow in coming is now likely to happen quickly. It is also clear that that although the initial transition will take great commitment the potential benefits are huge. The future is exciting, digitization is happening, the industry at every level must collaborate to smoothen the transition and maximise its potential positive impact.