Everyone seems to agree that the Internet of Things is here to stay. We have evolved into looking at it as Industry 4.0 and the emergence of cyber-physical transformation. Still, no matter how you characterize it, the world is becoming more instrumented, more digital, and the progression is not going to reverse. However, the progression status and acceleration tend to differ by industry, where some are more advanced than others. This progression opens the door to both challenges and opportunities. Paradoxically, some of the sectors that appear least inclined to embrace digital transformation have the most to gain by doing so. One such example is the construction industry, especially vertical construction in larger cities.
So why is this? Many of the inefficiencies in construction come down to a lack of information regarding people, assets, and required coordination. Additional concerns (and operational and financial issues, not to mention moral imperatives) exist regarding theft and safety. Both are material issues, and both can be very costly. Digital Transformation can impact all of these areas to a great extent.
Let’s take a closer look at some of the areas of concern. Regarding worker safety, around 20 percent of private industry fatalities in the workplace are in construction. In the field of environmental concerns, there is increasing pressure and expectation for using environmental-friendly techniques in the construction sector. From a technology adoption standpoint, a small minority of construction workers are comfortable or even acclimated with new technology. When it comes to labor issues, including labor shortages, there will be a need to re-skill hundreds of thousands of construction workers over the next two decades to new roles based on digital transformation. Perhaps the most significant consideration of all is the interaction between organizations associated with a given project. This pertains to the supply chain of construction materials, asset scheduling, and all of the communication, up to and including third parties like the city functions, utility functions, and other related parties that have to come together to deliver a completed project.
So, where to begin? One of the most common steps we are seeing is construction companies exploring and developing ways to make workers more productive. Among other efforts, this can mean filling critical positions with well-trained workers who can utilize modern technology. Many construction companies are working to improve the supply chain by using emerging technologies that help to increase transparency and coordination in procurement. Another area of focus is to enhance on-site execution by utilizing technology and advanced processes for greater coordination, timeliness, and precision for on-time, on-budget projects. Such coordination may be the area pursued most aggressively. Project management software has been a staple in construction for some time. Still, the growing proliferation and increased capabilities brought forward by BIM (Building Information Modeling) is enhancing coordination capabilities and efficiencies and saving time and money. Increased collaboration also extends beyond a given site to the ecosystem. From interaction with the utility companies to the city services to waste removal, supply delivery, and more, mean that collaboration cannot stop at the site line. Creating contracting approaches that provide meaningful incorporation of new technology and greater collaboration is essential for the ecosystem. For this to work, developing product and process partnerships is critical and can have a direct impact on outcomes. And all of this starts before the first shovel goes into the ground. Design and Engineering firms and project planners must begin incorporating emerging technologies into all relevant processes for increased leverage in a repeatable fashion.
The technologies needed by the industry are here today. And it’s not as if the technology won’t keep improving. It will. But in an industry that has, on average, 2% to 3% margins, the question isn’t whether to wait any longer. The question is, how much was lost by waiting until now. Technology alone is not a silver bullet, but it is an essential ingredient of profitable, safe, and effective industry practices moving forward. Let’s look at five areas that are worth considering.
First, the use of BIM and other ecosystem coordination systems should be a given. The construction process is often a struggle involving competing, disconnected goals, broken trust, and imperfect communications. These challenges can be effectively addressed with meaningful gains by combining innovation, best practices, and standards across the ecosystem to reduce costs, delays, and accidents, and where possible, align interests.
Second, companies will increasingly make use of asset tagging using small, low-power sensors such as the ones we use to find our car keys. We should use them to not only find the power tool, or the windowsills for the 34th floor but to further utilize that information for multiple purposes. The use of asset tagging and tracking can create greater capabilities for managing all operational aspects of a job to reduce delays and mistakes. The biggest differentiator for builders and developers in the immediate future is likely to be the innovations that can enhance efficiency.
Third, the industry push towards further implementation of real-time safety and response solutions. Systems are being deployed using the combination of increasingly sophisticated sensors and advanced communications for real-time remediation of hazardous conditions. These systems have numerous benefits, which are all evident.
Fourth, companies will see substantial benefits from the fact that these new construction systems and related information are, more and more, using Artificial Intelligence (AI) and Machine Learning. Making greater use of AI and Machine Learning can create truly adaptive systems capable of responding to changing conditions. According to Accenture and Frontier Economics, by 2035, it’s projected that the construction industry can see a profit increase of 71% by making use of AI to streamline operations and increase precision.
Fifth, we already see examples where the construction industry is increasing the use of Augmented and Virtual Reality. There are hardhats implemented with AR capabilities today. Using AR/VR can increase worker productivity and safety, reduce costly mistakes, and increase documentation quality. AR means efficient project staging and making pre-construction projects tangible for buyers and tenants. And the AR market is set to explode into the mainstream. Already, according to IDC, the market for AR in 2019 was $16.8B in the U.S. alone.
Last, the industry should and will increase the use of drones. This technology has numerous benefits. Drones today are adding new sensor capabilities and unique combinations of technology to reduce cost and improve safety. Drone use in the construction industry continues to be one of the fastest-growing trends, with usage rising well over 200 percent year over year. Drones are deployed for exterior building inspection, for theft surveillance and overall security, site surveillance, and even for movement of some assets. All of this adds up to a safer, more efficient, more effective project.
That said, the margins create the opportunity, but they also generate the impediment. The prevailing wisdom of some is that with such low margins and capital and labor constraints, it’s hard to peel away money and time to explore new technologies. To act on this takes time, money, and people with an inclination to act. That tends to bifurcate the playing field.
What should be done? Technologies need to become more affordable and accessible, and they are. We see that today. Company management needs to become more acclimated as to the potential. And funding sources, in particular, need to begin to insist on these tools being baked into the equation. With slim margins but massive inefficiencies and issues in the process, the people and organizations supplying the capital for these projects are the natural ones to lead, to insist on technological progress.