That the construction industry lags behind other industries on innovation and digital transformation is well known. A lack of investment in research and development, slow adoption of new technologies, low productivity and inappropriate risk allocation in contracts are just a handful of the common barriers to change, but more fundamentally there remains a lack of incentive for the parties that can make the biggest impact on a project to take action. Contractors, consultants and suppliers are often bound by lowest cost solutions, delivered to meet paper based, transactional performance criteria. In such cases contractors work to fulfil the contract, not to make better quality projects.
However digitisation, transformation and innovation are underway in the industry. You just need to know where to look. From the potential for Universal Building Robots, to 3D printed bridges and Building Information Modelling (BIM) throughout the construction and operational life cycles (not just in design), change is coming. Aware of this Middle East Economic Digest (MEED) and Mashreq Bank asked me to write about some of the world’s leading projects for a report which was shared at the MEED Quality in Construction Awards on 2nd May and will be online soon.
Before diving into the six case studies the report mentions research by McKinsey Global Institute which describes construction as being “ripe for disruption”. New technologies, it says, have the potential to deliver 60 per cent efficiency gains equating to $1.6 trillion in potential savings every year. At the top of the list for investment is digital technology with the research demonstrating that construction ranks lowest of 21 other sectors in terms of digitisation and has had only a 6 per cent growth in productivity since the 1940s compared to 1,512 per cent growth in productivity in agriculture and 780 per cent growth in manufacturing. But the experience of these other industries shows that there comes a point, a tipping point, where digital capability becomes a requirement for survival.
An example of this included in the MEED report is Siemens Building Technologies new headquarters in Switzerland. The firm did not want to perpetuate existing construction processes where contractors deliver a building according to a contract with the data developed during the construction period simply evaporating. Instead they wanted to capture this throughout design and construction and create a digital repository of data, a digital twin, that would enable the new facility to be cost effectively managed for the rest of its operational life. This meant using building information modelling (BIM) to its fullest extent, incorporating not only the digital 3D design model, but using it for construction work packages and linking time (4D) and cost (5D) and creating a virtual twin of the final building. To achieve this Siemens Real Estate went out to the market and demanded full BIM enablement. Not all major construction companies were able to comply. In Switzerland’s building sector a tipping point had been reached and Strabag, an Austrian contractor that has invested in BIM for a decade, was ready.
Siemens Real Estate undertook this transition accepting that it would need to spend more in the early stages of this project. Innovation does not come for free. But this investment would allow the company to manage its facilities more efficiently in future, minimising the lifecycle cost. Making the crucial link between the cost of new infrastructure and its operational expenditure (opex) is a vital step along the path of transformation. Clients may need to spend more, for infrastructure to cost less.
At the same time, incentivising contractors to deliver solutions that will result in better, more innovative, and more efficient infrastructure is also important. The Siemens project was carried out using a design and build contract, which gave Strabag more the freedom to help its client create the most cost effective long-term solution. Use of design and build also gives the contractor incentive to value engineer the scheme. As explained in MEED’s Mashreq Driving Better Value in Construction Report, this step sees contractors look for design alternatives which can maintain function and performance at lower cost. But under traditional lowest price contract arrangements there is no incentive for contractors to do this.
The good news for construction is that the benefits of digital construction have finally been recognised, a tipping point is being reached, and the industry is investing for its own benefit. To date contractors have told MEED that low margins mean that they can’t afford to invest in digitisation. Now they report that they cannot afford not to.
Other case studies included in the report include:
- The world’s first 3D printed bridge
- Universal construction robots
- Drones in monitoring and inspection
- Offsite innovation on the Hong Kong, Zhuhai, Macau bridge
- Digital construction innovation on a new bridge between Russia and China
- Model based design delivery on London’s Thames Tideway
I will include a link as soon as this is live but here is a sneaky peak of the cover…..