Delivering innovation in construction

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…..

Cover p3

 

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Risky Business

For most people Risky Business invokes an image of Tom Cruise dancing to Old Time Rock and Roll in a pink shirt and sports socks. But to me it seemed an apt title for a recent report I wrote for Tunnels & Tunnelling International on insuring major tunnelling projects.

Risk 2

Back in the late 1990s, the tunnelling industry was reeling from high profile incidents on tunnels all over the world from fire and flooding on Denmark’s Storebaelt Crossing to the 1994 Heathrow Tunnel Collapse. In response to fears that tunnel projects were becoming uninsurable, the Association of British Insurers, and the British Tunnelling Society joined forces to create a new benchmark for best practice. Published in 2003 the “Joint Code of Practice for Risk Management of Tunnel Works in the UK” was followed by an international version in 2006 named the “Code of Practice for Risk Management of Tunnel Works”. These codes became known worldwide as the Tunnel Code of Practice, or TCOP and over a decade later it is now under review.

Insurers say that development of the code was an important step in building confidence in tunnelling projects. “It has led to tunnelling projects being more insurable today,” explains Cedric Wong, senior engineering underwriter and vice president of projects and global markets at Swiss Re Corporate Solutions. “It doesn’t guarantee success but it gives the best possible chance of a successful outcome if it is followed and implemented. When we are presented with a tunnelling project by a broker, we look at the information provided by the client, contractor and we benchmark it against the TCOP,” he says. “We can assess if they have taken a risk based approach in choosing the original tunnel alignment, have they procured based on both quality and cost, have established a risk management framework, are they using risk registers, have they got design checkers? We assess the project and if it aligns with the code and if we determine that risk management is solid there is a good chance of insurability.”

 

“The positive work done on projects like Crossrail gives insurers a good deal of confidence that technically complex tunnelling risk can still be undertaken,”

Cedric Wong, senior engineering underwriter, Swiss Re Corporate Solutions

Complexity is inevitable when building a new GBP 15bn (USD 20bn) railway with 42km of new railway tunnel using eight TBMs, along with construction of a further 18km of station tunnels and interchanges as well as 9 new stations beneath the UK’s capital city – making it inherently risky. “The mitigating factors to that were that London had relatively successful projects before with the Jubilee Line extension and the Channel Tunnel Rail Link. The geological model of London is really well known. The presentation of the Crossrail project in terms of benchmarking against the TCOP showed a really high level of compliance which gave us confidence that there was a high chance of success on the project,” says Wong whose firm Swiss Re Corporate Solutions took the lead position on the insurance programme. “The other factors that convinced us was the level of retention that the client was willing to take, set deductibles reasonably high. The higher the deductible is the lower the insurance premium and what that demonstrates to us is a real confidence in their own risk management.” At the same time, Crossrail were interested in the insurers’ risk management activities, which Wong describes as a complementary risk management regime. “They were keen for us to share our experience of engineering and construction claims and the associated lessons learnt from projects around the world. Throughout the changing risk profile of Crossrail, we select the industry risk experts that we think are most suitable for the job. These are experts, people who can add value.”

This risk engineering programme is a critical part of such projects for the insurance industry. On Crossrail for example there are 28 different insurers backing the scheme who are reassured thorough the risk management approach of the leading insurer. But before any of these firms could be appointed, Crossrail needed to work with a broker to determine the appropriate insurance structure and levels of cover required for this mega- project. And its sheer scale meant that it had to be tackled differently from the outset with the contract being tendered through the Official Journal of the European Union (OJEU).

“Brokers had to go through a tender to demonstrate that they had the technical knowledge, ability and experience to advise Crossrail on the appropriate insurances for the project,” explains Sarah Bickerstaff, executive partner in construction services at the tender winning insurance broker Arthur J Gallagher. “We learned about what they were going to build and really became part of the delivery team. We worked with Crossrail to understand what their appetite for risk was, what their approach was going to be and to explain to them their options and the pros and cons,” she says.

The earliest fundamental aspect of this was whether Crossrail would procure Contractors’ All Risk (CAR) and Third Party Liability (TPL) insurance through an owner controlled, or a contractor controlled route where the contractor places the insurances for their element of the contract. For a scheme the size of Crossrail, a contractor controlled policy would have meant a large number of different policies with a range of excesses and cover. “It wouldn’t give Crossrail control of the cover and the quality of insurer and the budgetary stability in terms of premium. The whole aim was to keep the project on target, on budget and so therefore Crossrail took control of the insurances,” says Bickerstaff.

Contractors’ All Risks (CAR) insurance is the cover for material damage that could occur on a project. The project also required third partly liability (TPL) insurance covering any damage to third parties such as buildings, infrastructure or people affected by an incident. For Crossrail it was crucial to have high quality cover, over the lifetime of construction which was nine years, and with fixed premiums to give long term budget certainty. This was a challenge for the insurance industry which typically introduces break clauses in project insurance policies which allow insurers to re-evaluate their position throughout the construction period.

“One of the key drivers was certainty of cover for the entire nine-year construction period. This had never been achieved in the insurance market before,”

Sarah Bickerstaff, executive partner in construction services, Arthur J Gallagher

“They needed to have absolute confidence that the insurers would support the programme to the end of the project irrespective of claims experience.” It’s typical that a panel of insurers would be required to cover a project of this size. With such high values of risk running into billions other insurers would need to participate in the project. “It is like layers of a cake really. You buy elements of cover in acceptable tiers up to a level where Crossrail thought they had bought adequate protection given the likelihood of loss and given the potential severity of that loss,” says Bickerstaff.

To ensure that the level was appropriate AJ Gallagher provided Crossrail with benchmark figures from other major projects before taking the scheme to market. By early 2009 Crossrail were ready to begin procurement, which by moving through the OJEU process, was being undertaken in a new way. “The challenge for us as brokers was that this was the first major project insurance policy to be procured through the OJEU rules. It had to be done through a data room so all firms had the same access to information. This is a people driven industry so to get them all to go to an electronic data room and pull the information out was something that we had to educate the market on,” says Bickerstaff.

Eight years later and with the tunnelling complete, the Crossrail project has been truly ground breaking from a risk management and insurance point of view. But it isn’t over yet – the insurance coverage continues until the rail is operational – and the risk profile has evolved from a tunnel collapse type failures to fire risk within the completed stations – which is the maximum exposure scenario for insurers.

  • The full article can be viewed here

Chilean Tunnelling

Santiago
Santiago in winter (credit Liebherr Chile)

A few months ago I did a research piece on the tunnelling sector in Chile for Tunnels and Tunnelling International. The sector is extremely buoyant across all major sectors and more is yet to come.

“The market is quite active now, as there are some really interesting projects under development and coming in. There are road projects, metro project, hydroelectrical projects and mining projects,” says José Miguel Galera, managing director of consultant Subterra, which has been designing tunnels in the country for over 20 years and does 50 percent of its business in Chile.

But perhaps the most exciting future project for Chile will be the Paso de Agua Negra road tunnel running between Chile and Argentina and promoted by a joint governmental organisation known as EBITAN. “All tunnellers are positioning ourselves for this really interesting project. They called for prequalification at the end of 2016 and just two months ago it was published that 10 JVs have presented their candidature and 4 are Chinese. The other 6 are from the rest of the world,” says Galera.

The scheme involves construction of twin 14km road tunnels and is intended to improve regional connectivity particularly between Argentina and Chilean ports. Despite the enormous length of the Argentinian and Chilean border the number of crossings is small and largely consists of minor roads. The existing Agua Negra route for example is a minor road used just in summer as it runs along an altitude of 4780m meaning that snowfall blocks the route in winter.

CaptureThe new tunnel will be around 1000m lower and is planned as a twin tube due to its length and height. A second passageway offers many safety advantages and by having two equal tubes natural air circulation is enhanced reducing energy costs. It was also decided that each tunnel as a single lane is much safer from a driver perspective. With two tunnels and one-way direction each, light vehicles might keep a good speed and are not delayed by heavy traffic taking the outer lane.

The two tunnels will be 40m to 50m apart and descend from Argentina into Chile with the Argentinian entrance 4,085m above sea level and the Chilean entrance at 3,620m giving the tunnels a slope of 3.37%. Each of the road lanes will be 7.5m wide with space either side for pedestrians. The internal height of the tunnels will be 4.8m and emergency tunnels for people will connect both main tunnels at 250m spacings along the whole length. Vehicular interconnection galleries will be located every 1,550 m.

The industry is now waiting to hear who the successful prequalifiers will be and whoever ultimately wins this project will undoubtedly take on lessons from other tunnelling projects that have been carried out in the Andes including a raft of hydropower schemes. The most recent of these are the Alto Maipo project and the Los Condores project which both include significant tunnelling works for construction of the headrace tunnels and other infrastructure.

Read the full article in Tunnels and Tunnelling International

 

Visiting Germany’s Rastatt Tunnel

The exponential development of technology means that I am called upon less and less frequently to pack a bag and carry out a site visit IN REAL LIFE! Make no mistake there is no substitute for visiting a project in person. The story is better, the photos are better, the report is better. But the reality is that magazines don’t have much travel budget these days and the information kept by project teams is better than ever (usually) and so I find myself increasingly asked to call site teams using Skype or the old fashioned telephone and write the story from London.

Every now and then though, I inveigle my way onto a live project and get to meet the amazing people bringing the ideas for improving connectivity, providing essential services and improving economic growth to life. In Germany recently Jörg, Ursula, Martin, Sören and Ulrich of the Hochtief/Ed Züblin joint venture took time out of their 12 hour day (at least!) to talk to me about creation of the incredible Rastatt Tunnel.

But first I had to get there……..

Read More »

Tunnel Vision

Over the past couple of weeks I have been looking into the research that is underway at UK institutions related to tunnelling. There was more than I expected. My 2000 word article is currently 3124 words. But I can’t bear to cut anything out. Should I omit some of the amazing work underway at Cambridge University which is using increasingly sophisticated sensors to give real time data that can be compared with the centrifugal and numerical model data? Or should I edit back the report on work at Edinburgh University where explosive spalling of concrete during fire and the influence of ventilation are major research topics?

IMG_0771
Edinburgh University’s testing rig for studying the explosive spalling behaviour of concrete during a fire

I could miss out some of the incredible work being done at the University of Leeds Institute of Resilient Infrastructure where world leading research is being carried out into the cumulative effect of seismic loading on tunnels – something that design codes don’t currently cover. They are going to use sensors on two live tunnels in Chile where there there is an astonishing amount of earthquakes every month. Have a guess how many (the article will tell you – unless I have to cut that part)!

With the raft of tunnels planned in cities around the world the research at Imperial College London into the effect of tunnelling on existing tunnels, surely must be included. More specifically the university has carried out an incredibly detailed study into the impact on cast iron tunnels. Similarly Nottingham University is focused on the interaction between tunnels and buildings and its research is giving more effective tools for evaluating the effects of tunnelling on piled structures. City University too is focused on tunnel/structure interaction as well as undertaking research supported by the Pipe Jacking Association.  A current research project looks at the effect of tunnel excavation on escalator tunnels. Another focuses on ground support at the tunnel face and the effects on stability and surface settlement.

New technology and construction methods too have to be included. Dr Alan Bloodworth, who this week took over as the head of the UK’s only dedicated tunnelling and underground space MSc at Warwick University, has been studying sprayed waterproof lining systems, examining whether composite action occurs between the primary and secondary sprayed concrete linings due to the bonded waterproof layer (it does). How can I cut that?

And what about the future? Universities have research plans a plenty. I simply must include those or how will people know that Cambridge wants to create virtual tunnelling models and research the redistribution of loads around cross passages; that Edinburgh is working on new design strategies for mitigating concrete spalling in tunnels during fire or that Leeds University will create a virtual platform where the public can view the earthquake response of tunnels in Chile?

As I said there was more than I expected. There is nothing boring about tunnels!