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Digital Transformation

Digital transformation in the construction sector

The challenges facing the construction industry are myriad. Flat productivity, failures to recruit and retain talent, and poor collaboration throughout the supply chain have hamstrung the sector for a generation. Each is, in some way, a reflection of a larger problem: failure to fully embrace the potential of digitalisation.

World Built Environment Forum
17 June 2020

“On the face of it, you might think the business case for investing in digitalisation writes itself. However, construction continues to be one of the least digitalised industries in the global economy. Should we be surprised? Probably not.” Matthew Keen, Construction Industry Strategist with Autodesk pulls no punches in his assessment of the situation.

“Last year, Construction News reported that the average profit margin across the top 100 UK construction companies is still only 1.5%. In terms of amounts spent on research and development, only three construction companies appear in the global top 1000 firms.”

Digital transformation in the construction sector

This webinar is in partnership with Autodesk.

The construction sector has yet to futureproof itself for the demands of the 21st century. Estimates suggest that less than 1% of global construction revenues are reinvested into research and development – markedly short of levels invested by industries of comparable size and importance. Much has been said and written of the revolutionary potential of a more automated construction sector, but with 13% of global GDP and 7% of the world’s workforce in question, the significance of the challenge, and the scale of the opportunity, is great.

It seems, then, that construction is an exceptional industry in an increasingly tech-savvy world. Digitalisation has been shown to lower costs and drive process efficiencies in many sectors. Without investment into digital, the construction sector cannot realise these same gains. As such, margins have remained low, and firms have struggled to free up funds necessary to make investments. In short, construction seems unable to extract itself from an unvirtuous circle.

How to better capture the full value of digitalisation is, in the opinion of Shankar Chandrasekaran, Partner at McKinsey & Company, the most important question to answer.

“It’s what separates the grain from the chaff. The first rule is know the problem that you are trying to solve. There’s a lot of technology out there, it’s an evolving space with lots of new start-ups. So, the second rule is not to get overwhelmed by what is available.”

Chandrasekaran’s final rule is to remember that digitalisation is, at root, a human process. “I’ve seen umpteen cases where data is dumped on people who don’t have the patience, time or the skills to parse and use it. You have to curate the insights gained from data and make them actionable.”

I’ve seen umpteen cases where data is dumped on people who don’t have the patience, time or the skills to parse and use it. You have to curate the insights gained from data and make them actionable.

Shankar Chandrasekaran
Partner, McKinsey & Company

Dr Jenni Barrett, Director of CoLab, is similarly keen to stress the centrality of people to successful digitalisation. The public conversation around digitalisation has often centred on the potential detrimental effects of automation on jobs. Understandably, this is a particularly vexed issue for a construction sector that, according to some estimates, supports 7% of the global workforce. Dr Barrett is keen to reframe the discussion.

“When we can automate long drawn out processes, we will free up the human mind from those systematic, ultimately programmable tasks. It will give cognitive space to things like excellence in innovation. We have the opportunity to redirect our activities towards those things that, traditionally, construction hasn’t done so well.”

She continues: “We have a choice. We can either let digitalisation happen to us and take on the chin all the things it might change – be they good or bad. Or we can be proactive; we can grasp the nettle and let it be the catalyst for changes that have been necessary for a long time. Automation may replace menial tasks and, ultimately, it might replace jobs. But this is the opportunity to reprofile job structures, to enable people to move into new areas such as digital management and co-ordination. If we get the right training in place now, we’ll have ready-made leaders of the digitalised industry of the future.”

We can either let digitalisation happen to us or we can be proactive. We can grasp the nettle and let it be the catalyst for changes that have been necessary for a long time.

Dr Jenni Barrett
Director, CoLab

A recurring theme of recent WBEF output has been the possible accelerative influence of the Covid-19 pandemic on shifting social, environmental and professional realities. Says Matt Keen: “We’ve seen a lot of market volatility in the construction space, but that was driven by a fear of the unknown. Once people started to better understand the lockdown, many then said: ‘what is it that my business can do in order to move forward?’ We’ve seen that in construction: social distancing managed by small units attached to helmets that buzz when they come within two metres of another unit.”

And while the headlines have been dominated by Covid-19 since the beginning of the year, the spectre of climate change still looms large. The shadow is cast particularly long over a construction industry widely regarded as integral to our shared hopes of averting ecological disaster.

Fred Mills, Co-founder of The B1M, picks up the theme. “Digital tools are enabling us to understand how our built environment is performing, and the impact of new construction projects on the natural world.

“We have a rising global population, and more demand for homes, hospitals and schools than ever before. We need to build in a much more sustainable way. The pressure on the industry to digitalise is very strong. There are pockets of excellence, but we need widespread uptake. Ensuring that the whole industry gets there together is very important; we don’t need everybody producing advanced information models, but we do need a base level of proficiency.”

It is no exaggeration to say that what is required is a revolution in working practices and cultures across the industry. The task might well be daunting to many, but Mills remains optimistic: “The need is there, and the will is there too.”