Thursday, 30 March 2017

Construction's Three Pathways to the Future

Technological Trajectories

Over the last few decades there have been many scenarios for the future of the building and construction industry, often with titles like Construction 2000, 2020 or now 2030 or 2050, usually with a list of major trends expected to impact the industry. The list typically includes more data and associated computing technology, new materials and equipment, more education and training, less carbon and more sustainability and so on. For many of these items there have been a variety of roadmaps produced, providing very specific steps in developing a particular form of technology or process. Many scenarios emphasize the industry’s linkages to the rest of the economy and society. An interesting recent scenario analysis for Australian construction was covered here.

What often seems to be missing from the discussion in those sorts of exercises is an appreciation of how an industry as large and diverse as building and construction actually adopts and implements new technology. While it’s obvious that the industry as a whole is not going to be overwhelmed by some sudden mass movement to adopt some particular technology, whether it be steel reinforced concrete or BIM, the rapid pace of technological change is affecting construction. Like other industries there is potential for new entrants, new business models and great disruption.

It seems that there are three plausible pathways for how industry processes and structures might change over the next few decades, in the sense of technology adoption and implementation pathways. These might be called the business as usual, upgraded and modified, and transformed scenarios. What really differentiates the three is the rate at which new technologies are taken up, which in turn leads to different trajectories of technological development of firms within those three pathways.

The business as usual pathway is the slow accretive method that has been followed by the industry for decades, if not centuries. This is where the industry as a whole is much larger than any given project, and the individual projects reflect a consensus view on what the appropriate technological mix might be for that type of project, in that place at that time. Over time this industry consensus moves to include whatever the most effective or efficient piece of technology is, again for the circumstances of the particular project and those involved.

This is not a static process. I’ve argued elsewhere against the idea that building and construction is a technologically stagnant industry. The reality is that building and construction is the recipient of vast amounts of new technology from its traditional suppliers in the plant and equipment and building materials industries, and is increasingly IT intensive. The extraordinary growth of offsite fabrication in all its forms indicates the industry is quite willing to move to a new technological platform, but that platform has to be well proven before it becomes widespread.

Also, there are a limited number of projects that reward the investment of time and capital needed to develop and implement new technologies and new processes, and to overhaul organizational forms. In this case it is not always sensible, from a business point of view, to try and be on the cutting edge of technological developments. Nevertheless, offsite fabrication has already changed parts of the industry, the return on investment in BIM is generally positive, and the increasing sophistication of project management and integration software is opening up new possibilities and organizational forms.

Pathway 1: Business as Usual - Similar But Smarter

  • BIM integrates project development and delivery. Clients get procurement systems right, or at least less wrong, which drives efficiency and productivity improvements.
  • Modular and pre-fabricated components become universal and more complex, and many structural elements are standardised. Services become more integrated and building management systems become increasingly capable. 
  • Project management becomes much more information intensive and sophisticated, and techniques like target costing, last planner, tiered suppliers and so on become widespread.

The difference between the business as usual and the upgrade and modified pathways is the rate at which firms adopt new tech. There will be a widening divergence between firms that are comfortable with business as usual and firms looking for ways to create or sustain their market position. Again this might be as much about circumstances, where the opportunity presents itself firms would be expected to upgrade. The many YouTube videos of concrete printing and other 3D printed components, or carbon-fibre bridges, girder-laying robots and such, show just how nascent this technology is, with an intriguing mixture of backyard inventors, universities and multinationals involved. Drones are everywhere, and microsats are also offering site monitoring.

In the upgraded and modified pathway firms invest considerably more in technological development. In the course of upgrading to these new technologies firms might need to make significant changes to the way they are organized and the way they organize their projects. To really leverage the investment and get an advantage from the technology, whatever it is, usually requires modification of existing business processes, and depending on how the business approaches the task these modifications could be extreme or could be at the margin. Some businesses are much better at this than others.

There are many different firms in the industry, and many big firms have clearly developed technological areas of expertise, that they build their business around, such as tunneling, or remote sites or bridge building. Chinese firms like Win Sun (3D printed components) and Broad Group (prefab high rise) call themselves technology companies not construction companies. Australian company Hickory Group also has its own factories producing modular components for its projects, going back to the integrated model of nineteenth century general contractors. Sekisui and Ikea have been doing this for a while.

Pathway 2: Upgraded and Modified - Manufactured Mass Customization

  • Disruptive new entrants appear, with no historical baggage, who do not care about the traditional roles of industry professionals or suppliers. These firms do not work for clients but make products for their customers, in a vertically integrated supply chain.
  • Their buildings are standardized platforms, built repeatedly and thus can be quick and cheap. Designed to be produced in a factory (which may be onsite) and assembled by a trained workforce, with a range of finishes and decorative elements to allow mass customization.
  • New materials and production processes allow current boundaries of performance, size, function and design to be greatly extended. 
  • Incumbent firms respond by moving up the value chain, developing their integration and PM capabilities and concentrating on larger and more complex projects that incorporate new tech like high performance materials, systems and services.

The transformational model is the extreme high-tech version of rapid and sustained advances across a broad front of key items. This is far more speculative, because the future is inherently unpredictable, of course, but the potential is there for some serious disruption. The two primary drivers of change are expected to be IT (both software and hardware, i.e. AI, automation and robotics) and new materials and production processes. At present, new tech is rapidly spreading across larger firms in the industry, but generally at the boundary of pathways one and two. However, in the near future breakthroughs are possible in digital mapping and surveying and 5D BIM, production process automation, advanced analytics, and the Internet of Things. Continued progress in molecular engineering and high performance materials, 3-D printing, real-time site data, communications, advanced robotics, roller press printing of smart materials and fabrics and many more technologies will feed into the industry over coming decades.

Pathway 3: Transformational - Faster, Higher, Stronger

  • Science transforms building materials and production technology. The new products and materials are significantly stronger and lighter than existing ones. They create new opportunities for buildings that can be more distinctive, larger or higher than currently possible.
  • The new production technology automates many tasks and processes and creates new machines that are far more capable than existing ones. Materials and machinery become smart, with embedded processors, are networked and communicate with each other. Components are location and condition aware.
  • Humans partner with machine intelligence to accomplish many tasks, and use robots or exoskeletons for most physical work. Remote control of automated heavy plant and equipment becomes standard, while fabricated and modular components combine with automated systems and onsite robots to transform the building process.
What’s missing from the discussion here is any sense of the time-frame, however this too is entirely speculative. We’ve currently got elements of all three of these pathways in play, and the three will coexist across the industry as a whole for a long time. Because of the localized nature of building and construction there will still be large numbers of small firms in the industry for the foreseeable future, and those firms will generally follow pathway one.

One important issue will be how the broad mass of companies in the middle of the industry, the small and medium-size contractors of every sort, actually cope with the tsunami of new technology likely to descend over the next couple of decades. In every other industry which has become more capital intensive as technology develops, that industry has become more concentrated and the largest firms expand at the expense of mid-sized firms. This doesn’t mean we end up with a few giant construction companies, but it does mean that we are likely to see a far smaller number of, on average, larger firms across the industry. The effect of this change in industry structure should be fatter tails in the size distribution of firms.

The transformational pathway, by definition, does not have any current examples. The characteristics of the transformed industry might best be seen in what the industry produces, which would be smart and responsive buildings and structures. These are made of smart materials, which know their location, purpose and condition, run by smart operating systems that constantly monitor and control the building’s internal environment and systems, and have an energy efficient, self-repairing external skin. And the whole thing would have been delivered through some massively integrated management and manufacturing process that was entirely underpinned by digital data.

A recent publication on the Future of Construction page on advanced buildings shows how this trajectory is developing. This research by the Boston Consulting Group, a management consultancy, and the World Economic Forum, a multinational think-tank, is an ongoing project to promote cutting edge building technology in all it's forms. This new report  is Inspiring innovators Redefine the Industry, with six buildings and four flagship projects that demonstrate innovation in construction. As William Gibson pointed out (at a 1992 demonstration of the first clunky VR systems) “The future is already here, it’s just not very evenly distributed”.