Friday, 9 June 2017

Technological Transparency in Building and Construction

 The Cutting Edge No. 3

It is not easy to observe technological change across a project based industry. Evidence tends to be anecdotal, say Skanska’s Flying Factories, rather than systemic and widely known, like BMW’s carbon fibre manufacturing or Adidas’ 3D printed trainers. Thus, most building, engineering and architectural histories are a series of case studies of significant buildings and demonstration projects like the 1851 Crystal Palace or 2010's Burj Khalifa.

One of the effects new technologies are having in building and construction is increased transparency as more and more of the information used is digitized and new sources of data come on line. In the first category is software, in particular the fully integrated project development, procurement and management platforms now available. These increase transparency by making all transactions in the system visible to users, including clients, depending on their level of access. The main new source of data is drones.

There was a Cutting Edge post before Xmas on the use of drones in construction, which included the partnership between equipment manufacturer Komatsu and drone company Skycatch. This has since been followed by two more, similar partnerships. Kespry and John Deere joined up, as did Airware and Caterpillar, in both cases matching drone/equipment companies. These are the first, second and sixth largest construction equipment manufacturers globally (in 2016 order Caterpillar 18%, Komatsu 11%, and John Deere 5%), so this looks like a new front in the competition for market share.

A good description of the process of turning gigabytes of data into useful information comes from the Economist’s June 2017 Technology Quarterly here. The drone companies are using various technologies “to measure buildings precisely during construction and track the use of raw materials on site to ensure that everything is going according to plan. Drones are ideally suited to the task. Thousands of aerial photographs are crunched into a 3D site model, accurate to within a few centimetres, called a “point cloud”, which can be compared with the digital model of the building.” The process is called “reality capture”.

The same article included the new partnership between 3D Robotics and Autodesk, each industry leaders in their own right. They quote Chris Anderson of 3D Robotics, “It’s all an information problem,” he says. Drones are making it possible to check in real-time that plumbing, heating and electrical systems are being installed correctly, but their most important may be to measure progress made during the previous day and check that against the plan. There are competing services from companies like Nearmap and Sky and Space, which use GIS based satellite systems and also allow site progress to be viewed, although perhaps not with as much detail as a drone that can collect up to 100 gigabytes on a flight.

Autodesk and others are also using virtual reality and augmented reality to overlay digital models with real-world views. Another construction software giant, US corporation Trimble, is collaborating with Microsoft to use Hololens with the aim of “transforming how architects, engineers, contractors and owners work”. The 2016 Daqri smart helmet also uses Hololens, linking the 3D BIM model with the wearer on-site.

The idea that projects are information intensive is, of course, not new, and drone companies are not the only ones adding transparency to building and construction. While the ability to monitor site progress on a daily basis will improve the efficiency and effectiveness of project management, there are other new technologies and systems that will greatly increase the transparency of contractors and project managers operations and performance. These will help clients in general, but for those clients who are prepared to get involved in their projects and want to use the data this will be a transformative change in the construction technological system.

The Aconex cloud-based platform enables collaboration across the lifecycle of building projects, with document management, cost management, bid and tender processes and contract management, workflow and site management, and asset handover and maintenance. It fully integrates BIM and design development. Originally this was a project management system, like many others started in the dot com era, with contractors as the market. During 2016 the company moved to a new business model, where the project owner signs up for access to the Aconex collaboration platform. The owner is the fee-paying customer, a ‘subscriber’, while the other non-fee paying users are the project’s consultants, contractors and suppliers, who obtain access to the platform through the account holder's subscription.

Two other software majors have also entered this market, coming from totally different direction. Trimble Connect was launched December 2016, which brought together Trimble’s suit of six software packages covering engineering and construction. Trimble is a very big and very successful US firm, expanding from their origins in mapping and GPS to surveying, estimating and project management. The other is from German behemoth SAP. Their Connected Construction uses Internet of Things technology to link site activities to the PM and project plans. Launched in 2015, it is one of a number of industry based IoT ventures by the company.

Real-time project data and monitoring has many implications for clients, contractors, suppliers and workers. One can expect many variations in how they play out in different countries and across projects. How the increased transparency of project and contractor performance these new technologies provide will impact on the industry is an interesting and, for now, open question. Markets run on information, and industry behavior reflects information flow and availability, so these effects could be profound. The main area technological transparency will change is to reduce the current information asymmetry between contractors, who know a lot about their costs and capabilities, and clients, who typically have limited information about these. The current system of procurement and project management also provides opportunities for what are called hidden information and hidden action, from agency theory, which can lead to a principal/client making poor decisions when selecting and monitoring an agent/contractor.

With technological transparency monitoring is easier and cheaper, so hidden action becomes more unlikely. All else equal, agency theory suggests this leads to increased trust between contractual parties. Software platforms also compile a complete record of the project as it progresses through the stages from inception to operation, and do this in an objective manner with time, content and contacts recorded. Transparency means less opportunities for hidden information, which will decrease, about the project, the PM, contractors, consultants and suppliers. Agency theory suggests this would reduce adverse selection of contractual partners, and increase their contractual commitment (i.e. the effort they make to meet contractual obligations).

The Cutting Edge No. 1: Construction Technology Today

The Cutting Edge No. 2: Use of Drones in Construction