Productivity, safety will lead AEC disruption

Productivity, safety will lead AEC ...

by Dr. BURCIN KAPLANOGLU, VP,  Operations director, Lendlease | December 9, 2016

Positive disruption is coming to our industry, and it will happen first in relation to our shared desire to improve productivity and safety.

After all, even if we only improve productivity by 1%, the impact to the overall economy will be tremendous. In terms of safety, I think we all can agree that human life and well-being is extremely important. And improvements there certainly benefit any project's bottom line, as well.

When will we see this disruption? Soon.

I predict that we will be accurately measuring the output of construction operations by 2020. This will allow contractors and owners to benchmark productivity which will then serve as a catalyst to justify adoption of many newer technologies and improved methods. In that state, positive disruption will be driven by architecture, engineering and construction (AEC) companies that recognize the value of such change and proactively adopt it. Below are five trends that will help bring us to that future state.

• Future of Project Management: On Feb. 23, the author will be among those speaking at a special BW In-Studio Talk, "From the Cloud to the Internet of Things and Back." For more, click here.

“I predict that we will be accurately measuring the output of construction operations by 2020”

In June, McKinsey & Co. published an eye-opening study, Imagining Construction’s Digital Future (below), stating that the AEC industry is ripe for disruption. Insights? The report notes project productivity has been declining for decades, that at least 20% of projects completed still take longer than scheduled, and that as much as 80% of all projects still go over budget. But these tech advances offer hope:

1. Higher definition surveying and geolocation; 
2. Next-generation, 5-D building information modeling (BIM);
3. Digital collaboration and mobility;
4. The Internet of Things (IoT) and advanced analytics; and
5. Future-proof design and construction.

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At the same time, such disruptive developments will play out against a dynamic backdrop of an evolving AEC industry increasingly defined by these looming challenges and opportunities:

• Complex Eco System — Very large market, responsible for over $1 trillion (5% of U.S. GDP). It employs more than 6 million directly, and feeds multiple layers of supply chain, which depending on the size of the projects, often have 100 or more suppliers, spread across multiple tiers;

• No Dominant Player — Extremely fragmented contractor base. Need proof? ENR's Top 400 Contractors annually only represent about 30% of the market in combined revenues;  

• Product diversity and complexity — Every project is unique and non-repetitive, distinguished by constant change of environment, mobility, and multiple stakeholders, even on modular work; 

• Speed of adaptation — Historically resistant to change. Why? Factors include rigid company structures and cultures, short term focus, reluctance to break from the status quo;

• Entry of new influencers and players — Just the last two years has seen significant financial investments by tech companies, venture capitalists, private equity firms, and start-ups. Market alignment and value propositions among them, with construction firms, has been challenging;

• Cost of change and cyclical market — Front-end risks of early adaptation and related difficulties to identify consistent returns on investment (ROI) where market performance is cyclical.

In my opinion, the solutions that impact day-to-day operations in the field so far have seen the fastest adoption. With that in mind, I suggest that companies looking for ways to positively disrupt this industry should focus on productivity and safety, and use the power of big data to back up their story.

So, I agree with the top trends that the McKinsey & Co. research has identified. Not surprisingly, my top pick is #4, The Internet of Things. Big data's impact on equipment monitoring and repair; inventory management and ordering; quality assessment; energy efficiency; worker monitoring and safety; all offer the most promising, positive disruption that our industry can embrace in the very near future.

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Based in Chicago, the author is a recognized industry technologist and thought leader who advises start-ups, speaks at industry events, and serves as adjunct faculty at Northwestern University. By day, he is VP and Operations Director of Telecommunication Infrastructure at Lendlease. In addition to IoT, he writes about other tech solutions, including drones, wearables, robotics, predictive analytics, and their applications to real estate and the AEC space.

Author's note: I write this blog solely in a personal capacity. The views expressed above are mine alone and do not represent the official views of my employer, any clients, companies, universities, institutions, or industry organizations with which I may be affiliated. — BK