Construction remains one of the least digitized industries globally. Construction’s limited digitization contributes to ill-informed decisions and inefficient industry processes, accelerating financial and environmental costs. Going over the budget and allotted time is almost the norm in construction. According to McKinsey, large projects typically take 20 percent longer to finish than scheduled and are up to 80 percent over budget. However, even though the industry has been relatively slow to join Industry 4.0, digitization has progressed to some degree.
The COVID-19 pandemic might have pushed the debate of digitization in construction further, as it forced many industry leaders to re-think and reflect the ways we build. Automating and digitizing as many processes as possible using AI, drones, 3D printing and prefabrication, and many other tools might usher in a brave new construction era. But the pandemic’s impacts on the industry and the latest innovation combined, how will construction’s “new normal” be?
From sustainability to standardization, we analyzed five disruptions in construction to keep an eye on.
1. Accelerated Industry Transformation
There’s no way to deny it: The pandemic strained the construction industry, as it did with so many others. Over 70 percent of construction businesses experienced a decrease in their turnover. Similarly, almost 70 percent had to cease some operations during the pandemic thus far. However, many experts believe there’s a silver lining. The pandemic will oil the wheels of the technological evolution of construction processes, which was notoriously slow. Thus, all players must now prepare for a fundamentally different “new normal” and industry ecosystem born out of an accelerated industry transformation, advises a new McKinsey report.
Although much of this transformation will be led by digitization and technological advancement, there’ll be more to it. The same McKinsey report highlights that all players, big or small, will witness a significant industrywide restructuring. Increased M&A activity and many new and exciting startups entering the field will characterize the beginnings of this “new normal” in construction.
As new winners are emerging, companies will have to reflect on their business models, products, and services, reinvent themselves to remain competitive, and stay relevant in the “new normal”.
The limited digitization in the construction sector goes hand-in-hand with the industry’s poor reputation with sustainability. Inefficient building processes are both a reason and consequence to why the construction sector is one of the worst environmental offenders: Although estimates vary, some state that the industry contributes to 23 percent of air pollution, 50 percent of the carbon emissions, 40 percent of drinking water pollution, and half of the landfill wastes. Industry leaders are well-aware that this must change.
Construction is only at the beginning of its sustainability journey and has a long way to go. Yet, the rise of ecological considerations, which pave the way for green innovations, will keep disrupting the industry for many more decades to come.
All phases of this complex and transactional sector will keep changing from planning to supply chain management — all while considering the environmental impact of the buildings throughout their entire life cycle. Stricter governmental and global restrictions and specifications, ongoing digitization, more efficient building materials, and consumer demand for greener lives will further propel these changes.
3. Automation of Workflows and Services
Automation of products, processes, and services will arguably be one of the most disruptive byproducts of the ongoing digitization in construction. The pandemic merely highlighted the possibilities: Thanks to the rising adaptation of technologies such as BIM, 3D printing, robots, drones, AI, and analytics, it’s becoming possible to do an ever-increasing percentage of the construction work off-site.
In the construction sector, which has complex collaborations and workflows, automation will posit three primary opportunities for disruption:
- Automation of the physical tasks on-site
- Automation of production and manufacturing, (e.g. 3D printing building parts in factories)
- Automation of services and management procedures, (e.g. design, planning, or facility management)
All in all, these will reduce the on-site work and its execution and make management much more efficient.
4. Specialization and Customer-Centricity
“Riches are in the niches,” goes the common marketing mantra. With the rising demand for targeted services and sophisticated needs of our new world, construction is no exception. Increased specialization of products and services catering to a base of customers that value a high-level experience will characterize the “new normal” in construction.
While a “winner-takes-all” situation might have dominated the markets, the demand for laser-sharp focus and expertise is already rising. Firms that specialize in specific products and segments, such as luxury single-family housing, hospitals, and medical facilities, or processing plants, will enhance their profit margins and competitive edge. Likewise, companies offering specialized services and products might expect a smaller but more regular and engaged customer base. Hence, a higher focus on customer-centricity will determine the prospects of companies who want to stay desirable and profitable.
The good news is, thanks to new educational technologies and opportunities, it’ll also be easier for the human resources to train and specialize in emerging sub-fields to meet the market demand.
5. Globalization and Standardization
The rising product and service specialization by no means translates into localized and smaller operations. In contrast, with a consolidated value chain, automation, and globalized codes of conduct, the construction ecosystem will be more internationalized than ever in the “new normal”.
Responding to the challenges of climate change, public health, and housing crises, there’ll be stricter international codes, regulations, as well as health and safety procedures. Particularly in advanced economies, governments and unions acknowledge the need to standardize building codes and create certification and approval processes for factory-built products rather than reviews of each site.
As the standardization will become a standard in the new normal of construction, the barrier to run a genuinely global operation will be lower. Additionally, with increasing collaboration opportunities and supply chain innovations, construction will have a chance to be truly international.
“New Normal” for Sustainable Growth Opportunities
Thanks to all these disruptions brought upon by advancing technologies and shifting market dynamics, there’s no doubt the new normal of construction will be one that’s kinder to the planet and its people — and undoubtedly more efficient.
Through digital-first, sustainable, and customer-centric business strategies, future-forward companies are poised to take advantage of this wind of change.