My Four Takeaways from the FT Future of Construction Summit

Tuomas Syrjänen • Chief Artificial Intelligence Officer

The FT’s Future of Construction Summit brilliantly set out the best and the worst of the UK construction sector. On the one hand, the conference took place at One Great George Street, the splendidly Baroque style, grade 2 listed headquarters of the Institution of Civil Engineers. At the same time, the conference coincided with the FT’s front-page story on the report into Carillion which blamed the company’s collapse on regulators, the government and Carillion members of the board for “acting entirely in line with their own personal incentives.”

Against this contrasting backdrop, what were my main take outs from the conference?

1. Culture and contracts are key barriers

Following Carillion’s collapse, the consensus is that there needs to be a shift away from adversarial contracts which encourage self-interested negotiations and a race to the bottom on price. This sets the scene for behaviours where there is more interest in exploiting any problems that arise, than in collaborating with other partners on the project to deliver solutions.

More generally, the distrust implicit in many big contracts leads to an emphasis on micro management which does little to encourage innovation.

Lack of funding for innovation is seen as a key frustration, holding back productivity and making it harder to attract fresh talent to the business. While there are examples of cutting edge innovation, areas of the construction industry continue to be very risk-averse and unconvinced about the investment case for adopting new technologies. Aecom’s ‘Future of Infrastructure’ report found that only 56% of industry professionals considered themselves good at adopting and scaling innovative delivery.

While there are no silver bullet solutions, there was broad agreement that the sector must take collective responsibility for changing the status quo. Contracts which highlight explicit achievement metrics that work for all parties, was one proposed way forward. There was also widespread support for the role clients can play in driving cultural/mindset change around how contracts are drafted and implemented. The consensus was that there are big benefits to doing things differently. As one speaker put it “Greater collaboration equals greater productivity equals greater profit.”

2.The Productivity Gap – here to stay?

Carillion aside, construction’s productivity gap must surely provide a major catalyst for change. McKinsey’s figures show that despite being one of the largest sectors in the world, global construction productivity growth averaged just 1% a year over the past 20 years compared to 3.6% for manufacturing. Meanwhile in the UK, the combined effect of stalled construction/infrastructure projects in 2015-16 alone was estimated to have had a £35 billion impact on investment related GDP.

When it comes to improving productivity, tech is key. Specifically, this means adopting consistent technology through the project – one speaker referred to this as the digital thread that runs through the life of the project. But what does this look like in practice? Infrastructure firm Aecom is busy trialling emerging technologies and claims to have more drones than the US Military! More generally, CEO David Barwell reported how virtual and augmented reality solutions are merging delivery phases by offering interactive and easily accessible design models, allowing users to walk through the design of an asset in a virtual environment. This allows contractors to deliver highly accurate visualisations for consultations - such as the one to improve the A303 around Stonehenge - which can lead to better decision making and improved outcomes for stakeholders.

Barwell also described how standardised components are enabling fast-build modular techniques and procurement stages, with a new approach to design capable of creating efficiency improvements of up to 20% on a typical project.

Elsewhere, there is a growing use of drones for data capture, laying cables and transporting materials on site. Alongside IoT sensors and telematics equipment, the use of digital environments to pre-assemble panels is likely to become more mainstream while automation of functions such as welding will radically alter the supply chain and increase productivity. Meanwhile Artificial Intelligence (AI) will start to predict risks in the supply chain – it’s already possible to use AI to predict risk from photos. Emerging tech doesn’t just have the capability to reduce cost and boost productivity: wearables and virtual reality also have the potential to massively improve safety on site – the conference heard about the pioneering use of robots to assist with assembling scaffolding which the manufacturers claim will help prevent accidents and long term musculoskeletal injuries caused by constant lifting. Robots are also expected to reduce onsite labour costs by 33% and reduce the time needed to assemble the scaffold by 42%.

3. Visibility, connectivity and information sharing are key challenges

A chronic lack of supply chain visibility and information sharing emerged as a strong theme of the sessions. In certain cases, lack of transparency comes down to a closed corporate mindset. As one speaker put it: “do we want everyone in the company to know what we know, or to know just enough to do their jobs?” It was good to hear my colleague Jussi Aho, CEO of Finnish construction firm Fira Group Oy discuss with other panellists the need for leadership capability to bring out the cultural change needed to deliver real collaboration. In Finland, trust and radical transparency are part of our national work culture: it’s considered important for everyone in a company or on a project to know what is going on so that they are empowered to make a difference.

That said, the construction sector has a long way to go before we achieve this level of information sharing. In fact, speakers reported that many clients never get to see what happens within the project supply chain or all the people connected to it beyond their initial involvement, which can reinforce a sense of uncertainty and lack of trust. This led to calls for better use of existing technologies such as cloud collaboration and open data platforms to improve visibility, share and connect data and introduce a more integrated approach to big projects. Smarter use of open data platforms could help ensure relevant asset data was shared with key stakeholders, highlighting problems more quickly and reducing uncertainty.

There was also a demand for specialist subcontractors to be involved in design at an early stage to avoid designs that are unbuildable – again using digital tools to bring the right people together at the right time and encourage them to share in the risk and the rewards of a project.

While a huge mindset shift is required to facilitate greater information sharing and project transparency, the gain is worth the pain. If contractors can deliver a project with greater predictability around timing and cost outcomes, clients will be more willing to take risks and innovate. This in turn will help construction as a sector improve productivity and fulfil its growth potential.

4. If we can fix the problems, the opportunities are huge.

While the Future of Construction Summit inevitably focussed on the sector’s many and varied problems, one message rang out loud and clear. If we can solve the problems, the opportunity is huge. McKinsey even put a figure on it – globally they estimate there is a $1.6 trillion opportunity to close the gap. Here in the UK, Mace believes that if it fixed its productivity problem, the UK construction sector could be delivering an additional £100 billion of growth to the economy.

Yes, there is a bewildering choice of tech solutions to choose from. However, the advice from the speakers was: experiment, start small, don’t over focus on the numbers and open up to the construction tech ecosystem. Bring in innovation and data experts and allow them to hack your data and find problems worth solving.

Here in the UK, there has never been a better time to experiment thanks to initiatives such as the Government’s new Construction Sector Deal, a £170m funding package aimed at boosting productivity. The overall message from the conference is the case for change is crystal clear - we just need to pull together as a sector to make it happen.

Photo by 贝莉儿 NG on Unsplash

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