Over the past decade, digital technologies have transformed whole industries, ushering in the fourth industrial revolution, Social media platforms and on-demand streaming services from start-ups such as Facebook, Spotify and Netflix have transformed media and entertainment. E-commerce giants like Amazon and Alibaba have disrupted brick-and-mortar retailers. Digital-based mobility companies are challenging old-line automakers. And the new technologies did not just satisfy consumer demands for better entertainment, shopping and transport. In those industries and others, innovations improved companies’ productivity and sustainability and reshaped the skills and competencies needed to thrive.
During the same period, however, the construction industry has continued operating as it has for the past 50 years, with a heavy reliance on manual labour, mechanical technology and established operating and business models. Productivity has stagnated as a result.
Now, digital technologies are gradually entering the construction industry, changing how infrastructure, real estate and other built assets are designed, constructed, operated and maintained. Those technologies include building modelling prefabrication, wireless sensors, automated and robotic equipment, and 3D-printing. The econonic and social impact could be substantial, as the construction industry accounts for 6% of global GDP and employs more than 100 million people worldwide. Within 10 years, full-scale digitization could help the industry save an estimated 12-20%, equal to between $1 trillion and $1.7 trillion annually, n parallel to the new technologies, there are several global megatrends that urge players in the construction industry to rethink long-established practices. Among the most impactful are fast urbanization, climate change, resource scarcity and a growing talent gap. The last of these is especially pressing. Already today, more than two-thirds of world Contractors have difficulties filling key positions while in Pakistan and world over construction sector, hard-to-fill vacancies is more than double in other countries the talent gap is expected to grow further,
Six key ways to thrive amid disruptions
Players along the construction industry’s value chain – architects, designers, engineers, building material suppliers, contractors, and operations and maintenance companies – need to prepare strategically and make the right moves to thrive amid the disruptions the new technologies and trends could cause. However, the myriad potential changes in the industry will make it difficult to predict the future. To help, the World Economic Forum, together with the Boston Consulting Group and more than 30 leading companies from the construction world, created three future scenarios to prepare the industry for a broad range of possible futures:
• Building in a virtual world. Artificial intelligence (AI), software systems and autonomous construction equipment replace most manual work throughout the engineering and construction value chain.
• Factories run the world. Construction activities move largely to factories and the industry uses lean principles and advanced manufacturing processes to pre-fabricate modules that are later assembled on-site.
• A green reboot. The construction industry uses sustainable technologies and new materials to meet tough environmental regulations. It is still unclear which route construction will take, and very likely that the future will include elements of all three scenarios. Current business models, strategies and capabilities will not be sufficient in any of these future worlds. This underscores the fact that players along the construction value chain need to prepare strategically.
Many proposed actions relate only to a particular scenario, but six key actions will be relevant in any possible future.
• Attract new talent and build up required skills – as any future scenario requires talent with substantially different skills than today’s workforce possesses, and adequate upskilling processes are largely not in place.
• Integrate and collaborate across the construction industry’s value chain – as the construction industry is characterized by a disintegrated and highly fragmented value chain, which hampers the seamless data flows and integrated systems that are essential in any future scenario.
• Adopt advanced technologies at scale – as the construction industry has been slow to adopt new technologies and still heavily relies on manual labour and mechanical technologies, resulting in poor productivity.
Further key actions are: to maximize the use of data and digital models throughout processes; to review existing product portfolios and embrace new business opportunities; and to enable change-management and adaptiveness.