While the construction industry has always been among the driving forces of the economy, it has also long been criticized for its lack of efficiency in comparison to other industries and its resistance to innovation. There have been several discussions on lack of tech adoption in the project industry and it is lagging all other industries in the past few decades.
In my opinion, there are a few reasons for this:
- Transient nature of jobs: In the construction environment; teams, locations, environment, processes etc. are in constant flux as resources are shuffled across projects and each project has its own nuances. This consequently undermines the ability of organizations to train, develop and implement new practices.
- People on the move: While the industry is highly reliant on people, the sense of ownership of companies towards people and vice versa is lower. Consequently, there is little incentive for these two stakeholders to contribute to each other. This does not encourage employees to commit to the organization and help improve its processes. In short, the rolling stone gathers no moss.
- “Contracts precede relationships”: Interactions in the construction ecosystem can be intensely transactional in nature with lesser emphasis on process improvements compared to traditional industries. In the construction industry it is common to be co-located at the client’s premises, which are often physically away from the parent organization. Often this distance and proximity to the customer coupled with pressures of project process and project performance by the client will translate into lower focus on improvement initiatives to improve efficiency. To complicate matters, clients who are in the driving seat of the project industry do not have the wherewithal, patience, or incentive to attempt adoption of new technology in their design and construction processes in the duration of the project.
- Disconnected work systems: Often multiple modules of technology with a varying rate of adoption are deployed across the value chain and/or that is deployed within one organization and often these disparate systems do not talk to each other. This lack of free flow of information hinders the ability of the industries to collaborate with its several moving parts.
All the above result in a situation where the construction industry is seen as reluctant to adopt technology consistently. However, there is a growing realization and awareness among stakeholders on this subject. The ability to innovate varies throughout the supply chain and project stages, and just as innovation will mean different things to different economies, it is equally important to realize that challenge and meaning of innovation for a small specialist sub-contractor will almost certainly be very different from that of a large multinational corporation. For e.g. We have seen changes in this approach in certain parts of the construction ecosystem with engineering design leading the way. The ecosystem around the Engineering design has been evolving at a faster pace in comparison to the other stages of construction projects.
Some early steps have been focused on back-office work such as construction accounting related ERP solutions, document management, data collation and analytics, etc. and is expected to move on to field activities. Many automations have been adopted from the manufacturing industry, especially from the automobile industry wherein robotics and workflow automation have been used extensively.
A few trends such as volumetric construction, offsite / prefab, integrated construction robotics, innovation in concrete technology with reduced setting time, etc. are trending as major focus and in the post covid acceleration. We expect to see major changes in the construction segment between 2024 and 2028, when we expect changes in the business models and reduction of 50-60% unskilled workforce with a large number of technical skill requirements driving higher efficiencies.
At an organizational level construction companies need to invest in a central pool of excellence to identify new technologies suitable for their operation and drive their adoption across project operations in a dogged manner. This may also involve building a positive pressure to counter the client pressures the delivery teams typically face on the ground. They can also spawn new learnings between various parts of the organization and enable organizational learning. Lateral recruits coming into the organization can be incentivized to adhere to or actively discouraged to deviate from set norms as defined by the central think tanks.
Government incentive and regulation has been seen as a good way to hasten tech adoption across the board. For e.g., Singapore BCA has incentives; funds and credits and changes in regulation has hastened the adoption of technology and improvement in productivity and helped in changing processes in the construction industry.
However, we must keep it in mind that the current business margins or limited financial capability does not encourage investment to fuel innovation and automation. The industry works on lower single digit margins, which effectively does not allow room to invest in technology. In fact, the developers and the local governments who were so far the beneficiaries – and going to benefit more – will have to invest heavily with universities and industry to create research and development centers, innovation hubs, and even finance the pilot projects. Further there is a need to integrate processes, across multiple stakeholders, to drive the adoption of technology in this industry i.e. Government initiatives integrated with the industry players, industry stakeholders working harmoniously across the value chain with a clarity and finally at a project level, there is a need to integrate its various disparate phases seamlessly to drive this elusive adoption. This wholesome integrated approach can create an atmosphere conducive to adopting new technologies which in turn can result in increased efficiency, cut waste, and save money for all stakeholders. This is all the more important in today’s environment, when the need is felt strongly across the value chain to deliver faster and cheaper.