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By Laura Moretz
November 6, 2017
55 percent of the respondents to KPMG’s recently released 2017 Global Construction Survey, “Make it, or break it,” believe that the industry is ripe for technological revolution, and 72 percent say that technology is important to their strategic vision. Why is it, then, that the survey finds that only 5 percent are “cutting-edge visionaries” and 57 percent consider themselves to be “followers” or “behind the curve”? There is a mismatch between the respondents’ beliefs and their readiness to embrace change.
Clay Gilge, the co-author of the report who leads KPMG’s Major Projects Advisory practice, says, “I think a lot of entities out there actually thought that they were leading, and when we evaluated them it turned out it wasn’t actually the case… people within the industry are seeing how much technology is disrupting and advancing—they’re realizing that they’re kind of getting left behind.”
“There’s a big gap right now between where people would like to be versus where people are.” Gilge says many companies are looking for ways to better integrate data. “There’s a lot of what I would consider optimism about the adoption of advanced analytics, the adoption of mobile technology project management information systems. However, when you look at where the actual respondents are, there’s a big gap there. They’re not nearly as far along as you would expect.”
Construction and engineering companies are ripe for disruption in part because “there haven’t been productivity increases in like 40 years — it hasn’t had the same gains as other industries,” Gilge says.
Technology advances are mostly in isolated pockets of the industry. “You have this fragmented industry that has a lot of opportunity. The question is if the players within the industry disrupt themselves or whether there are going to be other players that are going to come in, like in media, where you had Netflix? Are there those same types of players that are going to come into construction and disrupt the entire supply chain?”
Gilge says one type of disruption has occurred when general contractors and developers team up, partially collapsing the supply chain. “Those general contractors are actually putting in an equity stake and those developers are actually more like a GC so that part of the work stream is collapsing.”
Such an arrangement can bring together isolated streams of data. When the subcontractor, the equipment and material suppliers, the architect, the engineer, the general contractor, and the owner all maintain separate streams of data, it is hard for anyone to make fully informed decisions. “If you collapse that down for less players, the data becomes much more aggregated, and you can make decisions around productivity and efficiency more easily.”
Integrated data will be the backbone of technological advancement in the construction industry, Gilge predicts. Right now, the advances are in isolated areas, such as the use of drones here, or the use of 3D printing there.
“It’s going to be way more effective if you have a completely integrated life-cycle for a project. Imagine everyone sharing the same information,” he says. “If you leveraged the data across the project life-cycle, implementing those new technologies would be a lot easier.”
The question remains: can disruption or a radical integration of technology into the industry come from the existing leaders? Gilge says, “Some of the leaders, you’re asking them to go out there and, basically, disrupt themselves and embrace technology… It’s not the youngest, the most dynamic kind of workforce. A lot of that has been because there is a bunch of engineers who are very pragmatic and conservative, and you know, they’ve done things a certain way.”
Another obstacle is that subcontractors who might offer integrated solutions do not have enough financial incentive. “If you’re investing a lot in technology and others are going to reap the benefit, then you really have to look at that.” The owner of the project is the real winner. “Sometimes, the contractors aren’t incentivized to make investments unless it’s going to their bottom line.”
Not only is adequate financial incentive a problem, Gilge says, but also “there is a pretty big lack of skill sets around what you need within your engineering-construction company today versus yesterday. Yesterday, you didn’t need cloud architects. You didn’t need all these data scientists; you basically needed an IT person that kept your network running. I think there is a resource gap, and it also goes all the way down to a generation gap where you don’t have the right people. A lot of it comes down to the fact the industry hasn’t been attracting and retaining the younger millennials at the rate that it really needs to.”
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