Huge tower blocks built in weeks under one roof… automated bridge-building behemoths… bricklaying robots… No it’s not science fiction.
These are all real solutions doing here and now business. And soon there will be more. So what are the big trends in construction, in Europe, the US and Asia, and how can we turn them from opportunities into business benefits? Here are three trends and opportunities for companies to leverage in 2017.
Opportunity #1: Within five years, 35 per cent of asset owners will move over to outcome- and performance-based contracts
According to a 2015 report from Transparency Market Research the global market for Product Lifecycle Management will reach over $75 billion 2022 — forecast to grow at a Compound Annual Growth Rate (CAGR) of 8.1 per cent from 2015 to 2022. As with other industries, it means that contracts in the construction sector too will become increasingly complex and service-based. It’s not a new idea! Famously, Rolls Royce’s pioneering ‘Power-by-the Hour’ concept, invented in 1962, supplied a complete engine and accessory replacement service on a fixed-cost-per-flying-hour basis. Recently Rolls Royce added Engine Health Monitoring, which tracks on-wing performance using on-board sensors and Lease Engine Access, which supplies clients with a back-up engine during off-wing maintenance — clearly connecting assets using the Internet of Things (IoT) with the enterprise applications that manage them will accelerate the innovation of business models. But the key takeaway for construction companies is that they need to be crystal clear about the core purpose of their asset. If a company is building a hospital, for example, it might win its contract through guaranteeing provision of an agreed number of beds over time, or even the health outcome of patients. And it will need to be able to measure both. For the client everything outside these core metrics could just be extra expense.
How can companies leverage this? Today IoT enables construction companies to measure things in a detail and quality that has never been possible before. Essential key metrics to keep in mind are availability, reliability, maintainability, supportability, cost of ownership, and end result. Technology functions within construction firms need to empower business analysts with assets’ performance indicators so that they can find the most profitable models that will enable them to turn service into an opportunity. Ultimately construction companies will operate more like service industries acting on a performance-based model.
Opportunity #2: Within five years over 50 per cent of all construction projects will use offsite modular construction and 3D printing
I recently visited an Irish construction company constructing beautiful, durable, high-quality schools throughout the UK. But they built them at their plant in Ireland and shipped them across the UK for assembly onsite. Each school module took a few months to construct. These were extremely high quality builds. If you had seen one in its finished state you would never have guessed it had been built in a factory.
Modular constructions are all around us. In fact we probably don’t spot them precisely because they have become so usual. Modules are the new bricks and mortar in airport terminals and rail stations (Heathrow Airport and Birmingham New Street in the UK are just two examples). And they’re built to last. These assets have upwards of a 30-40 year life, lasting as long they are designed for. Opportunity #3: In the next five years 25 per cent of work in the construction industry will be carried out by robots. Driverless cars, battalions of self-driving trucks — for most of us these are now firmly on the technology agenda. Yet for many in the construction industry it still seems some time away. It isn’t. A 2016 PWC report pinpoints China as a prime example of booming demand driving huge growth in industrial robotics: “Since 2013, the number of shipments of multipurpose industrial robots in China has roughly doubled to an estimated 75,000 in 2015… forecast to double yet again to 150,000 by 2018, according to the International Federation of Robotics.”
A new remotely operated bridge building machine in China, the SLJ900/32, operates, without any conventional crane technology. It travels across the bridge constructing a temporary track as it goes and towing each new segment with it — extending between the bridge’s columns and dropping the segment into place.
Kenny Ingram
The author is Global Industry Director of Construction and Contracting at IFS. Views expressed are his own and do not reflect the newspaper’s policy.
Picture source: Alamy Images