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Smart Industry 1/2018

Smart Industry 1/2018 - The IoT Business Magazine - powered by Avnet Silica


Smart Solutions Construction Building on IoT The Future of Construction Catching Up The building industry is older than the pyramids – and in many ways it has remained unchanged. However, after years of stagnating productivity and antiquated processes and procedures, construction is slowly awakening to the fact that, to remain viable, it needs to gamble big on technology in general and IoT in particular. 72 ■ By Mark McCoy

Construction holds the dubious honor of having the lowest prod uctivity gains of any industry, says a report by McKinsey & Company, a management consulting firm. In the United States, productivity in the construction industry has plunged by half since the late 1960s. UK newspaper The Economist called building the “least improved” of all major industrial sectors. Why? Ask builders and they will complain about the rising costs of materials and increasingly restrictive building codes, along with tighter workplace regulation and many other suffocating bureaucratic strangleholds. Although low inflation in most developed countries has held costs down for the past ten years at least, over the same period productivity in construction in Europe and North America rose by just one percent annually – a piddling rate. To find an explanation for the anemic state of the building industry, one must search elsewhere, says Luc Luyten of Bain & Company, a consultancy firm based in Boston in the US. The first reason is that builders have been extremely reluctant to invest in technology because the industry has learned through bitter experience to always prepare for the next recession. Capital-heavy approaches to construc tion bring high fixed costs that are hard to cut during a downturn. “Workers, in contrast, can be fired,” Luyten explains. As a result, construction relies heavily on brute force – in the struggle of machines versus humans, building workers have the advantage. This applies not only to less developed countries like India or Pakistan, where wages are low, but also to Western nations. Fragmented market The second reason construction lags behind other industries is its extreme fragment ation. In the US alone there are more than 730,000 building firms employing over seven million workers. That means the average head count of a construction company is just ten. The same goes for construction companies in most European countries. There are around 74,000 businesses in Germany employing 780,000 people, or about 10.5 people per company. The sheer number of firms presents a whole raft of problems, the greatest of which is cut-throat competition. With dozens of companies bidding on each contract, it is relatively easy for developers to drive prices, and margins, down. Even if a single winner emerges, the company will normally need to join forces with many other companies who are signed on as subcontractors, each looking out for its own best interests. Digitalization, Luyten believes, is the only way out of this mess even though builders are slow to embrace digital technology. Take Building Information Technology (BIM), for example: its 3Dmodelling processes introduce efficiencies by allowing architects, engineers, and builders to work as teams, sharing information and harnessing the power of the cloud. In other words, BIM lets partners in a building project – architects, developers, contractors, and subcontractors – share files of information to support decision-making regarding a building or other built assets. Big BIM vs Little BIM In the past, builders relied mostly on 2D drawings (plans, elevations, and sections) to share information. Now 3D models provide a feel for the geometry of a building, and BIM makers have been busy adding extra dimen sions, like time and cost, to their systems, causing many of them to refer to themselves as 5D BIM or Big BIM. Ideally, such systems go beyond the planning and design phases of the project, extending throughout the building life cycle and supporting processes including cost, construction, and project management as well as facility operation. Critics have been quick to note BIM can’t do everything. For instance, date modelling with BIM takes much longer than something fresh off the drawing board, so more time and effort is required. At least theoretically, this should balance out in the end thanks to reduced costs due to errors and rectifications later. But for the construction company, feeding the necessary data – some of which Robotics and 3D printing require 30% to 60% less building materials and can be completed between 50% and 80% faster Michael Shomberg Global vice-president and general manager for engineering, construction, and real estate at SAP might not even be available during the early stages of a project – means shifting effort, and investment, forward, with no certainty that anyone will eventually foot the bill or that any major benefits will accrue to the builders themselves. Due to the fragmented, heterogeneous nature of the industry, widespread use of BIM faces additional hurdles. As a rule, many firms are involved in a project, each with its own software tools and computer-aided design (CAD) systems, and each with its own proprietary data format. BIM could solve the latter problem, but only if the functionality has been installed, and paid for, beforehand. In addition, many architects consider design as their own personal intellectual property and are highly reluctant to share data with others, even if they are all supposedly on the same team. Digitalization is the future In practice many building companies choose to opt for Little BIM – a stripped-down version that acts as a stand-alone solution with limited functionality. Its use is generally restricted to employees of one company or even one group within the company, such as planners or asset managers. Here, again, fragmentation means that builders hesitate to share costs with other companies, any of which could one day become their competitor. Michael Shomberg, global vice-president and general manager for engineering, construction, and real estate at SAP, a German enterprise software company, is convinced the future of construction lies in digitalization. 73