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An analysis of Digitization in Construction Industry

Digitalization has become a popular concept around the world today due to its ability to create efficiency in operations, effectiveness, and provide new opportunities. Digitizing information makes it easier to preserve, access, and share. For example, an original historical document may only be accessible to people who visit its physical location, but if the document content is digitized, it can be made available to people worldwide. There is a growing trend towards digitization of historically and culturally significant data.

Digitization is of crucial importance to data processing, storage and transmission, because it “allows information of all kinds in all formats to be carried with the same efficiency and also intermingled”. Though analog data is typically more stable, digital data can more easily be shared and accessed and can, in theory, be propagated indefinitely, provided it is migrated to stable formats as needed. This is why it is a favored way of preserving information for many organisations around the world.

Construction industry embracing Digitization

The digital push is accelerating and even if construction industry players are still confused and hesitant about the change and new technologies, the time has come for them to develop a real digital strategy. Many players have created innovation labs and launched “proof of concept” (POC) explorations, often through local business unit initiatives, to test possible options and to remain open to possibilities without investing too heavily. Those local experiences are not sufficient anymore to ensure success in the future and to be on top of the wave for the years to come. It is important to note that while the necessary digital evolution can be a threat if not approached properly, it is mainly a land of opportunities both regarding cost efficiency, as well as regarding top-line client experience improvement and offer differentiation. Market player positions and values will be deeply impacted if today’s leading players don’t catch the ball in time.

Evolving client expectations

Influenced by other rapidly changing markets (such as B2C with platforms that have triggered new relationships, tailored products and powerful service levels), now expect the same from their homes, offices, commercial buildings and infrastructures to make their “connected lives” even more a reality. Constructions need to be more and more individualized, modular, connected to the Internet of Things (IoT) and allow for specific performance tracking, optimization of energy and improved security and health parameters for instance. Client demands are quickly rising and become more and more complex with expectations increasingly on the “usage” more than on the product itself.

New technological capabilities

Sensors and various hardware as well as software have seen cost drop and efficiency rise over the past few years opening the path to new possibilities. Technologies available on the market are more numerous than ever before (such as virtual and augmented reality, drones, robotics and additive printing) making it urgent to separate the more valuable ones from mere novelties.

New generation of craftsmen and professionals

Tech savviness is spreading in the construction industry, which traditionally has been, resistant to change, accelerating the adoption of digital tools. Innovative university curricula are training the younger generations for emerging tech-related jobs. Many new jobs, not yet known, will be created in the years to come with the adoption of new tools and processes.

Booming start-up environment

Startups have taken advantage of the market opportunities induced by some of these trends to fill newly created added-value gaps. Oliver Wyman has identified nearly 1,200 startups worldwide since 2010 in real estate and construction. These startups have received around US$19.4 billion in funding over the period, half of it in 2017.

Operational efficiency of digitisation

Virtual, augmented and mixed realities as well as dematerialization, in-situ documentation, connected schedules and immediate planning adjustments, vision of historical changes. Process efficiency has the potential to drastically increase through more efficient, transparent and rapid collaboration.

Connected machines, equipment and workers All machines and equipment (and even the workers on construction sites) have the potential to ultimately be connected, triggering improvements on dimensions such as maintenance, energy consumption, health and safety incidents, delays or quality. Robotics related innovations are also being tested and increasingly applied to automate the execution of repetitive tasks and support workers.

Industrialization of processes and parts

Construction tends to industrialize through pre-fabrication, modular production or 3D printing for instance which is, without doubt, a big opportunity to increase productivity in the sector.

Improved customer experience

Clients are increasingly becoming part of their own project, through enhanced visualization and possible participation in conception for instance. Moreover, facilitating their often very heavy administrative burden and really caring about their satisfaction at every stage of their journey becomes a priority. Platformization of the promoter business is also part of this change given that it ultimately aims at reducing costs and facilitating the client’s experience.

The challenge of digitization of construction Industry

A major challenge facing the construction industry is how to bring unproductive sites-sites that are currently too challenging to build on-into productive use. The need is urgent: As societies urbanize, they need to make fuller use of the limited amount of land at their disposal. As more and more land is developed, sites that had previously been too awkward, or even impossible, to build on soon become desirable locations.

The construction industry is ripe for disruption. Large projects across asset classes typically take 20 percent longer to finish than scheduled and are up to 80 percent over budget. Construction productivity has actually declined in some markets since the 1990s; financial returns for contractors are often relatively low-and volatile.

While the construction sector has been slow to adopt process and technology innovations, there is also a continuing challenge when it comes to fixing the basics. Project planning, for example, remains uncoordinated between the office and the field and is often done on paper. Contracts do not include incentives for risk sharing and innovation; performance management is inadequate, and supply-chain practices are still unsophisticated. The industry has not yet embraced new digital technologies that need up-front investment, even if the long-term benefits are significant. R&D spending in construction runs well behind that of other industries: less than 1 percent of revenues, versus 3.5 to 4.5 percent for the auto and aerospace sectors. This is also true for spending on information technology, which accounts for less than 1 percent of revenues for construction, even though a number of new software solutions have been developed for the industry.

Technical challenges specific to the construction sector have a role in the slow pace of digitization. Rolling out solutions across construction sites for multiple sectors that are geographically dispersed-compare an oil pipeline, say, with an airport-is no easy task. And given the varying sophistication levels of smaller construction firms that often function as subcontractors, building new capabilities at scale is another challenge.

However, none of this is going to get easier. Projects are ever more complex and larger in scale. The growing demand for environmentally sensitive construction means traditional practices must change. And the shortage of skilled labor and supervisory staff will only get worse. These are deep issues that require new ways of thinking and working. Traditionally, the sector has tended to focus on making incremental improvements, in part because many believe that each project is unique, that it is not possible to scale up new ideas, and that embracing new technologies is impractical.

The McKinsey Global Institute estimates that the world will need to spend $57 trillion on infrastructure by 2030 to keep up with global GDP growth.1 This is a massive incentive for players in the construction industry to identify solutions to transform productivity and project delivery through new technologies and improved practices.

The advantages of digitization in construction

Digitalisation in construction can be said to have started with designers moving away from their drawing boards to computer aided design practice some decades ago. From there, and with the constant improvement of digital technologies, the construction sector has progressively embedded.

Moving from today’s paper-based processes to digital solutions can help address many of the typical pain points, be it managing the supply chain or tracking crew productivity to name but two of the many challenges. Large construction projects are incredibly complex and require perfect synchronisation of people, equipment and material all the way from planning to on-site execution.

Existing digital solutions allow real-time and granular transparency on ‘all the moving parts’, powerful and timely analytics on progress and risks, enhanced coordination and, ultimately, better end-to-end management.

Given below are a few of the advantages of the digitisation of construction

Cost saving

Geological surprises are a major reason that projects are delayed and go over budget. Discrepancies between ground conditions and early survey estimates can require costly last-minute changes to project scope and design. New techniques that integrate high-definition photography, 3-D laser scanning, and geographic information systems, enabled by recent improvements in drone and unmanned-aerial-vehicle (UAV) technology, can dramatically improve accuracy and speed.

Modern survey technology

Modern survey technology is more accessible than ever because costs have come down substantially. Lidar and real-time kinematic GPS are now available for about $10,000. High-resolution cameras are small and light enough to be mounted on standard industrial drones; this is faster and cheaper than using helicopter-mounted cameras for aerial surveys. Specialized technology providers offer cost-efficient survey packages, including drone and UAV equipment, data uploading, and processing services, as well as software to manage drone flights, data capture, and dashboards to visualize information. Some government agencies and nongovernmental organizations have started providing free lidar maps.

Building information modeling

Building information modeling (BIM) should be regarded as the backbone of the new way of working triggered and targeted by the digital strategy given that different elements (such as various software, drones, construction engines, building and infrastructure equipment) should ultimately be connected to it. Overall BIM – especially 5D integrating planning and budget – is expected to trigger significant improvement potential (direct costs, quality, delays, security, image) along the full construction value chain (design, construction, operations and destruction).

BIM are used and hence if BIM acts as a real central coordination methodology and cockpit of a given project (and not only as a “siloed” software). We estimate that in this case around 15 percent to 25 percent total cost savings are achievable.  Recent evolutions also connect BIM and Geographic Information Systems (GIS) triggering additional opportunities. Important to notice, BIM also serves as an enabler for the industrialization of processes and parts.

Of course, while it always remains a priority, the focus on BIM will vary from one construction player to another depending on their position on the value chain. For instance, promoters, contractors, equipment manufacturers or facility management operators will consider BIM differently. Similarly even among contractors, building and infrastructure players, different BIM approaches will be used. This will likely trigger a displacement in value capture along the chain. General contractors may benefit more from higher-efficiency engineering and better managed project lead times as well as reduced waste; building material suppliers may see some of their volumes diminish. This may push upward integration and further concentration of building material suppliers to capture value.

Digital collaboration and mobility

Process digitization means moving away from paper and toward online, real-time sharing of information to ensure transparency and collaboration, timely progress and risk assessment, quality control, and, eventually, better and more reliable outcomes.

One reason for the industry’s poor productivity record is that it still relies mainly on paper to manage its processes and deliverables such as blueprints, design drawings, procurement, and supply-chain orders, equipment logs, daily progress reports, and punch lists. Digitizing workflows has substantial benefits. In an American tunnel project that involved almost 600 vendors, the contractor developed a single platform solution for bidding, tendering, and contract management. This saved the team more than 20 hours of staff time per week, cut down the time to generate reports by 75 percent, and sped up document transmittals by 90 percent. In another case, a $5 billion rail project saved more than $110 million and boosted productivity by using automated workflows for reviews and approvals.

The Internet of Things and advanced analytics

By measures such as the number of people, the profusion of construction equipment, and the amount of work going on at the same time, project sites are getting denser. They now generate vast amounts of data, a majority of which is not even captured, let alone measured and processed.

The Internet of Things is a reality in many other sectors; sensors and wireless technologies enable equipment and assets to become “intelligent” by connecting them with one another. On a construction site, the Internet of Things would allow construction machinery, equipment, materials, structures, and even formwork to “talk” to a central data platform to capture critical performance parameters. Sensors, near-field-communication (NFC) devices, and other technologies can help monitor productivity and reliability of both staff and assets.

Technological advancement of design processes

New building materials, such as self-healing concrete, aerogels, and nanomaterials, as well as innovative construction approaches, such as 3-D printing and pre assembled modules, can lower costs and speed up construction while improving quality and safety.

Building materials represent a $1 trillion global industry; materials usually account for more than half the total cost of projects. Traditional materials such as concrete, cement, and asphalt make up most of this demand.


The potential benefits of digitalisation within the construction industry (and with a particular emphasis on energy efficiency) are numerous. As well as improving data and information sharing, communication among different players, and monitoring, digitalisation can also facilitate the implementation of methodologies for testing and surveying.

As part of the development of a 2050 Energy Efficiency Vision, the Coalition for Energy Savings has commissioned the Fraunhofer Institute for Systems and Innovation Research to assess the potential for energy savings by 2050 under three different scenarios. The tasks included an update of the techno-economic energy saving potentials and an assessment of scenarios focusing on so-called ‘New Societal Trends’, such as changes in lifestyle, the impact of digitalisation and a shared economy. These changes have shown a potential impact on energy efficiency improvements and a potential contribution to decrease or increase energy consumption. In particular, an increase in energy consumption might be the result of new societal trends that are not accompanied by policies with a strong implementation of the Energy Efficiency First Principle. Results presented in this report state that, by 2050, the final energy saving potential identified can lead to a reduction in household energy demand of 63%.

Digitalization is the vehicle for change in today’s time. While almost every industry today is moving towards digitalization for better growth prospects, construction is one sector that is majorly lagging behind. The construction industry is considered the least digitized sector, although it is estimated that within the next three to ten years, it will witness integration of several digital technologies, including BIM, Machine Learning, 3D printing and robotics in its workflows.

Like in any other sector, technology will fundamentally reshape construction around the world – driving productivity and efficiency, redefining the project lifecycle and creating new winners and losers. The question is when, and which firms will be willing to spearhead the transformation.


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