Global Trend

The Coming Revolution in Construction

While the Digital Revolution has already started to transform most parts of the economy, the construction industry is still operating in the twentieth century. Compared to other industries, it lags far behind in innovation. While information technology, lean processes, and automation have fueled huge increases in labor productivity in sectors like manufacturing, retail, and knowledge work, U.S. labor productivity has actually dropped in construction. Specifically, while non-farm labor productivity has gone up 153 percent in the U.S. since 1964, construction labor productivity has declined by 19 percent.

If the current trends continue, we’ll soon be zipping around in autonomous cars and drones while robots and software perform much of our work?and then we’ll return home to the buildings that are still constructed, as they were when our grandparents were children.

But all that could change if the construction industry applies new technologies and ideas that are now emerging.

The need for an upheaval in the industry is vast. Engineering and construction accounts for 6 percent of global GDP, and it is the largest consumer of raw materials.

At the same time, demand for new housing is soaring. According to the World Economic Forum (WEF), every day 200,000 people are added to the populations of the world’s cities, generating demand for affordable housing and urban infrastructure.1

According to the UN World Urbanization Prospects report, by 2050, about 70 percent of the world’s population will live in cities. In North America and Europe, the percentage will be 90 percent. Given the growing demand and the limited supply, prices are already inflated beyond the reach of millions of people. According to UN projections, one-fourth of the six billion people living in cities in 2045 will be forced to live in slums if nothing changes.2

According to the McKinsey Global Institute, the housing affordability gap is $650 billion per year, or 1 percent of global GDP. In some cities where prices are highest, the gap is more than 10 percent of local GDP. Building the housing needed by 2025 would require $9 trillion to $11 trillion in construction costs using today’s technologies and methods.3

Fortunately, new technologies are about to disrupt the construction industry, lowering both the cost and the time needed to build new homes, as well as office buildings, bridges, and roads.

A new WEF report called “Shaping the Future of Construction” outlines the possibilities. Just consider new materials that are being developed for the construction industry:4

- Lixil is creating ceramic sidings that blend cement with organic fibers to achieve the same performance at 50 percent less weight.

- Concrete that includes bacteria that allows it to repair itself will cut lifetime costs by half.

- Concrete that includes chemicals will harden in half the time.

- Neopor is an expandable polystyrene from BASF that will be 20 percent more efficient in providing insulation.

- Micronal, also from BASF, a “micro- encapsulated phase-change material incorporated into building materials,” enables buildings to cool themselves without air conditioning.

- “Smart bricks,” currently being developed by scientists at the University of the West of England, contain microbial fuel cells that give them the ability to recycle wastewater and generate electricity from sunlight.

New materials are just the beginning. Also on the horizon are new technologies and new approaches to construction that promise even greater benefits. For example, instead of constructing an entire house or office building on-site, workers could simply assemble pre-fabricated components like walls or rooms that would be produced in a factory. This approach is already being used in building prisons and bridges.

Similarly, modular components can be produced in factories and then used in designs at job sites. The factory would take advantage of economies of scale to drive down a construction project’s costs and completion time. One example is the UK’s Lime Tree Primary Academy, which was assembled from standardized components on a production line. Instead of the typical two years to build the school, the project took just seventeen weeks.5

Most of the assembly of the modular and pre-fabricated structures won’t be done by humans. Robots will work with crews of construction workers, improving the quality of the work, reducing the time needed to perform it, and lowering costs. They also take on dangerous jobs, such as balancing on narrow construction beams at great heights. According to the U.S. Bureau of Labor Statistics, an average of one hundred construction workers have been killed every month since October 2014.

Large 3D printers will build full-sized homes and buildings by pouring cement one layer at a time. Similarly, a British global design company called Arup utilized 3D printing of steel components and consumed 40 percent less materials compared to conventional production techniques.6

Based on our analysis of this important trend, we foresee the following developments:

First, the construction industry will finally embrace innovations in business process redesign.

While other industries have ruthlessly squeezed time and costs from their processes, construction firms continue to use wasteful processes that cause projects to go over budget and beyond deadlines. According to the WEF, if the construction industry adopted lean principles and techniques, companies could reduce costs by 15 percent, while finishing projects 30 percent faster

Second, the new construction materials, techniques, and technologies will drive down the costs of construction.

Hundred of thousands of construction workers will need to acquire skills in working beside robots. By 2030, housing costs will drop sharply, and by 2050, billions of people in the world’s cities will be able to move out of slums and into affordable housing. But existing homeowners will see their property values fall as the supply catches up to the demand. Those who see the changes coming will sell their homes before the crash and move into rented houses or condos.

Third, policymakers will make changes in order to help to fill the affordable housing gap.

The economic benefits, and the benefits to society, are too great to ignore. According to the WEF, “Closing this gap could create up to 100 million additional jobs and generate $6 trillion a year in economic activity in the long run.” Governments can provide financing help to developers by providing guaranteed loans, offering tax incentives, and reducing the time to get approvals and permits.

Fourth, new skyscrapers will reach unprecedented heights, and buildings of all shapes will appear on the skyline.

Advances in 3D printing technology and new materials will enable the construction of any type of building that an architect can imagine. Glass, steel, and concrete will be built up layer by layer together, and breakthroughs in materials science will allow buildings to be lighter, more energy-efficient, and strong enough to withstand hurricanes and earthquakes. The height of buildings will no longer be limited to the length that elevator cables can safely extend; new technology from German firm ThyssenKrupp will replace the cables with magnetic levitation. Elevators will no longer need to move only vertically; they’ll be able to go up one shaft and down another, or move horizontally along the width of a building that might span a city block.

References
1. Quantum Run, June 23, 2016, “Forecast: Infrastructure 3.0, Rebuilding Tomorrow’s Megacities,” by David Tal. ⓒ 2016 Quantumrun Forecasting, a subsidiary of Futurespec Group Inc. All rights reserved. http://www.quantumrun.com/prediction/infrastructure-rebuilding-megacities-future-cities-p62. For more information about where the world’s population will live in the future, visit the UN World Urbanization Prospects website at: https://esa.un.org/unpd/wup/3. McKinsey Global Institute, October 2014, “A Blueprint for Addressing the Global Affordable Housing Challenge,” by Jonathan Woetzel, Sangeeth Ram, Jan Mischke, Micklas Garemo, and Shirish Sankhe. ⓒ 2015 McKinsey & Company. All rights reserved. http://www.mckinsey.com/global-themes/urbanization/tackling-the-worlds-affordable-housing-challenge4. To access the report “Shaping the Future of Construction: Breakthrough in Mindset and Technology,” visit the World Economic Forum website at: https://www.weforum.org/reports/shaping-the-future-of-construction-a-breakthrough-in-mindset-and-technology/5. The Telegraph, December 23, 2015, “Are Robots the Next Construction Workers?” by Chris Moss. ⓒ 2015 Telegraph Media Group Limited. All rights reserved. http://www.telegraph.co.uk/education/stem-awards/design/robotic-revolution/6. Quantum Run, June 23, 2016, “Forecast: Housing Prices Crash as 3D Printing and Maglevs Revolutionize Construction,” by David Tal. ⓒ 2016 Quantumrun Forecasting, a subsidiary of Futurespec Group Inc. All rights reserved. http://www.quantumrun.com/prediction/housing-prices-crash-3d-printing-and-maglevs-revolutionize-construction-future-cities-p3