Global Trend

The first stage of every techno-economic revolution involves the introduction of a new technological paradigm. At that point, the focus is primarily on the companies creating the technology itself.

That’s true whether we’re talking about railroads, steel, electricity, or computing. That stage ends with a “transitional crisis,” or turning point, like the Dot-Com Crash; then, the survivors spend 5-to-15 years building-out the capabilities promised during stage one.

Finally, during the second phase of each revolution, mature capabilities create truly transformative value for society by reshaping the entire economy using the new technological paradigm.

This last step happens when the technological paradigm achieves the capability and affordability which enables its cost-effective deployment in foundational industries.

During the first stage of the digital techno-economic revolution, the big winners were device & chip makers, software companies, telecom companies, and eventually, internet platform companies. Traditional industries that dealt with information products like media, banking and insurance have largely been transformed, while ecommerce is slowly reshaping retailing.

However, maturing technologies coupled with demographic and geo-political forces have only now reached a tipping point beyond which the remaining foundational and ubiquitous economic sectors will be truly transformed.

One of the largest and most automation resistant of these foundational sectors is construction. Since the beginning of the 20th century, its productivity growth has lagged far behind sectors like manufacturing, transportation, and business services.

According to a 2017 report from McKinsey & Company, Global labor-productivity growth in construction averaged only 1 percent a year from 1995 to 2015; meanwhile productivity growth averaged 2.8 percent for the total world economy and 3.6 percent for manufacturing.

According to this estimate, if construction productivity had kept pace with the global average for all sectors, we’d be getting 50 percent more value for each hour of construction work performed.

This added value could translate into higher pay, greater profits and better value for end-users. This is a big deal when you consider that construction earnings before interest and taxes account for only 5.5 percent of revenue, on average.

Worldwide, construction spending totals over $10 trillion a year. In the United States, it totals roughly $1.8 trillion annually and the industry employs roughly 7.6 million people. More importantly, the quality-of-life of every person on earth is influenced by the availability of cost-effective homes, offices, factories, stores and infrastructure.

This means improving the performance of the construction sector can have an outsized impact on economic growth and our quality-of-life.

In the United States, current demographic and economic trends indicate that construction spending could approach $2 trillion as soon as 2025, implying the need for as many as 8.5 million total workers.

That makes sense when you couple growing residential demand from maturing Millennials with the reshoring of American manufacturing as well as on-going efforts to renew infrastructure ranging from roads & bridges to airports, pipelines and power grids.

This challenge is exacerbated by demographic factors. Specifically, 25 percent of workers in the construction sector are Baby Boomers, 55 and older. Worse yet, the American educational system has done a poor job of equipping people for this industry or even funneling them in that direction.

As a result, the sector is having difficulty retaining the current workforce, let alone growing it at several times the rate of the overall workforce.

Fortunately, a whole suite of digital solutions is finally emerging which have the potential to resolve this dilemma and eventually enable dramatically faster growth, despite demographic constraints. These solutions include robotics, artificial intelligence, and additive manufacturing.

The implications for cost and availability could be enormous. For instance, there are expected to be an additional 2 billion people on Earth by 2050. To meet their needs, humanity will need to build over 13,000 structures every day from now until 2050.

Such a building boom means unprecedented opportunities for technology to transform construction methods. The combined power of AI, robotics, machine learning data analysis and process automation has the potential to make construction much faster, less expensive, and less wasteful, while making human jobs safer and less physically demanding.

And with fewer than 31 percent of projects coming in within 10 percent of budget and schedule, the impact on the industry and the wider economy could be substantial.

Meanwhile, the value created for consumers, workers, and investors will be enormous.

Given this trend, we offer the following forecasts for your consideration.

For example, supply chain and building material software company DigiBuild is already using AI to bolster its offerings. The company has been around for five years and has automated the job of sifting through suppliers to find materials and working out scheduling.

Last fall, DigiBuild became the first company to introduce OpenAI’s ChatGPT into the construction supply chain. It claims that AI has improved efficiency and slashed costs for the firm’s clients. What used to take a team of humans hundreds of labor hours using Excel spreadsheets, notebooks and manual phone calls has been reduced to a matter of seconds with the help of language learning models.

That means a construction firm using Digibuild software can talk to 100 suppliers in one minute versus just a handful in a couple of hours. The potential savings in terms of procurement and planning are enormous.

Project oversite and coordination readily lends itself to digitalization, enabled by Artificial Intelligence. AI is especially effective for processing and mining unstructured data such as photos, videos, and text and converting them to insights and intelligence.

Furthermore, unlike conventional reports and dashboards which focus on ‘what has happened’ or ‘what is happening’ on projects, AI can ask ‘what might happen?’ This can be a total game-changer when done right.

What are the benefits? At the design stage, AI-powered software is helping architects and engineers design more efficiently and quickly generate 3D models of buildings and other structures. This allows for faster and more accurate design, saving time and money.

At the planning and execution stages, AI is also being used to help construction managers plan and manage projects more effectively. AI-powered software helps managers to track progress, identify potential problems and optimize resources. This helps ensure that construction projects are completed on time and within budget.

Just as factories replaced craftsmen in manufacturing, modular construction is poised to replace most on-site construction in the housing sector. A buyer can generally expect to spend anywhere from 10 to 20 percent less on their home if he or she chooses to “build modular.”

These savings are found mostly in three major areas: bulk purchasing, labor costs, and building materials.

First, modular manufacturers create multiple homes every month, and so are able to order items they need in bulk, reducing the cost per item.

Second, it requires fewer man-hours total to construct a home by modular means and the cost per man-hour during the manufacturing stage is much lower.

The average workman on a site-built home will have multiple responsibilities; a worker in a modular manufacturing factory is much more specialized. Depending on the worker, the size of the factory, and the volume needed, a modular worker may need to do only one type of task all day, every day. The worker will become an expert in just that one aspect of home-building (such as installing cabinets) and will be able to do that one task much faster and more efficiently.

And third, extra material that would be “scrap” in the case of the site-built home can be reused by one of the hundreds of other homes that will be constructed in the same facility, and the resulting savings can be passed on to buyers.

Now armed with ERP systems, the whole process can be optimized in ways that would be impossible with site-built homes. - The combination of digitalization and skills shortages finally gives this 70-year-old business model a clear set of competitive advantages.

Drones equipped with high-resolution cameras already allow construction professionals to capture in-depth job site imagery from any direction and altitude. Increasingly,

AI-enhanced software installed on the drone, will let construction professionals measure and monitor the progress of a project, evaluate worksite safety, and flag potential problems.

Moreover, drones can create 3D models allowing for a detailed view of the job site, unavailable through traditional methods. Drones also allow construction personnel to quickly inspect progress, even where it’s too hazardous for human beings.

Furthermore, using drones will let construction professionals better understand the project’s progress, inspect for any deficiencies, and review the work completed.

As drones become ubiquitous, costs will go down while user skills and system capabilities will increase making the cost-benefit tradeoff clear. As a result, drones will make it easier for construction professionals to reduce risks while doing more in less time.

AR is already transforming how builders and contractors visualize, design, and construct projects. By allowing different players to view and interact with digital representations of the construction project, AR facilitates faster and more efficient planning.

Moreover, AR can be used to evaluate the progress of a project in real-time; this allows for up-to-date communication between stakeholders, enabling quick response and action when changes need to be made. AR can also improve construction plans and designs by allowing for the visualization of projects and their components in a 3D environment.

This allows for a better understanding of the project and its components, leading to better decision-making. AR also allows for improved measurement and scaling of components. In addition, AR can help manage the project by providing real-time information on installation and maintenance as well as documentation of changes and tracking of safety measures.

Moreover, AR can play a key role in capturing, storing, tracking, and integrating data which can be used to assess problems and provide solutions quickly and easily. This allows for better understanding and management of the project throughout its lifecycle. And that reduces potential errors, as well as ensuring that the project is running within budget and on schedule.

3D printing is especially cost-effective and efficient relative to traditional construction methods when the designs are complex or unique. As demonstrated by several startups, 3D printing can enable the fabrication of affordable, energy-efficient, and sustainable homes and other buildings, in a fraction of the time it would take to build a traditional home. The technology typically uses concrete and plastic resins as the printing “ink.”

Beyond that, 3D printing will revolutionize how construction companies create, customize, and modify building components. Using 3D printing, components with complex shapes can be designed, prototyped, and tested more accurately and quickly than ever before.

For instance, several firms already use 3D printing to create prefabricated building components such as structural beams and columns, which can be quickly assembled onsite with minimal effort.

Furthermore, 3D printing enables construction workers to quickly and accurately scan and model existing structures to identify areas needing repair or improvement. Then, it enables workers to create customized parts and components for repair or replacement.

In this way, 3D printing offers an efficient and cost-effective means of repairing or improving existing structures without costly and time-consuming demolition and reconstruction. Going forward this could help cost-effectively transform today’s glut of urban office and commercial space into housing units.

For over a century, construction workers have used a widening assortment of power tools, ranging from nail guns and power saws, to bulldozers, backhoes, and cranes. For the most part, these tools reduce human effort, provide greater strength, and take over risky tasks.

Combining AI, vision systems, and precise navigational capabilities, human-supervised robots are increasingly able to streamline the construction process, reduce the need for manual labor and increase accuracy in constructing buildings, bridges, roads, and other infrastructure projects.

And unlike self-driving cars and transport trucks on public streets, the liability associated with job site construction robots can be effectively managed. Because of limited capabilities and high costs, robots will make their first impact in targeted applications and then enter a wider range of roles. Over time, robots will automate construction tasks ranging from excavation and grading to pouring concrete, welding, and wall erection. They will also rapidly and accurately measure and move material on the job site, reducing costs and boosting productivity.

Furthermore, robotic 3D printing will allow for constructing large components in a fraction of the time required by traditional methods. Installing rebar and pouring concrete are two other functions particularly well suited to robots.

Similarly robotic heavy equipment is well-suited to digging trenches, removing soil, and helping with demolition. Such automated excavation will reduce the need for human labor which can be redeployed for planning, oversight and equipment maintenance. And,

A key problem in attracting people to the construction industry is the physical strength required as well as the perceived accident risks. While neither of these factors can be totally eliminated, digitalization will reduce both, making the industry more attractive to 21st century Americans.