Madrid 2018: A digital revolution in construction

While this is driven by an array of reasons, the low degree of digitization in the industry is the largest differentiator between construction and the industries which significantly outperform it in productivity growth—including, but not limited to, retail, media, and manufacturing.

With so much to gain, the construction industry is poised for a productivity revolution and digitization may be one of the biggest drivers of change. Already, large amounts of capital have been invested in digital construction solutions and first-movers are adopting new technologies across the entire construction value chain. Digitally leading industries such as high tech, media, and telecom show that aggressive first-movers wield competitive advantages and fast-followers find it difficult to catch up.

In this peer-to-peer Global Infrastructure Initiative roundtable discussion, senior Spanish capital project and infrastructure leaders discussed the regional opportunities, challenges, and implications of the digital revolution in construction. The group represented a wide variety of sectors, including energy, real estate, engineering, construction, technology, and talent. Key insights included:

  1. Integrate a tailored digital strategy focused on business value into your operating model. As a first step, the CEO, executive team, and board members need to develop a comprehensive strategy and transformation roadmap. This strategy needs to be based on a diagnostic that quantifies the impact of the digital strategy and the steps to realize its value. Importantly, it must be accepted as a tangible and pragmatic strategy by leadership.
  2. Nominate a C-suite member to lead the transformation. The CEO or a member of the executive team should lead the transformation with clear communication of the strategy, roadmap, and objectives. This champion will need the full support of the board and executive team and a license to innovate, including retraining and recruiting personnel for new ways of doing things.
  3. Introduce a culture of innovation. Tight margins and deadlines hinder attempts to foster a culture of innovation within organizations in the industry. However, leaders should be encouraged to create the opportunities and budgets for project leaders to experiment with new technologies. Similarly, creating a system for capturing lessons and refining best practices for re-use in other projects is essential for broader adoption. Crossrail’s Innovation 18 program is a good example of how to create a culture of innovation.
  4. Develop the necessary internal skills and capabilities to succeed. The construction industry traditionally falls behind when it comes to investments in R&D (1 percent vs. 3-5 percent in other industries) and IT (1 percent vs. 2-4 percent in other industries). This lag is also present in capability building with lower investment in training and upskilling. Increasing this investment, both through internal training and hiring new skills, is critical for better adoption and effective use of new digital tools. Moreover, processes and mindsets will not evolve if staff members are not continuously prepared to implement new standards and don’t see their leadership setting the example.
  5. Involve stakeholders throughout the value chain. Changing an entire industry requires action along the full value chain. Digitization presents a tremendous opportunity for the industry to increase their competitiveness. However, siloed solutions have proven to fail in complex supply chains—and construction supply chains are among the most complex. Therefore, companies must define common standards, adopt ruthless transparency, and integrate their digital supply chain end-to-end to successfully and fully materialize the potential improvements from digitization. One idea to drive digitization and shape true digital projects is to form a network of partners that jointly invests in the future.
  6. Learn from industries that are further along the road. Lessons can be learnt from industries ahead of the construction industry, such as aerospace and automotive manufacturing. In a closely adjacent sector, some international players in real estate have successfully adopted many digital tools including 5D BIM, control towers, augmented reality, robotics, 3D printing, and seamless collaboration platforms.