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Construction Industry Needs to Negotiate Increasingly Complex World

“When nothing is certain, anything is possible. The complex world we are moving into requires economies of learning and robustness,” John Sanei, futures strategist, human behavior specialist and best-selling author. Sanei was speaking at a virtual conference held by construction software company RIB CCS which explored the urgent need for the engineering and construction industry to embrace digitalization to remain relevant and future-proof their businesses.

He stressed the need for organizations to move beyond economies of scale and mass efficiency and recalibrate themselves for what’s coming: uncertainty. “To prepare for uncertain times, we need to develop robust business models and structures that allow for experimentation and to see what grabs and what doesn’t grab”.

RIB CCS CEO, Andrew Skudder, says the engineering and construction sector has been operating in the same way for decades, is one of the least digitized industries in the world (21 out of 22 industries) and has not enjoyed significant productivity growth in recent years. “With the world shifting towards the next great technological transformation, the ability to move with the tide of innovation is essential for industry players to gain a competitive advantage and set the pace in the built environment.”

Skudder says one of the conference speakers, Marc Nezet of Schneider Electric, highlighted three major challenges the world is currently facing – a global pandemic, recession and, most notably, climate change. “World Economic Forum statistics indicate that construction accounts for 13% of the global GDP, 6% of world employment and a staggering 40% to 50% of worldwide emissions, meaning climate change cannot be solved without transforming the building and construction industry.”

In Nezet’s words: net-zero carbon cities and buildings can only emerge after being thoughtfully designed and built. And thanks to digital software technologies, users are empowered across the lifecycle of any construction project to make decisions for a more efficient and lower carbon future.

McKinsey & Company partner, Gerhard Nel, reiterated the need for change in the industry. “This need is driven by an industry that is currently characterized by increasing complexity, changing customer preferences, sustainability considerations, a move to modular, a shortage of skilled labour and a stricter and more complex regulatory environment.”

He suggests new industry dynamics are at play with emerging disruptions such as industrialization in the form of modularization and product standardization, as well as industrializing workflows from engineering to planning and procurement. “In addition, he says new entrants with new business models or unicorns will lead to disruption of the market.” He says McKinsey & Company conducted a survey of all the digital solutions in the market, surveying 2,400 companies. “Clear trends have emerged around firstly – digital twinning; secondly – 3D printing, modularization and robotics; thirdly – AI and analytics (using big data); and fourthly – supply chain optimization and marketplaces.”

Skudder says from RIB CCS’ perspective, the most interesting aspect was the digitalization of the industry as a key disrupter. “With a plethora of digital solutions out there, we have witnessed two ‘plays’ in digitalization. “One is the platform play where software companies like RIB look to creating a common or single database with applications on top that give clients a holistic view and the ability to access to their data, but where each participant in a project has their own applications to suit their work, be it estimation, planning or quantity surveying, amongst many others. This allows for enhanced collaboration and the harnessing of structured data for better decision making around projects.

“The second play is the tool-set play whereby software companies build specific applications to solve specific problems such as estimating or planning. The problem with this is that data is then situated in silos and becomes difficult to consolidate. “That’s why we believe that when it comes to digitalization, it’s about embracing a single platform that connects the organization’s data, business processes and people in one environment, which leads to greater efficiency, increased access to information and better run projects,” adds Skudder. Referring to the topic of disruption raised by John Sanei, Skudder agrees that sometimes meaningful transformation requires creating ‘future teams’ in the business to experiment on new ways of doing things. “Innovative organizations do this as a matter of course, but I don’t think construction companies do it enough. I think it’s a great suggestion for them to consider, especially with the way the sector is evolving.”

Importantly, Skudder says, significant change management and digital transformation need to be leadership-driven. “Clients also need to establish a digital roadmap of the journey they intend to take and deliver good quality training to employees. Our philosophy at RIB CCS is that organizations need to be empowered to train themselves, thereby allowing them to own their projects.” Perhaps, Skudder and the other conference speakers’ sentiments can be best summed up by Rukesh Raghubir, CEO of M&D Construction Group, who says: “We need to understand that as an industry, if we do not disrupt ourselves, someone else will do it for us.”

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