Over the coming months, the Plain Language Guide Editorial Board will be publishing a series of opinion pieces and hosting open online calls to discuss them. In March we will be holding an exclusive in-person event for senior executives to address the issues these articles cover.
This is your opportunity to participate in the debate. Scroll down to read more about the challenge of digital transformation for construction and find out how you can join us to discuss these important issues.
What is Digital Transformation?
Digital transformation is the development of new business processes for data – new business models. Beyond the simple concept of digitisation (which the Plain Language Guide describes on page 5), beyond making that data work for your existing business (digitalisation), digital transformation implies a transformational process whereby new, innovative processes create a very different approach to business in the built environment.
Examples of digital transformation include:
DfMA (Design for Manufacturing and Assembly) is a process where building products and components are designed in a way that they can be mass produced and then assembled on site more simply, sometimes by less skilled labour. Platform DfMA takes this concept further by applying a set of digitally designed multi-purpose components that can be used in multiple different situations and building types, reducing bespoke elements, and benefiting from the efficiencies of mass production in a way that embraces 21st Century technological advances.
The Digital Supply Chain
Responding to the accelerating pace of change, companies are moving beyond manual and fragmented systems to a data-driven and digitally executed approach which enables supply chains to become much more responsive. This approach brings the added benefits of transparency and collaborative partnerships to enable advanced planning, the analysis and prediction of demand patterns and the leveraging of asset availability.
The Food Trust
The Food Trust is a US based non-profit network of food producers, suppliers, manufacturers and retailers. The network is dedicated to addressing food poverty and access to healthy food in the US. It does this via a permissioned, permanent and shared record of food system data which tracks food safety and freshness, minimising waste and unlocking supply chain efficiencies, meanwhile enhancing the brand reputation of those companies who participate.
In the logistics industry, TradeLens provides an instant record of shipping containers, their location, contents and conditions throughout their journey, protected by a permissioning model encrypted by Blockchain.
Responsible Sourcing Blockchain Network
As companies begin to take sustainability and social justice seriously they have been looking to keep hand mined minerals out of their supply chain, to prevent them from inadvertently exploiting child and forced labour.
In a recent IBM study, 77 percent of consumers surveyed said that buying from sustainable or environmentally responsible brands is important. EVs, smartphones and laptops are high-visibility products whose value is closely tied to their rechargeable, long-lasting li-ion batteries. Being able to demonstrate responsible sourcing can help win customers, establish reputational value and prevent backlash such as legal action.
The Responsible Sourcing Blockchain Network uses blockchain’s shared, distributed ledger to track production from mine to battery to end product, capturing information on the degree of responsible sourcing at each tier of the supply chain. Downstream companies can access the verified proof that they support and contribute to responsible sourcing practices, which they can then share with auditors, corporate governance bodies and even consumers.
The above examples show how technology has been used to support a business case rather than drive it. As we set out in the Plain Language Guide [page 32],
“Beware of jumping onto a technology before you have fully fleshed out your requirements. Otherwise, you may end up limiting your requirements to the tech rather than the other way around.”
All these initiatives are also collaborative, involving competitors working together, which is one reason for their success.
Why is Digital Transformation a big issue?
Numerous reports over the years have sought to measure, track and propose solutions to inefficiencies in the construction industry. Examples include
- Building to the Skies (1934)
- The Placing and Management of Building Contracts (the Simon Report, 1944)
- The Phillips Report on Building (1950)
- The Placing and Management of Contracts for Building and Civil Engineering Work(The Banwell Report, 1967)
- Constructing the Team (The Latham Report 1994)
- Rethinking Construction (The Egan Report),
- Accelerating Change (2002)
- Never Waste A Good Crisis (2009)
- The Future of Construction Product Manufacturing (2016)
- Modernise or Die (the Farmer Review, 2016)
- Building a Safer Future (Hackitt Report, 2018)
- A Fresh Way Forward for Product Data (2018)
The question is, why is the industry not reflecting and acting on these reports?
Digital transformation might not be able to help us identify what the problem with our industry is, but it does offer the opportunity to unlock a solution and deal with some of the inefficiencies all these reports talk about:
- Consolidating operations - the introduction of cost-effective, customer-focused digital tasks streamlines business workflows and eliminates overheads associated with outdated solutions.
- Economies of scale – traditionally economies of scale are produced by increasing production to spread costs over a larger output. However digital transformation provides alternative ways to reduce costs, support growth and simplify processes. The 2020 McKinsey Report, The Next Normal in Construction provides details.
- Collaborative involvement of SMEs - Digital transformation enables a network of smaller, specialised companies to collaborate and deliver economy of scale together.
- Improve building performance – a digital supply chain offers the opportunity to smooth out complex, bespoke or compromise solutions leading to better accuracy, transparency and quality of detailing and installation as designed. This can close the ‘performance gap’ between the design and the completed asset as highlighted in the 2016 report ‘The Future of Construction Product Manufacturing’
- Data insights – one of the great benefits of going digital is the ability to track metrics and analyse, which in turn can enable informed decision making and incremental improvements in performance. Data analytics allows us to obtain valuable insights while saving time and effort. Without it, we’d be left searching for needles in the proverbial haystack of data.
- Policy Improvements – accurate data, including near-current and dynamic data, can inform agile policy making based upon facts.
Through a combination of digitalisation, automation and optimised manufacturing-led supply chains, the sector can grow over £30 billion by 2025, assets can be delivered over 30% cheaper and 40% quicker, and the trade gap can be reduced to 50% by 2025 whilst supporting employment growth in the sector and wider economy” The Future For Construction Product Manufacturing, 2016
What is required to enable Digital Transformation?
Data integrity is the maintenance of, and the assurance of, data accuracy and consistency over its entire life cycle. It is a critical requirement of a successful data system. To use data, users need to be able to have absolute confidence in the content. The specifier needs to trust the certificate. The installer needs to trust the instructions. The asset owner needs to trust the safety information.
Data Security and Compliance
Users need to have confidence that the data they are using and sharing, is secure and that they can continue to comply with compliance schemes from GDPR to fire safety and certification. In the plain language guide (pages 32-34), we set out a series of questions manufacturers should ask third party technology companies so that they can receive the services they need with the right level of assurance, security and control.
Supply chain transparency
Businesses need to be able to know what is happening upstream and downstream in the supply chain and to be able to communicate this both internally and externally. The increasing demands of governments, consumers and society as a whole mean that transparency is a prerequisite for many industries. Transparency will be essential in a post-Grenfell, climate aware, built environment sector.
Integrity means that if our private life was suddenly exposed, we’d have no reason to be ashamed or embarrassed. Integrity means our outward life is consistent with our inner convictions. – Billy Graham
What is preventing Digital Transformation in Construction?
Here are six reasons why we think that digital transformation is not being adopted by construction and the wider built environment. What have we missed out?
1. Siloed Industry
We are a siloed, fragmented industry with actors in the built environment failing to look at the whole supply chain perspective or outside our sector. When construction looks outside it can bring huge benefits to individual companies. We need this approach to go industry wide.
We aren’t educating and training for a long-term digital strategy and not working towards building an industry with trust, collaboration, transparency and respect for each other. As a result, our silos will continue and we will struggle to attract the next generation.
2. Fragmented Initiatives
We don’t have a long-term digital strategy, nor do we have leadership supporting long term investment in digital transformation. Instead, a series of separate initiatives and reports which often are not supported by real examples, long term monitoring, regulation, investment or industry partnership. The initiatives that do exist are often complex to access and difficult for the uninitiated to understand.
3. Lack of Effective Government Support
By their nature government initiatives are short term. Short term construction plans create a sense of uncertainty and make businesses in construction reluctant to invest and focused on firefighting immediate challenges. Business leaders are reluctant to invest in initiatives which don’t have long term strategic reliability – they see digital initiatives as another ‘Code for Sustainable Homes’, ‘Green Deal’ or ‘Feed in Tariff’ that may be revoked at any time.
Government needs to plan for long term strategic action with genuine monitoring of deliverables to support industry in an agile way to commit to digital transformation over the long term. An agile methodology does not mean short term, it means an organisation is able to adapt easily to changing circumstances and learns from failure rather than ignoring it.
4. Adversarial Industry
We have an adversarial construction and procurement system which encourages suspect practices and profiting from others’ failures, and disincentivises good actors from finding innovative ways to work together. Instead, competitors have a drink and a polite word but keep concerns and opportunities from each other under a fear of giving away IP or revealing a lack of understanding. We never talk about what is real. No wonder we have a mental health crisis!
5. Misconceptions about what Digital Transformation is
There is a perception that the construction industry is manual and analogue, that existing buildings are messy and complicated and cannot benefit from a digital supply chain or modern methods of construction.
The vast majority of our built fabric that will be with us in 2050 already exists, and there is a perception that modern digital methods can only work on new buildings.
There is also a perception that mass production means lack of bespoke detail, but this is a misunderstanding of what modern mass production means. The advent of the fourth industrial revolution and digital transformation allows for commoditised designs but the output can still be bespoke. The Hyundai Ioniq 5 and the Kia EV6 are two completely different cars built on the same E-GMP platform (chassis). Further, digital technologies now enable mass customisation and co-creation.
Construction has always used mass production – think bricks, blocks and panel sizes. A bricklayer works within the constraints of their medium, yet still makes a skilled decision about how to lay a brick and innovation in the use of bricks continues.
6. Lack of standard information procedures
The Plain Language Guide identified that one of the challenges to construction for built environment professionals is the lack of availability of reliable, structured data about products. But this is only one of the challenges. For a transparent supply chain with data integrity, security, compliance and interoperability, the industry as a whole needs to adopt standard information procedures.
Join the Conversation on our open Teams Call
What do you think is holding the construction industry back from embracing digital transformation? We would like to hear your views.
Join us on Teams to discuss this article on Friday 28th January at 2.30. Sign up here for your place.
“You will never reach a destination if you stop and throw stones at every dog that barks.” Winston Churchill