Innovators Shake Up Tradition-Bound Construction Industry

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refabricated skyscrapers, 3D-printed houses, automatically designed hospitals– futuristic dreams are now a reality, according to a new report from the World Economic Forum. The report, Shaping the Future of Construction: Inspiring innovators redefine the industry, analyses ten innovation cases, and provides key success factors and policy recommendations to accelerate innovation in construction.

The report, developed in collaboration with BCG, underlines that relative to other industries, productivity in engineering and construction has stalled over the past 50 years. Technology was not making any fundamental advances, and companies remained averse to changing their traditional methods. Recently, however, transformative technological developments have emerged, and some pioneering firms have adopted them for current projects. These developments – 3D printing, building information modeling, wireless sensing and autonomous equipment, to name just a few –are already starting to turn traditional business models upside down.

The ten lighthouse innovation cases in the report illustrate the value of embracing innovation. Prominent flagship projects, such as Dubai’s Burj Khalifa, the world’s tallest building, and The Edge in Amsterdam, the world’s most sustainable office building, showcase state-of-the-art innovation. So, too, do the various startups or pilot projects that the report features, such as the 3D printing of houses by the Chinese company Winsun or the predictive analytics of construction data by the Chicago-based firm Uptake, Forbes’s hottest startup of 2015. Jointly, their inspirational stories give a glimpse of the industry’s future.

As construction companies reap the benefits of innovation, so will their clients and the community at large benefit. “Incremental change is not an option; by redefining the ultimate frontier, leapfrogging innovations in construction will finally help to address major societal challenges, from mass urbanization to climate change,” says Michael Buehler, Head of Infrastructure and Urban Development at the World Economic Forum. “The widespread adoption of these innovations is going to make a serious impact, socially, economically and environmentally.”

Crucial Government Contribution

Governments are crucial stakeholders in the transformation of the construction industry. They need to create an environment conducive to the adoption of innovative technology as regulator, strategic incubator, or project owner. The report recommends that governments update building regulations, move to performance-based and future-oriented standards, and introduce more flexible procurement models in infrastructure projects to overcome typical hurdles for innovation. In fact, infrastructure is again high on the agenda in almost all regions of the world. In the words of John Beck, president and CEO of Aecon Construction Group, one of Canada’s leading construction companies: “There has always been a mismatch between the need for infrastructure assets and the capital to fund them. By leveraging all the remarkable innovations that have emerged in recent years, we have a new opportunity to narrow that gap.” For infrastructure and other built assets alike, innovation will boost the value over their entire life cycle.

Companies Spearhead Industry Transformation

On the basis of BCG analysis of these successful innovators, the report suggests ways in which companies can stimulate innovative ideas, turn those ideas into reality and ultimately succeed in the market. Pioneering firms, for instance, create an innovation-friendly culture that rewards risk-taking; they take a longer-term product perspective rather than on individual projects; and proactively shape the regulatory environment. Companies have nothing to gain from delaying; once they implement innovations, the benefits – lower costs, shorter delivery time, and reduced environmental impact – can begin to accumulate.

To paraphrase William Gibson, the Future of Construction is here now – it is just not evenly distributed. Innovative companies and projects, as described in the report, demonstrate the art of the possible and how to address the challenges involved,” says Philipp Gerbert, a Senior Partner at BCG and co-author of the report. “The impact of these innovations on the traditional construction ecosystem will be interesting to follow. We see a widening gap between the innovation laggards and leaders, in particular with regard to their digital transformation.”

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