Shaping the Future of Construction: Inspiring Innovators Redefine the Industry

 
10/05/2017



By Philipp Gerbert , Santiago Castagnino , Christoph Rothballer , and Sven Witthöft



3D-printed houses, automatically designed hospitals, prefabricated skyscrapers—these once-futuristic dreams are now a reality, as described in a new report, Shaping the Future of Construction: Inspiring Innovators Redefine the Industry, developed by BCG and the World Economic Forum. The report showcases and analyzes ten Lighthouse innovation cases—prominent flagship projects as well as startups and pilot projects—that demonstrate the potential of innovation in construction and give a glimpse of the industry’s future. The stories not only serve as an inspiration but also vividly describe the typical challenges that innovators face and show how to overcome those challenges.

A Widening Gap Between Leaders and Laggards

The construction industry plays a central role in society in both emerging and mature economies. It creates jobs, accounts for 6% of global GDP, and builds the industrial and civil infrastructures that enable other businesses to thrive. In the years ahead, the industry will become even more important because of several global megatrends, such as migration into urban areas, climate change, and a new push for infrastructure worldwide. As a typical source of entry level jobs for immigrants, and as a provider of affordable housing, the industry is sure to be at the center of public debate. And if public budgets tighten further, scrutiny of the industry’s cost-effectiveness will be even sharper than usual.

Traditionally, the construction industry has been slow to adopt new technologies and processes, undergoing no fundamental change over the past 50 years. In contrast with almost all other industries, its productivity has hardly increased—and in the US, it has not increased at all. Recently, however, new digital technologies—such as building information modeling (BIM), wireless sensing, and 3D printing—have begun transforming the way that infrastructure, real estate, and other built assets can be designed and constructed. These new technologies have still not been widely adopted, however, and the gap between the innovation leaders and laggards is widening. Shaping the Future of Construction aims to accelerate innovation, analyzing leading innovators to identify recommendations for companies at large, governments, and other stakeholders.

How Companies Can Spearhead Industry Transformation

The case studies reveal the following key success factors for companies that boost innovation in the construction ecosystem:

  • To stimulate innovative ideas, successful companies develop a vision and instill an innovation culture in their workforces; create talented, multidisciplinary teams that bring in experiences from nonconstruction industries and devise agile organizations; and take a customer-centric approach, starting from the asset users’ pain points.
  • To turn their innovative ideas into reality, these companies establish product platforms instead of taking a traditional individual-project perspective, launch pilot projects and prototypes to show proof of value, and nurture the broader ecosystem of suppliers and other partners to manage supply-side constraints and enable a broader adoption of the innovation.
  • To succeed in the market, the companies embrace business model innovation alongside technological innovation, advocate new ways of contracting that both reward innovation and life cycle performance and enable early collaboration, and work with governments to shape regulatory environments, such as for 3D printing in construction.

Governments’ Crucial Contributions

Although the industry’s transformation is and must be driven by the private sector, governments also need to play an important role by pursuing policies conducive to the adoption of innovation. Three key roles emerge for governments: smart regulator, long-term strategic planner and incubator, and forward-looking project owner.

  1. Smart Regulator. This role involves making smart decisions about regulations, such as harmonizing and updating building codes, as well as developing performance-based and forward-looking standards.
  2. Long-Term Strategic Planner and Incubator. This involves defining a country-level strategic innovation agenda for the industry, investing in flagship projects and research and development, and enabling startup financing.
  3. Forward-Looking Project Owner. This involves creating an innovation-friendly owner culture, introducing more flexible procurement and contracting models, and taking a life-cycle perspective to obtain innovative solutions that provide the highest total value of ownership and are not simply the cheapest.

To deal with the broader societal challenges—including sustainability, affordability, and disaster resilience—and to serve the public good, the construction industry needs to innovate more vigorously. By implementing the success factors and policy recommendations mentioned above, companies and governments will accelerate innovation within the construction ecosystem and achieve higher productivity as well as social and environmental benefits.

For the construction value chain, the benefits of full-fledged digitalization, arguably the most important holistic lever, are huge: within ten years, full-scale digitalization in nonresidential construction will lead to annual global cost savings of $0.7 trillion to $1.2 trillion (13% to 21%) in the engineering and construction phases and $0.3 trillion to $0.5 trillion (10% to 17%) in the operations phase, according to a BCG report titled Digital in Engineering and Construction: The Transformative Power of Building Information Modeling

The original version of the report was published by the World Economic Forum.

A report last year, Shaping the Future of Construction: A Breakthrough in Mindset and Technology, provided a comprehensive construction industry transformation framework with more than 30 measures for companies, the industry, and governments. Another new report, The BIM Revolution Comes to Building Materials, explores how manufacturers can fully exploit the potential of BIM.

SOURCE: https://www.bcg.com/publications/2017/engineered-products-project-business-innovation-shaping-future-of-construction-inspiring-innovators-redefine-industry.aspx



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