How is digital transformation changing the construction industry? Which digital offers, which digital business models exist or do come up? Here’s an overview.
The referenced construction market in this blogpost will be Germany. Actually, the construction industry is an important economic sector in Germany. It has about 2 million employees, it contributes about five percent to the GDP. The construction industry is subdivided into the main construction trade (mainly construction companies), the finishing trade (sanitary, electrical, etc.), the other construction trade (e.g. development of land) and the planning sector (architecture/engineering offices). What’s characteristic of the construction industry (in Germany): High proportion of small enterprises; about 90 percent of the companies have only between one and new employees.
Status of digitization in the construction industry
Basically, all the studies and assessments I am aware of indicate that digitisation in the construction industry is not yet very far advanced. In short: The construction industry is clearly lagging behind in digitisation. This is also matched by the fact that the construction industry shows no (or hardly any) productivity growth; according to some studies, productivity growth was even negative in the period from 1990 to 2005.
In a recent study of the ZEW the authors soberly state: “Evaluations based on the Eurostat ICT survey regarding the use of non construction-specific information and communication technologies such as ERP systems, cloud computing and Big Data show that the German construction industry tends to be in the bottom middle of the middle range in European comparison. Only in the use of Big Data technologies is the German construction industry very well positioned, at a generally low level.”.
There is, however, some reasons for the delay in digitisation: First, the construction industry has enjoyed a boom for years, which reduced the pressure to modernize and diverted management attention away from digitization. Second, the construction industry has a very high proportion of small and micro enterprises (see above), which are generally less willing to deal with and invest in digitisation.
Digitisation in the construction industry: CAD, virtual reality, 3D scanners and more
The low level of digitisation is already felt in basic (IT) infrastructure of companies. The proportion of companies in the construction industry using ERP software is only 20 percent. By comparison, the average across all industries is around 40 percent. When it comes to electronic invoicing and CAD software (Computer Assisted Design), there is also potential for further penetration. The construction industry is lagging behind as compared to other industries.
RFID technology (Radio Frequency Identification) is already being used on construction sites, for example to locate material on construction sites, for automated testing processes in the supply chain and so on. However, it’s not yet widely used. While the use of RFID in vehicle construction or mechanical engineering is used by approx. 35% of companies, the share is just under 10% in the construction industry (source: aforementioned ZEW study).
Technologies such as Virtual Reality or 3D-Scanner are also already used, albeit only to a small extent. A pioneer in the use of 3D scanners technology in Germany is the world market leader for fire protection, MINIMAX: It is used for the inventory taking of suspended ceilings in department stores, hospitals and the like; electric cables, ventilation shafts, etc. is mapped by 3D scanner, processed by a specialized team of experts (for CAD software) and made available to the planning departments.
Increasingly, mobile terminals are also being used on construction sites: mainly for the purpose of collecting measurement data. It is only rarely used for working time recording. One such software solution is the application Building Site 4.0 (by the software company RIB Leipzig GmbH). The offering is described as follows: The app “Baustelle 4.0″ is the mobile supplement to our browser-based digital construction file. The app enables the collection, retrieval and documentation of construction site data (…). The first step is to create projects and upload construction plans in the digital construction file. (…) Defects, photos, notes and other data recorded with the tablet / smartphone are linked and assigned to the respective project. (…) the data can be transferred to the digital construction file via synchronization and viewed by all project participants.”
The company Planradar also offers a comparable solution. And to name a start-up in this field: Sablono (headquartered in Berlin) also offers a solution to document construction progress on-site with mobile devices.
The Building Information Model
The future lies with the Building Information Model (BIM) (actually, this buzzword has been used since the 1980s). This is a complete digital (virtual) model of a building project; this goes far beyond the CAD model (3D model), because the time dimension (project phases, even the entire life cycle) and the cost dimension are also added. Result: A 5D model. All parties involved in the construction project can access this model: The planning office, the property developer, the construction companies, companies of the finishing trade, the operators and the client.
This idea of BIM comprises a variety of functions and functional areas: 2D drawings, 3D models, document management, scheduling/planning, collaboration, tracking of conflicts, change management, mobile access and the like. This is where different software solutions interlock: CAD software, software for the digital preparation of product information for BIM models, planning features, tools for efficient communication between general contractors and manufacturers and much more. Numerous standards and interfaces are relevant here. You can get a good overview in a whitepaper from thinkproject.com (Download).
There are already first experiences with the Building Information Model. And did you know? – From this year onwards the Federal Ministry of Transport and Infrastructure (BMVI) (Germany) makes the use of BIM obligatory for all newly commissioned projects. And a recent study (June 2019) of the management consultancy PWC summarizes the experience of the construction industry with BIM:
The BIM is quite a big and ambitious idea, especially for an industry (with many small and micro-enterprises) that has a low level of digitalisation. It is therefore not surprising that the lack of consistent interfaces between project participants makes many construction companies adopt a wait-and-see attitude. The required technical standardization has by no means been achieved, yet. I can confirm this based on a software development project for a major player in the construction industry: For example, there’s the standard for bills of quantities and cost calculations GAEB, which is established for decades. An insider told me that about 20 to 30 percent of the GAEB files in circulation are faulty – not all of the defaults are showstoppers, but this situation for a long-established standard reveals a lot about the challenges for a vision like BIM.
Further challenges on the Roadmap of BIM: The high investments that are required and the lack of skilled workers, who can develop and implement a BIM strategy for their company. But there’s progress, however: According to the PWC study, every second company surveyed has already worked with BIM. And the advantages are confirmed by the companies: More efficient work processes were achieved, shorter planning and construction times and – overall – better cooperation between the project participants.
Industrial IoT, building management
After the construction phase, it is about building management. Actually, building management (keyword: IoT) offers a lot of opportunities for digitization. I’ll basically inject some content from a related blogpost, that is: Internet of Things: Status Quo and Outlook:
Building management technology is an important market. For example, sensors measure the daylight intensity and control the lighting accordingly. A company in the Siemens Group (Siemens Smart Infrastructure) also equips buildings with infrared cameras, beacon technology, temperature measurement devices and sensors for energy consumption. Based on the data generated in this way, Heat Maps can be generated that make visible which areas of the building are heavily used and which are not (underutilized). In this way, the usage/utilization of a building can be optimized.
The provider Comfy (also part of the Siemens Group) allows employees in buildings to use a smartphone app to set the desired temperature and lighting to individual requirements. The building “learns” with the help of this input/information and ensures an optimal indoor climate and lighting. Other features in preparation in the area of building management include inventory tracking, so that hospitals, for example, can efficiently determine where used equipment and medical material is available.