Two overriding concerns for 2018 and beyond—the labor shortage and productivity—were on the minds of this year’s Construction Executive future technology panel. The construction industry’s labor shortage is expected to worsen in 2018 as Millennials shun construction careers, Generation Xers move into leadership positions, and Baby Boomers retire. “While many U.S. sectors, including agriculture and manufacturing, have increased productivity 10 to 15 times since the 1950s, the productivity of construction remains stuck at the same level as 80 years ago,” according to “Reinventing Construction: A Route to Higher Productivity” by the McKinsey Global Institute. While the report paints a dismal look at construction productivity, hope—and solutions—are on the horizon.

The Catch 22 is that without a skilled tech-savvy workforce, how can construction companies adopt the technologies they need to increase productivity? And how can the industry, which has a reputation for being slow to adopt technologies, attract tech-savvy workers or train the ones they do have? The answer lies beyond robotics and automated building processes.

Frederic Guitton, Chief Revenue Officer at RedTeam Software, recommends a cautious approach for companies wary of adopting new technologies: “Carefully select which technologies to implement based on specific desired outcomes and relative risks for adoption and use. Depending on the size of the organization, consider using pilot programs to observe how the technology is actually used and how to design the appropriate training. Implement a process for technology acquisition and develop a well-thought-through training based on specific internal processes.”

Matthew Harris, Viewpoint’s Chief Product Officer, believes construction is shedding its slow adopter image. “I think this next generation of contractors will be on the leading edge of innovation. They will have to be forward thinkers to transform their companies, driving more productivity and faster projects with less risk and stronger profit margins,” he says. “They’re going to push the businesses they work for to give them the tools they need to dig deeper into their data, and see results in real time so they can operate smarter projects today and do a better job of forecasting and planning for future ones.”

Solving the Labor Shortage

According to the U.S. Bureau of Labor Statistics, construction unemployment was just 5% in November 2017, trending toward a 6% unemployment rate for the year, lower than 6.3% in 2016 and 6.2% in 2000.

One solution to the labor shortage is finding the champions. “While future leaders could be the best workers in the field, the most highly skilled in their trade, or most efficient project managers, they may also be team members who haven’t found their niche,” says Mike Ode, President of Payroll4Construction.

“One of the best ways to identify future leaders is to look for exceptional attitude and above-average aptitude, even if they haven’t found where they flourish yet. Invest in them, make sure they are where they’re best positioned for success, and if you see an aptitude for leadership, reward their potential by giving them the opportunity to try, to fail, and to learn.”

Don Whyte, President and CEO of NCCER, points out that “welders, electricians, and heavy equipment operators are in high demand. In 2004, The Brookings Institution estimated that half of what will be the built environment in 2030 does not exist yet. Highways; roads and bridges; the electrical grid; water, gas, and oil pipelines; sewer and drainage systems; and airports, hospitals, and aging city skylines will all require craft professionals and construction managers to rebuild, renovate, and maintain.”

He continues: “The technology is emerging as a supplement to traditional training. As it becomes more affordable, it will continue to take on a greater role in even more programs. 2020 is only two short years away. On average, it takes 10 to 15 years to develop a seasoned craft professional. Contractors need to assess their workforce development program now to determine if their pipeline is full. If they see an abundance of young emerging talent, they are well on the way to meeting their future workforce needs. Being actively engaged in developing their workforce is a necessary and integral part of their business now and for many, many years to come.”

Carl G. Castellano, Vice President and Chief Risk Officer at Philadelphia Insurance Companies – Surety, agrees that maintaining qualified craft professionals is an immediate challenge for most contractors. “A resilient contractor will recruit and train during the next few years and implement more efficient processes to meet this challenge.”

The McKinsey Report recommends that the construction industry “revamp its image to attract more young people by adopting some of the characteristics of the technology industry, such as cross-functional teams, individual empowerment, flexible assignments, and an emphasis on learning and deploying the latest technologies. Infuse digital technology, new materials and advanced automation and reskill the workforce.”

“Whether it’s drones, robotic systems, and automation or even mobile apps, companies need to have the right people and processes in place for technology to be successful,” says Fred Ode, CEO and Chairman of Foundation Software. “They need to have a solid implementation team, buy-in and involvement from end users, and a plan for how they are going to use the technology. This includes managing the security of the technology, staying compliant with laws and regulations, and keeping employees trained and the technology usable over time.”

Adds Wendy Rogers, President and CEO of eSUB: “Construction workers will need to be adept at their trade as well as adept at using technology in order to do their work efficiently. The ongoing labor shortage due to the declining workforce and aging population will force the industry to restructure the way labor is optimized. Prefabrication and automation will streamline how labor is utilized on a construction project. With skilled labor resources so limited, subcontractor labor will be used in an integrated labor delivery model during critical junctures of the project, such as the preconstruction design phase and installation.”

Brightening a Dismal Productivity Outlook

The McKinsey Report identified insufficiently skilled labor at the frontline and supervisory levels along with industry underinvestment in digitization, innovation, and capital as one of 10 root causes of productivity failure. By comparison, the JBKnowledge 2017 Construction Technology Report found that lack of staff to support the technology, insufficient budgets, and employee hesitance were the top 3 reasons for not adopting new technology.

The McKinsey Report called construction progress “glacial,” as it continues to rely on traditional methods of construction, even as projects get more complex. “The report cited 4 main digital trends that can enable the construction industry to move toward productivity:

• • Next generation 5-D BIM;
• Digital collaboration and mobility;
• Near-perfect surveying and geolocation; and
• The Internet of Things (IoT) and advanced analytics.

BIM, AR, and VR

While BIM has been readily embraced, it must become more of a priority for contractors of all sizes. Allied Market Research reports that the global BIM industry is expected to be valued at $11.7 billion by 2022. Millennial workers are key to widespread adoption of BIM, as it will enable them to embrace the “big picture” of projects and help older workers overcome hesitance to adopt BIM and other technologies. JBKnowledge’s 2017 Construction Technology Report notes that “unless builders make BIM a priority, they will fall behind.”

The technology exists for seamless interaction among all stakeholders on a project as they view a 3-D hologram of the project’s design, enabling everyone to visualize, share ideas, and detect problems on projects.

Augmented reality (AR) and virtual reality (VR) are methods of viewing data, but artificial intelligence (AI) is the key to understanding the data,” says Sarah Hodges, Director of Autodesk’s construction business line. “Successful companies won’t simply capture and store the data, but develop capabilities to centralize the data, normalize it, and analyze it.

Only then can contractors focus on what activities are most responsible for successful projects. Ultimately, they will reduce what data they collect and focus on the task with the greatest impact on success. They will optimize based on AI, and only then will AR and VR become effective as contractors accurately predict project performance as opposed to determining how the project performed after it is completed.”

“AR is a simple way for workers to interact with BIM information,” adds David Gaw, CEO of Sensera Systems. “Overlaying design information on the build or capturing field information into BIM may be a good application of AR. The first step is to get the jobsite connected and generate data to add value.”

Rogers agrees. “Virtual reality and augmented reality will increase on the jobsite. Integration with BIM will help contractors detect abnormalities and errors. If subcontractors are connected, they can reduce rework and deliver a project quicker and at a lower cost.”

With all that in mind, some safety concerns remain with regard to VR headsets restricting peripheral vision. “Although some innovators are beginning to introduce AR into the construction delivery process—an example being where hardhats are outfitted with a transparent visor that can display 3-D renderings and receive instructions from remote managers—AR has been slower to adopt than VR,” says Jeff Weiss, Executive Vice President of Global Sales for CMiC. “Inevitably, BIM, VR, and AR technologies will coalesce over time, but it will take at least 5 years until computing power and devices become mainstream.”

Workflow Integration/Digital Collaboration

As construction technology providers continue to offer more integrated solutions, contractors will collaborate with all project stakeholders to design and build cohesive infrastructure, utilities, buildings, and communication networks in smart cities.

For now, contractors are using apps on mobile devices for time tracking, generating reports, managing documents and inventory, and documenting project progress, which leads to more integration, collaboration, and communication.

“The ever-present business issue in construction is the quality of the relationship between the different companies on the jobsite,” Guitton says. “How efficient can the communication be in order to achieve peak performance on behalf of the customer? Construction is a very complex business, and one of the most challenging components is the processing of invoices between general contractors and subcontractors, which requires validation of credentials, lien rights handling of the sub-tier claimants, and agreement on what has been completed and should be paid. To minimize conflicts, all parties need to be connected so that the process itself is more transparent, therefore reducing the costs associated with this process as well as mitigating the risks for parties.”

With the number of applications and technology available, it is important that all data and information flow freely between all applications and users, Rogers adds.

“Integration and an open platform for collaboration and transparency can connect all members of the project team more closely than ever before—from the owner and architect to the general contractor and subcontractors,” she says. “Disjointed interests among stakeholders is a big problem.

Breakdowns in communication and risk shifting are the foundational issues that cause projects to go over budget and behind schedule. Integrated project delivery will change this and provide more collaborative efforts for faster project delivery and less rework.”

The ability to scale for the future is crucial, according to Harris. “Many contractors have systems in place that, while they work well enough now, are not built for change. They can’t adapt when new technologies are added to the business mix. That’s why cloud computing is so important. When change is needed, software operating in the cloud is much easier—and far less expensive—to upgrade. Moving to the cloud enables contractors to optimize their systems, drive better data integration, and ultimately focus on winning more business instead of upgrading servers.”

A crucial consideration when assessing whether a company is positioned for growth is IT’s role in the business. Contractors must ensure a seamless workflow to connect their back office, extended project team and field staff. “Going forward, I think the companies that will thrive and grow, regardless of economic cycles, are the ones that make the IT investments today that will allow them to scale tomorrow,” Harris says.

Near-Perfect Surveying, Geolocation, and Time Tracking

Drones are becoming more commonplace on the construction jobsite as they become adept at capturing aerial data and jobsite data in 3-D models, and produce high-resolution images. Despite these improvements, drones may soon be replaced by real-time satellite images with zoom resolution and overlays.

“The must-have tech tool is a time-tracking solution that delivers real-time labor productivity,” Rogers says. “Tracking time and managing labor productivity is critical to profit protection, especially for subcontractors whose profit margins rest on their ability to manage labor effectively. Subcontractors provide the majority of skilled and unskilled labor on projects. In order to get paid, subcontractors need labor tracking software that also documents work completed.”

While Ryan Driscoll, Marketing Director at GPS Insight, agrees that driverless cars are the future, he doesn’t see autonomous vehicles overtaking the construction space just yet. Driverless vehicles, however, “would improve driver and public safety and result in more efficiently driven vehicles. Mobile apps are going to be the vehicle that construction managers use most to consume telematics information, especially as Millennials and Generation Z enter management positions,” Driscoll says.

Jobsite cameras are another commonly used technology. According to Gaw, “Jobsite cameras are powerful tools to save time and improve safety, security and accountability. The technology is mature and offerings have hit the tipping point in terms of cost, ease of use, and functionality.”

IoT and Advanced Analytics

By incorporating the IoT, construction equipment, materials, and even structures can communicate with a central data platform to capture critical information, such as equipment usage and performance along with other real-time data that enables contractors to streamline their supply chains, reconcile material plans with physical availability, and analyze productivity.

The McKinsey Report notes that “recording more and higher-quality data and combining these analytics from the design to the building stages of a project will improve contractors’ ability to develop better front-end estimates of a project’s cost, obtain predictive trends and recommendations useful for decision-making, and get a better handle on project risk.”

On the wearables front, the IoT is being applied in a variety of interesting ways. According to Weiss, the correlation between health and safety means both must be considered to keep people on jobsites safe, but ultimately the information gathered by the wearable needs to be used in some way by putting it back into other systems and platforms. “As it’s automated, it can be integrated into what has to be managed for safety records,” he says.

In addition, next-generation wireless connectivity (5G) will enable the transfer of gigabits of data in seconds to make it even easier to collect data from connected construction tools, equipment, wearables, sensors, drones and vehicles, and to leverage the IoT on jobsites to improve productivity and safety.

But just efficiently capturing data is not enough, Weiss says. “Robust data management platforms are needed to combine the captured data with external sources to yield actionable insights that help construction firms become more competitive and to continually improve the ways in which products and services are delivered.”

Cyber Risk and Data Security

Michael B. Bomba, Director and Counsel for AIA Contract Documents, cautions, “With the increased dependency on digital practice techniques, including electronic project management systems and BIM technology, the construction industry is far more exposed to cybersecurity risks than it has been in the past. Insurance companies have reported a significant rise in the ransomware occurrences where a company’s computers have downloaded malicious software that is designed to block the company’s access to its data until a ransom is paid. Accordingly, the company is exposed to the amount of the ransom, as well as the possibility of significant business interruption costs.

“Companies are further exposed when their system is compromised and private personal data breaches occur. A company may be required to notify all the individuals whose personal data has been exposed, which can be an expensive proposition,” Bomba says. “There may be additional costs thereafter to protect those exposed (e.g., credit and/or fraud monitoring services). As ransomware and other data breach incidents have increased over recent years, a significant number of insurance carriers have developed, or will be developing in the near future, insurance policy solutions to protect construction companies.”

Driscoll notes advancements in telematics that include data security. “With all of the hacking scares during the last few years, it is increasingly important that business data remain secure. Many telematics providers are investing in security to ensure all customers are safe.”

JBKnowledge’s report offers one last piece of advice: “Most construction companies are missing an opportunity to legitimize and recapture IT expenses to help justify investment on future projects by not billing IT expenses to owners. Until contractors learn the value of IT and how to apply it, they will have a hard time selling that value to owners and clients.”

But as a whole, construction leaders are excited about the future of construction technology. “There are lots of startups around project management apps, VR, AR, and drones,” Fred Ode says. “Back office construction software is maturing and consolidating through acquisitions and partnerships, so now there are fewer key players. This cycle will continue during the next decade. Software companies will need to look beyond traditional software technology and grow into other areas of the market that help contractors succeed, such as service and education.”

Reprinted from Construction Executive, January/February 2018, a publication of Associated Builders and Contractors. Copyright 2018. All rights reserved.

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