Is tech forcing the built world to evolve its procurement models?
December 17, 2019 by David Bowcott
Unlike the manufacturing industry, where environments can be tightly controlled and products are often carbon copies of one another, construction projects will likely always face a degree of uncertainty. Advancing technology and enhanced computing power, however, are helping to usher in a new, more predictable era in building.
I recently attended the latest edition of Building Venture’s Built Environment Innovators Network (BEIN) which took place in bustling Brooklyn, N.Y. Jesse Devitte and his team from Building Ventures have done a great job of putting together a network of thought leaders and innovators and these sessions never disappoint as the provocative presentations and panels have amazing content and the members of the Innovators Network are highly interactive during each of the sessions.
The Brooklyn event was opened by Phil Bernstein, currently the associate dean at the Yale School of Architecture and a former vice-president of AutoDesk Inc., where he was in charge of future vision and tech strategy. Bernstein helped dream up the name Building Information Modelling (BIM) when Autodesk was transitioning from their Computer Aided Design (CAD) offering into the world of three-dimensional design. Bernstein’s session set the tone for the entire event, painting a picture that illustrated how technology – through the design, construction and operations phases of projects – is creating a great opportunity for the construction industry to re-think its current offering and procurement models.
As most of us know, several of the top procurement models being utilized by owners, design firms and contractors are not delivering the desired outcomes on a consistent basis. In fact, they largely miss the mark when it comes to consistency. As often cited, McKinsey & Co. research has indicated 98 per cent of large construction projects face either cost overruns or delivery delays. Now, this is not entirely surprising when you consider the fragmentation of the industry and the fact that each project is done on a unique location. Among a long list of other project unknowns, the disjointed information sharing amongst the three key stakeholders – owners, designers and contractors – adds to the problem.
There is no mistaking construction for the auto sector where cars are built in controlled environments, allowing you to mitigate most, if not all, the unknowns. Every construction project, on the other hand, begins with a multitude of mysteries that are often only uncovered as you journey through the building process. These mysteries come in many forms. What are the ground conditions like? Where are the exact locations of the utilities? What will the weather be like? Are the stakeholders (from the owner, designer and contractor to the many subconsultants, subcontractors and suppliers) financially sound and capable of doing the necessary work? One of the greatest risks is that you are often dealing with a unique design that will never be used again. Likewise, you have a unique mix of stakeholders that come together for one project only, often based on who had the most competitive pricing. With so many unknowns and so much uniqueness, one can understand why the historical stats around projects being delivered on time and on budget are so poor.
Times are changing. In his discussion, Bernstein proposed the architecture and engineering sector is no longer constrained by its human limitations. In an age of what sometimes feels like unlimited computing power, the design sector can almost instantaneously iterate thousands of designs. Further, they can set output parameters to arrive at the optimal design from the thousands of iterations. Finally, they can simulate the optimal design to eliminate a lot of the unknowns faced in the construction and operations phase.
In this way, technology is allowing the design community to interrogate the design to ensure the mysteries associated with buildability and operability are eliminated, or at least reduced. Questions that could be answered include: What will the operating budget for the asset be? How will the asset hold up in a Category 4 hurricane? How big will the asset’s carbon footprint be? These and many other questions can be answered to a high degree of certainty based on advancements in the design technology and the forward strides in data capture and its integration into the design process. The addition of other technologies, such as real-time data capture during all phases of the asset’s life (digital twin) and distributed ledger technology, could create a single source of truth available to all stakeholders, making disputes easier to resolve and forging a foundation for a more collaborative approach amongst stakeholders.
Springboarding off this technological foundation, project models that have not been widely adopted in the past, such as partnering, integrated project delivery and alliancing may start to be utilized more frequently. Further, with new technologies being applied to all phases of an asset’s development and operations, these models could be extended to allow for collaboration that considers not just the total cost of construction but encompasses the total cost of ownership.
David Bowcott is Global Director – Growth, Innovation & Insight, Global Construction and Infrastructure Group at Aon Risk Solutions.
This column originally appeared in the December 2019 issue of On-Site. Click here to read through the whole issue.