The Next Wave of Digital Disruption

February 07, 2018

Industry 4.0 or the 4th industrial revolution is a term coined in Germany in 2011 to describe the recent increase in digital connectivity between customers, products, processes and manufacturers. Recent years have seen the emergence of a range of digital technologies - from analytics and artificial intelligence to cloud, mobile, robotics and sensors - that have played a major role in redefining industries such as media, communications and retail. The cost of these advanced technologies is continuously decreasing, you can now pay less than £400 for a drone that was worth £75,000 and top-of-the-range only a decade ago, and as demand is met at lower price points technology becomes ubiquitous and easily accessible, with the cumulative effect of these progressive technologies further accelerating innovation.

In recent years construction projects have progressively evolved too, with more numerous and complex mega-projects - bridges, metropolitan transport systems and airports - and growing lists of elaborate components to retail and residential developments. There is no evidence, however, that the methods, processes and technologies used to construct the smarter and more efficient infrastructure has evolved as rapidly. Traditionally, asset-heavy industries such as construction are known to be inflexible with companies investing resources in managing assets, high operating costs and risk instead of R&D and innovation.

“Construction remains one of the most stagnant major industries in the world, still using many of the same methods first deployed in the 19th century. As a result, productivity is falling, the construction workforce is shrinking, and demand for housing continually outpaces supply.”

Michael Marks, Katerra.

It’s been reported though, that in the past half-decade there has been $10 billion invested in construction-technology firms - from digital design and pre-construction through to construction and operations management - with startups mainly addressing issues in the areas of on-site execution, digital collaboration and back-office integration. McKinsey’s 2017 report on the sector’s productivity identifies field productivity and site-performance management as the two areas in need of most improvement, and as tools addressing these issues have the potential to considerably impact the bottom line, it is no surprise these areas have attracted the most investment activity.

Global productivity growth in the infrastructure sector has been static at 1% for the past two decades, and it is certainly time for change. Digitalisation will provide the industry a wide array of opportunities for value creation; increasing profit pools along the value chain, generating alternative revenue models and equipping firms with new ways of accessing global markets. Additionally, the benefits of digital innovation surpass the realm of economics, potentially addressing issues such as environmental sustainability, education, equality, health and wellbeing.

“Today, the complexity of the environmental, economic and social challenges we face, demands that we innovate alongside others — with our minds open. [...] Our aim is to connect with those who are imagining the world of tomorrow.”

Philippe Bonnave, Bouygues Construction.

Innovative, agile startups provide an opportunity to rapidly break free from traditional moulds, embrace new technologies, access specialist resources and develop internal competencies.

Carlos Adams

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