{"id":5632,"date":"2022-09-29T02:11:49","date_gmt":"2022-09-29T02:11:49","guid":{"rendered":"https:\/\/crestnetwork.com\/?p=5632"},"modified":"2022-10-01T03:06:07","modified_gmt":"2022-10-01T03:06:07","slug":"how-digital-transformation-is-impacting-the-construction-industry","status":"publish","type":"post","link":"https:\/\/crestnetwork.com\/how-digital-transformation-is-impacting-the-construction-industry\/","title":{"rendered":"How Digital Transformation Is Impacting The Construction Industry"},"content":{"rendered":"\n
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<\/a>About the Author:<\/p>\n\n\n\n

Matt Rogers is a freelance writer for over 5 years, mostly writing on the topics that concern the relocation, construction, and real estate industries. When not working, he enjoys history novels and collecting souvenirs from over the globe.<\/p>\n<\/div>\n<\/div>\n\n\n\n

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Well into the digital age, technological innovations continue to expand many industries\u2019 horizons in new ways. In turn, accelerating digitization gives rise to the broad, oft-misunderstood term of \u201cdigital transformation\u201d. However, the construction industry specifically continues to face inherent challenges in this regard, such as fragmentation and decentralization. It thus remains notoriously hesitant to adopt new technologies, from project cost management to construction project planning software \u2013 and therefore lags behind by comparison. Still, digital transformation is impacting the construction industry as well, albeit in subtler ways.
What is digital transformation?
First, let us briefly define digital transformation before exploring its applications for the construction industry. This term is indeed very vast, so its intended meanings invariably change across different contexts and industries. SalesForce provides the following concise definition:
\u201cDigital transformation is the process of using digital technologies to create new \u2014 or modify existing \u2014 business processes, culture, and customer experiences to meet changing business and market requirements. This reimagining of business in the digital age is digital transformation.\u201d
Thus, an initial distinction lies where precisely digital transformation occurs. The process does not simply entail adopting new digital tools for any one phase of production or marketing, but a holistic digitization of processes, communications, and culture. Simple adoption of cloud-based construction management software, for example, is, by all means, a step toward digitization, but does not constitute a transformation in any fundamental sense.
With this rudimentary definition, we now focus on the construction industry specifically. An article by Ayokunle O. Olanipekun and Monty Sutrisna, published in FrontiersIn, pinpoints digital technologies in which the industry sees \u201can increasing implementationf\u201d:
\u25cf Building information modeling (BIM)
\u25cf Augmented and virtual reality (AR\/VR)
\u25cf Laser scanning
\u25cf Robotics
\u25cf 3D printing
\u25cf Prefabrication and DfMa platforms
\u25cf Analytics software
\u25cf Blockchain
\u25cf Digital twins
\u25cf Internet of things (IoTs)
\u25cf Machine learning solutions
Evidently, digital transformation is impacting the construction industry across all phases \u2013 as the term intends. However, this is far from a clean process, as the industry faces distinct challenges that have historically hampered innovation.
Digital transformation challenges the construction industry faces
Longstanding labor shortages aside, which the pandemic has certainly not helped alleviate, the construction industry has traditionally struggled with the adoption of new technologies. E-builder notes this in no uncertain terms, as they correlate it to sluggish productivity growth:
\u201cConstruction productivity growth has remained at 1% annually for the past two decades. This correlates to the fact that construction, as an industry, ranks 2nd-to-last for technology adoption.\u201d
This phenomenon would require multiple articles and careful research to fully explore and decipher, but McKinsey offers a solid, if distilled, set of reasons underlying it. Let us summarize each.<\/p>\n\n\n\n

1 Fragmentation<\/h1>\n\n\n\n

The initial and perhaps most overarching challenge in the way of digital adoption comes with the definitional fragmentation of construction projects. Projects that occupy many specialists of multiple disciplines across the value chain, let alone organizations, require immense coordination, which is often unfeasible. Here, McKinsey rightly notes \u201cthe short-term and often adversarial nature of construction contracts\u201d as an additional layer of inhibition.<\/p>\n\n\n\n

2 Lack of replication<\/h1>\n\n\n\n

The second issue comes with a definitional lack of replication. Construction planning software may see application across different projects, as may other software across a project\u2019s lifecycle. However, large-scale digital transformations remain hard to execute and encompass multiple projects because construction projects often differ on fundamental levels \u2013 often being \u201cone-of-a-kind endeavors.\u201d<\/p>\n\n\n\n

3 Transience<\/h1>\n\n\n\n

Coupled with a lack of replication, construction often entails notable transience. Project teams, organizations across the value chain, and individual contractors and subcontractors are \u201crarely consistent\u201d. It is exactly because digital transformation lags behind that this transience cannot be alleviated by standardized assets and processes.<\/p>\n\n\n\n

4 Decentralization<\/h1>\n\n\n\n

Echoing this point, McKinsey identifies the fourth and final inhibitor in decentralization. As large construction companies\u2019 \u201cbusiness units and divisions [are] following their own processes rather than standardized ones\u201d, decentralization only exacerbates the industry\u2019s natural unwillingness to adopt new technologies.
How digital transformation is impacting the construction industry
The construction industry has inevitably begun to embrace digitization across the globe. GulfBusiness cites the case of the United Arab Emirates as an example, where government-backed digitization has drawn the attention of digital investment funds. Many of the researchers and publications identify similar slow but steady steps forward across the globe. The reasons for this are numerous and primarily hinge on digital transformation\u2019s current and potential benefits for the industry.<\/p>\n\n\n\n

1 Diversification<\/h1>\n\n\n\n

Deloitte pinpoints a curious initial benefit to construction professionals\u2014diversification. Indeed, portfolio diversification, especially in such trying, competitive times, is a reasonable goal, the motives for which (across all industries) typically \u201cconsist of growth, synergies, reduced risk, and cash flow recurrence and stability.\u201d
Examples of portfolio diversification include:
\u25cf Storage. Building owners specifically may consider the needs of the relocation industry and opt to retrofit appropriate space into a climate-controlled facility with steady temperature and humidity. The moving team behind Heavenly Moving and Storage<\/a> argues that a robust digital foundation will, in turn, facilitate better inventory management for improved storage safety.
\u25cf Hospitality. Another diversification option into \u201cless related areas\u201d, as Deloitte puts it, may find firms and building owners alike investing in hospitality instead. This endeavor, too, has much to gain from a holistic digital transformation, with facility management as a very notable example.
\u25cf Consulting. Finally, experienced construction professionals may instead seek to offer consultation services, as a way to \u201cextract value from technologies and the key business expectations of each client.\u201d In this regard also, standardization through digital transformation may begin to remedy the industry\u2019s challenges.<\/p>\n\n\n\n

2 Long-term cost reductions and increased productivity<\/h1>\n\n\n\n

This second benefit bears scrutiny, as it seeks to strike a very specific balance, namely increased productivity and long-term cost reduction against implementation cost.
Indeed, the McKinsey Global Institute finds that \u201cdigital transformation can result in productivity gains of 14 to 15 percent and cost reductions of 4 to 6 percent\u201d. However, they also recognize the aforementioned challenges, and soon present a cautionary note:
\u201cToday, the industry is in deadlock\u2014to break it will require movement from all players. [\u2026] But [owners] are generally risk-averse and not sufficiently experienced to navigate an opaque market. Only when there is a sufficiently broad range of contractors and production-system-based players [\u2026] may they change their procurement practices.\u201d
Nonetheless, both theirs and other research cited above identify massive potential in long-term cost reductions and productivity. There is certainly consensus as regards a key principle, applying technology as a means of solving a specific problem.
In this regard, ConstructionExec cites individual cases of contractors and companies that have successfully adopted construction management software and other focused solutions. While isolated, these cases are already illustrating how digital transformation is impacting the construction industry, one productivity boost at a time.<\/p>\n\n\n\n

3 Worker upskill and competitiveness<\/h1>\n\n\n\n

The final benefit of digital transformation, especially as labor shortages continue, lies in competitiveness. Reaping digitization\u2019s benefits aside, up-skilling workers allows companies to increase retention rates, a boon when construction turnover rates remain high, as well as retain a competitive edge as digitization expands.
Regarding the former, DCSL identifies the ever-present factor of turnover, noting that \u201cwithout widespread digital adoption, the construction industry risks being marginalized and may lose a generation of new talent to other sectors”. Fortunately, up-skilling does not simply begin to address this concern but also yields a demonstrable competitive advantage. Notably, the WEC finds that approximately 66% of employers expect positive up-skill and re-skill ROI within a year. Fortunately, PwC reaffirms their expectations, finding that 93% of CEOs who opt for such programs see both productivity and retention benefits.
Conclusion
Digital transformation is impacting the construction industry in three main, distinct ways. First, it offers notable portfolio diversification options for construction professionals and building owners alike. Then, in more direct ways, it promises long-term cost reductions and productivity boosts. Finally, as new software options abound, it incentivizes worker up-skilling toward securing a competitive edge. The industry faces unique challenges that inhibit such overarching transformations, but researchers hope they will diminish in time.<\/p>\n","protected":false},"excerpt":{"rendered":"

About the Author: Matt Rogers is a freelance writer for over 5 years, mostly writing on the topics that concern the relocation, construction, and real estate industries. When not working, he enjoys history novels and collecting souvenirs from over the globe. Well into the digital age, technological innovations continue to expand many industries\u2019 horizons in […]<\/p>\n","protected":false},"author":3,"featured_media":5634,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"off","_et_pb_old_content":"","_et_gb_content_width":"","limit_modified_date":"","last_modified_date":"","inline_featured_image":false,"footnotes":""},"categories":[12],"tags":[],"acf":[],"yoast_head":"\nHow Digital Transformation Is Impacting The Construction Industry | CREST Real Estate Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/crestnetwork.com\/how-digital-transformation-is-impacting-the-construction-industry\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How Digital Transformation Is Impacting The Construction Industry | CREST Real Estate Network\" \/>\n<meta property=\"og:description\" content=\"About the Author: Matt Rogers is a freelance writer for over 5 years, mostly writing on the topics that concern the relocation, construction, and real estate industries. 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