Is construction ready for Industry 4.0?

Industry 4.0 is an umbrella term for a range of emergent technologies including, big data, cloud computing, artificial intelligence, IoT and sensors that some analysts believe could initiate a fourth industrial revolution. The New Civil Engineer has estimated that the gains to construction could be worth an extra £25bn per year.

Impact of Industry 4.0

The advent of this new technology has permanently changed the way construction businesses operate and evolving market demands are forcing the industry to become more connected, dynamic and customer centric.

We recognise that to thrive in this new landscape, civil engineering and construction organisations need to develop new business models that take advantage of these opportunities and minimise risks, but so far, the industry has been slow to react.

It's important to remember that while technology and data are important enabling components for successful business models that drive innovation and deliver value, they're not the answer in themselves.

Which is why we want to know how business models are changing in response to these pressures.

Roundtable discussion on Industry 4.0

In partnership with Invennt, ICE hosted a roundtable discussion on 29 October 2019 to answer the question – is construction ready for industry 4.0?

Key takeaways from the discussion:

• The adoption of new technology is only one piece of the puzzle.

  The industry must leverage technology to enable new business models that solve operational challenges and satisfy emerging market needs.

• There’s a need to understand the value technology brings, rather than focusing on cost.

  The industry needs to move away from short-termism and a transactional way of working. Many tenders currently contain no requirement or opportunity for a digitised approach to construction delivery, with the main priorities being cost and time, triggering a race to the bottom among main contractors that trickles down the supply chain.

• There’s a need to view data as an asset, use it to inform decision making and facilitate continuous improvement.

  Typically, when a project is completed, there’s lots of data but no analysis to help inform how processes could be better and what lessons can be learned. There’s a need to be able to store, transfer and communicate data more effectively across projects, and use it to improve operations rather than just as evidence in dispute resolution.

• Better incentives would help to move towards digitisation.

  Currently, organisations are not incentivised for systems to be set up efficiently. There’s no push to learn lessons and look at metrics.

• Skills and capability within organisations have been lost because they’re chasing the lowest cost.

  Some organisations in the industry (e.g. consultancies) are remunerated based on hours worked. This does not incentivise working in a smarter way, as it results in fewer billable hours and lower revenues. To address this, contracts based on client value must be implemented.

• Information sharing lags behind other industries.

  Success stories are shared to win bids but not to share best practice and maintain competitive advantage. The fragmentation of organisations (across projects) makes it difficult enough to diffuse information and knowledge across a single company, let alone throughout the industry. There's also a reticence to give away what might be considered strategic advantages, even if the result is a more capable industry as a whole.

• Collaboration has been challenging due to competitive nature of construction industry.

  Alliancing and long-term relationships have been proven to enable better collaboration. Unless industry moves to this way of working, it’s likely we’ll stay stuck in a competitive environment that continues to chase lowest cost without innovation sitting at the heart of what we do. Organisations are focused on protecting their slim margins on individual packages due to the transactional nature of contract administration, rather than being engaged to deliver long term outcomes.

Further information from the discussion will be published in a report by Invennt, due to be released on 6 February 2020.

For press enquiries and more information regarding the report, please contact Andy Hastie.