Construction has long been considered an industry that lacks both evolution and innovation. While other industries have avoided stagnation by becoming more efficient and productive over time, the construction industry has stuck on its tracks. According to McKinsey in 2017industry has failed to keep pace with global productivity growth averages, with global productivity growing only 2.8% over the past 20 years. They also liked that construction projects typically take 20% longer to complete than planned and are up to 80% over budget.
The construction industry is one of the largest in the world, employing nearly 7 percent of the world’s working-age population and spending approximately $10 trillion annually on construction-related goods and services. Show reports that in North America, construction costs are up 5% to 11% from last year, and we are currently in a twin housing crisis, with a lack of buildings and a lack of affordability. So how is it possible that an industry that is so important to the economy and housing, with broad financial support behind it, stagnates? How is the industry evolving?
“Construction is one of those industries where adoption is typically ten years behind most industries,” said Larry Brinker, Jr., CEO of Brinker Group, a family of commercial construction companies. “A lot of it had to do with the people who were in construction at project management and board level. They were typically not that tech savvy based on their backgrounds, so the adoption rate was definitely lower when it came to new technologies.”
A historic lack of technology adoption in a leading industry would lead many with the ability to create technologies to optimize to focus on other industries instead. Healthcare, transportation, retail and manufacturing are some industries that have experienced rapid growth due to both the need and creation of new technologies, especially during the pandemic.
René Morkos, CEO of ALICE Technologies, a construction options platform, shares a similar perspective on why construction has historically been one of the most difficult areas to evolve and digitize. “One of the reasons is that digital information in construction has long been incomplete and compartmentalised; it was difficult to share between different technology providers. Combine that with construction professionals, especially older generations who have been in the industry for longer, who have historically been reluctant to change their processes.”
While technology can be the golden ticket for many industries, why is the lack of adoption holding the industry back so drastically? Brinker, whose companies have been responsible for more than $4 billion in construction projects, explains that 30% of all construction work done is typically rework. “It adds cost and time to a project because you often identify the updates and rework to the project while you have labor in the field, meaning the project or that scope of work should stop now while architects figure it out, but also it reduces the actual productivity and efficiency of labor, increasing the timeline and increasing costs.”
For construction to evolve, you not only need the right type of technology that bridges the gaps in digital information and sharing, but you also need groups of professionals who are ready and willing to adopt the new technology. While others may not have been excited about creating technology that could help an unwelcome industry, Morkos invented the world’s first generative construction simulator that incorporates BIM models and user-defined rule sets, which then generates millions of valid simulations to create a build project. He then founded ALICE Technologies in 2015, which is actively committed to reducing construction costs worldwide by 25%. them just received $30 million in Series B funding to continue their work.
“Our technology has the potential to reduce global construction costs by 25%; millions more people will have access to health care and infrastructure, and raise their standard of living. In addition to reducing costs, optimizing with this technology can also reduce carbon emissions from construction,” said Morkos.
ALICE uses AI to provide tools that help with the planning stages through project delivery. The technology explores scenarios that make the most efficient use of project resources: materials, equipment, labor, and more. Unique in bringing AI to construction planning, ALICE helps contractors create a wide variety of construction plans. They can create different scenarios and chart a path that makes them more likely to deliver not only on budget but also on time.
Wes Asao of Hawaiian Dredging Construction Company, the largest general contractor in the state of Hawaii, used ALICE in their construction planning to create an affordable senior housing project in downtown Honolulu. “ALICE helped us plan the facade, looking at different ways we would attack and erect the facade in a 20-start building that is very tight with the adjacent buildings. ALICE helped us in the planning and sequencing of the outer skin of the building using the suspended scaffold. ALICE made a 3D model on time and actually visualized what our plan would be.”
Both Brinker and Morkos share that with a new generation of project and construction managers, they see stronger relationships with technology, faster adoption and an enthusiasm for evolution.
“The rebirth of construction is just around the corner,” Morkos said. “With the rise of the ‘contech’ segments, companies are getting better at sharing digital information. Customers demand it and companies adapt accordingly. Companies are becoming more and more comfortable with the application of new technologies. This is especially true for ‘next-gen’ construction professionals – our digital natives. They see the benefits that ‘contech’ can bring and become vocal advocates for tech adoption within their organizations.”