Sources: World Economic Forum, Geneva; Boston Consulting Group; CP staff
Digital technologies such as building information modeling, prefabrication, wireless sensors, automated and robotic equipment, and 3D printing will transform the entire engineering and construction (E&C) industry and its 100 million-plus employees worldwide, according to “Shaping the Future of Construction: Future Scenarios and Implications.” The new World Economic Forum and Boston Consulting Group report cites a potential $1.0 trillion to $1.7 trillion in an annual cost savings tied to a full-scale digitization of the global E&C business.
In parallel, authors note, global megatrends should motivate companies to rethink industry practices. Rapid urbanization, with more than 200,000 people per day relocating from rural areas into cities, resource depletion, and the widening talent gap are but a few of the most powerful of these trends. “Shaping the Future of Construction” is the first report to integrate consideration of the new technologies and trends into consistent scenarios for the future E&C industry.
The World Economic Forum and Boston Consulting Group worked with more than 30 leading companies and other stakeholders from the E&C industry over the past year. Through workshops in Berlin and London, they developed three extreme, but plausible, future scenarios for the industry. In the “Building in a virtual world” scenario, which participants consider highly likely, design and engineering software systems are powered by artificial intelligence, and autonomous construction equipment replaces most manual work throughout the E&C value chain. Authors also weigh “Factories run the world” and “A green reboot” scenarios.
Although the report indicates that it remains unclear which scenario will unfold, authors have little doubt that the real future will include elements of all three. “Current business models, strategies, and capabilities will not be sufficient in any of these future worlds,” says World Economic Forum Future of Construction Cochair Michael Burke, chairman of Los Angeles-based architectural/engineering/construction giant AECOM. “This underscores that players along the construction value chain need to prepare strategically to thrive in the face of anticipated disruption.”
In addition to recommending specific responses to each scenario, the report provides a set of actions that will be relevant in any possible future. It finds that 74 percent of the E&C company CEOs who attended the 2018 World Economic Forum meeting in Davos reported that they considered attracting new talent and improving the skills of the existing workforce to be among the top three actions for keeping pace with upcoming disruptions. The other two priorities they named were improving integration and collaboration along the value chain (65 percent) and adopting advanced technologies at scale (61 percent). For each scenario, the report describes the most important changes that E&C companies must anticipate; explains how customer requirements, segment demand, regulations, processes, and technologies would change; and, provides details on how the competitive position of existing industry players would be affected, what new entrants could be expected, and which new business opportunities will arise.
“Decision makers should understand the disruption outlined in the future scenarios as a wake-up call and use the identified key actions as a foundation for companies in the construction industry to prepare and shape a prosperous future that will allow the industry to fulfill its role in promoting economic growth, social progress, and environmental responsibility,” contends past Future of Construction initiative chair Luis Castilla, chief executive officer of Madrid-based Acciona Infrastructure.
“Shaping the Future of Construction: Future Scenarios and Implications” is posted here.