The Construction Industry as a Technological System

Reordering the Physical World

When asked what our idea of the construction industry is, the mental picture we have is one of putting up buildings and structures. This is what the industry does, so it is obviously true. A more interesting question is how does the industry do this? To answer that question all the various participants in the project life cycle from conception to operation have to be included. Then there is the vast underpinning of manufacturers, engineers, industrial designers, scientists and technologists. An industry with a deep layer of specialised firms that form a dense network of producers, suppliers and materials is known as a technological system.

Technological systems solve problems or fulfill goals using whatever means are available and appropriate; the problems have to do mostly with reordering the physical world in ways considered useful or desirable, at least by those designing or employing a technological system. (Hughes 1990: 53)

The idea is from Thomas Hughes, an engineer and historian of technology, and his definition of a technological system is a model of clarity that indicates a lot of hard thinking. It recognises that there is an overlap between the idea of a technological system and an industry, but accepts the boundaries between industries and firms are blurred when the task is problem-solving. A technological system draws in suppliers from many industries to deliver solutions to problems, just as the construction industry’s technological system draws in suppliers from many industries to deliver projects. Those projects are themselves solutions to problems.

This is all at a high level of generality, of course, but one of the subtle aspects of the idea is way it is fractal, which means the same features exist at different scales. For example, there is a network of political, legal and financial organisations that facilitate the industry at the scale of the system, and at the level of a sub-sub-sub-supplier in the production chain there is another network of supporting firms. This effect can also be seen with machinery and components, at both the scale of the machine and for parts their design and production involves networks of engineers, managers and technologists.

This allows us to define a technological system based on the relationships between the firms and other organisations involved in reordering the physical world, in this case by delivering buildings and structures. Those firms and organisations make up the ‘industry’ that delivers those products. This is clearly similar to the concept of the broad construction industry discussed earlier. Similar but different, because here membership of the technological system is by participation and linkage, not by SIC codes. Regulatory agencies and professional licensing, for example, are part of a technological system but not found in industry statistics.

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Technological systems are, for Hughes, the key to understanding technological change. He studied the development and evolution of electric light and power between 1870 and 1940, and wrote a history of the industry. He saw these large, modern technological systems evolving in a loose pattern: “The history of evolving, or expanding, systems can be presented in the phases in which the activity named predominates: invention, development, innovation, transfer, and growth, competition, and consolidation. As systems mature, they acquire style and momentum.” (1990: 65)

There are many industry life-cycle models, most based on the idea of stages of development using generic terms like invention (new knowledge) and transfer (to production). Hughes’ version has seven phases that he uses to track the development of what he calls ‘systems of production’. These are the massive industrial complexes that arose in the first half of the twentieth century from major nineteenth century inventions like electricity and the internal combustion engine. Hughes is particularly interested in a small group of people he calls ‘system builders’, men like Henry Ford and Thomas Edison, who conceived and built entirely new and fully integrated supply chains, which became the technological systems used to produce cars and electricity. In Hughes’ book American Genesis, which had the subtitle A Century of Invention and Technological Enthusiasm 1870-1970, these system builders have a central role.

Within the seven phases of Hughes’ industry life-cycle are two smaller, interior cycles. Cycle 1 is invention, development, innovation and transfer, and clearly applies to emerging industries going through rapid technological change driven by new inventions. But it also describes the ongoing process of refinement of existing technology that underpins modern industry. Because most new inventions are based on some new combination of existing technology, as we accumulate more knowledge, new materials and equipment and so on, the range and number of possible new inventions is increasing exponentially. This means the general pace of underlying technological change can be expected to increase, affecting older, mature industries as much as newer ones.

In a production system as large and diverse as the construction industry technological system there are many entry points for new tech, so the issue here may not be the role of system builders, as in the industries studied by Hughes, who was interested in the way “radical inventions inaugurate new systems”. While radical inventions are significant, he discriminated between them and what he called "conservative" inventions. All inventions need to be tested and extended, expanded and finally put into production, so the great majority of R&D and innovation is done in corporate labs and is incremental, endlessly refining parts of the production system, usually in response to something changing elsewhere in the system. All industries have this push-pull dynamic in their supply chains, as production and distribution methods evolve over time.

Across the construction supply chain there are occasional technological breakthroughs, but they don’t create new industries because they typically come from firms and organisations already within the technological system. As a mature system, many of its sub-markets can be expected to be quite concentrated, with a few large, well established firms exactly like those Schumpeter suggested would be most likely to engage in R&D and invention and innovation. And these firms typically focus on incremental improvement of their product or service, and do so at approximately the same pace as their competitors within the technological system, the ratchet effect in action.

Because this form of invention and innovation is incremental, it should not be dismissed as unimportant. An example is the increasing lifting capacity of cranes over time, another is the new generation of construction chemicals, mainly sealants and concrete additives. These will greatly improve building performance and are the products of long-term industrial R&D, which is how technological change works in most industries most of the time. Another example is the development of computer-aided design software, which went on for decades before building information models were produced in the 1990s. BIM has advanced through 2D and 3D versions to the 4D (schedule) and 5D (cost) iterations today. Software linked to cameras or drones can now provide 4DAR (augmented reality) images from a building site linked to the BIM virtual project.

Cycle 2 in Hughes’ industry life cycle is growth, competition, and consolidation. This is where we get mature technological systems, industries that have moved past early rapid growth, and where the shape of the industrial structure has emerged. In many cases these are oligopolistic, with a few specialised firms dominating market niches or layers in the supply chain. The car industry is the obvious example, where two-thirds of global production is done by eight firms and there are often only two or three suppliers of dashboards, door panels, seats, airbags, brakes and steering and other key components. Construction materials like cement, concrete and glass, and components like building management systems, lifts and elevators are all similarly oligopolistic industries in mature supply chains.

Hughes has different types of system builders in each of his seven phases, based on the kind of system builder who is most active as a maker of critical decisions. “During invention and development inventor-entrepreneurs solve critical problems; during innovation, competition, and growth manager entrepreneurs make crucial decisions; and during consolidation and rationalization financier-entrepreneurs and consulting engineers, especially those with political influence, often solve the critical problems associated with growth and momentum.” (1990: 57). Basically, technological systems evolve through three stages based on a dominant business model and types of people: invention, management and finance.

Momentum is a useful idea too, particularly at the system level, although it can also refer to the well-documented persistence of older technologies despite newer and better versions being available, like the QWERTY keyboard or radio. Hughes thought “Mature systems, have a quality that is analogous ... to inertia of motion. The large mass of a technological system arises especially from the organizations and people committed by various interests to the system.” This highlights the value of a systems approach, because it includes organisations, organisational forms and people in networks of influence. This helps explain the long-run stability shown in a mature technological system.

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The driver of the development trajectory for the construction industry in the the 21^st century will be technologies now emerging, like nanotechnology, machine intelligence, exoskeletons, robots and so on. Possibly human augmentation. These are expected to vastly increase our abilities in hardware, both mechanical and silicon, and software, with new applications and programs and the development of intelligent machines trained in specific tasks. Because the industry’s technological system is so wide and deep this will affect a very large number of firms and people, and through them the wider economy and society.

How firms utilise technological capabilities will increasingly differentiate firms within an industry. It is widely recognised that there are differences between industries in the way that technology is adopted, adapted and applied, but the differences within industries has generally got less attention. For building and construction this is a far more significant driver of change than many people seem to think, it is after all a very conservative industry.

Hughes, T.P. 1990. The evolution of large technological systems, in W.E. Bijker, T.P. Hughes and T. Pinch, eds., The Social Construction of Technological Systems, Cambridge, MA: MIT Press, pp. 51-83.
Hughes, T.P. 1989. American Genesis: A Century of Invention and Technological Enthusiasm 1870-1970. Chicago: University of Chicago Press. New ed. 2003.