Farsight For Construction

Four Scenarios

In 2016 a scenario analysis for the building and construction industry in Queensland, Australia, was released. Background info and the report are available here. The scenarios describe “four plausible futures for Queensland’s construction industry over the coming two decades, with a focus on impacts for jobs and skills. Each scenario consists of a description of Queensland’s construction industry in the year 2036, a narrative of how the scenario came about, and a commentary on plausibility.” I substituted Australia for Queensland in the graphic, as this is more realistic, but have left the scenario outlines intact.

Scenario 1: The Digital Evolution

This is a future where traditional tradies and operators are in demand and highly paid. High-fidelity training simulators are used to attract a ‘gamer generation’ and fast-track apprenticeships to address skill shortages. A small number of progressive companies are managing capacity constraints through using exosuits to retain older workers and cut costs due to injury. Industry structure and practices have changed little but diffusion of BIM and data analytics has driven improvements in efficiency, customer service, product quality and workplace safety. Such steady improvements are enabling the industry to compete internationally, and to adapt to cost pressures related to scarcity of human capital and raw materials. Manufacturing of buildings and building elements remains niche and relatively expensive, as only a few local companies tap a small low-volume market. Heavy equipment/machinery is still operated by humans with some autonomous functions to improve efficiency.

Industry structure and practices have changed little but diffusion of BIM and data analytics has driven improvements in efficiency, customer service, product quality and workplace safety. Such steady improvements are enabling the industry to compete internationally, and to adapt to cost pressures related to scarcity of human capital and raw materials. Manufacturing of buildings and building elements remains niche and relatively expensive, as only a few local companies tap a small low-volume market. Heavy equipment/machinery is still operated by humans with some autonomous functions to improve efficiency.

Being a cautious innovation culture means that people in the industry, as well as their customers, don’t like surprises and shun failure. Construction companies focus on delivering projects on their books, while the market gives priority to proven products and methods, seeing traditional construction as a ‘safe investment’. There is a lingering problem with waste from construction despite high material costs, and the industry is in the bottom of the OECD in terms of R&D investment and partnerships with the research sector.

Scenario 2: Smart Collaboration

The industry has not yet seen full automation of repetitive, dangerous and physically demanding tasks, but Queensland is at the forefront of experimenting with new solutions to make construction safer, more materials efficient and productive. Living labs have been established to enable R&D and deployment of new materials and tools to cope with an ageing workforce, harsh climate and resource pressures. Queensland is home to a globally renowned and coveted materials and building standards system.

Queensland’s strong early adopter market pushes the industry to continuously improve and experiment with new products, methods and tools. Traditional trades and professions persist but are in decline, with the employment emphasis on new jobs based on digital literacy, agile project management and prefabrication. Working with BIM, along with augmented and virtual reality technologies, is a core skill across the industry (akin to smart device use in 2016). Quality assurance and continuous improvement roles are in demand. Workers develop modular skills and competencies quickly through high-fidelity training simulators.

The workforce has fully embraced advanced exosuits, which allow older workers to continue in physically demanding trades. This technology has also allowed many women to participate in physically demanding site-based work. While assistive technologies have deskilled manual jobs, they have allowed job rotation possibilities for office-based professionals and managers who seek new experiences and insights of the construction process; a practice that fosters natural curiosity among construction workers. New opportunities for improvement and innovation are constantly cropping up; innovation management is a core competency, with most companies maintaining an innovation register, and running trials and experiments across a portfolio of projects.

Wide adoption of online peer-to-peer platforms in the industry with embedded ranking systems has been driven by consumers, and has all but eliminated ‘cowboys’ in the industry and boosted the quality of construction work done, especially in the maintenance sector. Foreign companies have invested in the Queensland industry in an effort to acquire new capabilities and innovations. The state’s industry has a global reputation for operating with integrity and for ‘shared benefits’. Communication skills and collaboration across disciplines and ethnicities is a strength, and foreign partners value the egalitarianism that is widely evident in the state. The industry is at the top of the OECD in terms of R&D investment.

Scenario 3: Globally Challenged

This scenario sees Australia struggling economically. The country has fallen behind the global transformation of construction, characterised by widespread adoption of advanced manufacturing techniques and smart robot technology. Overseas entrants are dominant in the Australian market, which is struggling with a high cost base. An Asian company is Australia’s number one home builder.

 Some Australian companies are outsourcing large components of projects to overseas fabricators to stay competitive with new entrants. This survival strategy, along with a short-term project focus, means that important strategic decisions are overlooked. Many Australian companies are either being bought out or are going out of business. Newspaper headlines tell the story of an industry in decline (much like headlines about the Australian auto industry in 2016). The workforce is a mere 10% of what it was in 2016. High unemployment is being addressed through extensive (albeit reactive) retraining programs to improve job prospects for vast numbers of workers.

The giants of construction are Japanese, Korean and Chinese corporations that were preeminent car manufacturers of the late 20th and early 21st centuries. While robots are not allowed on site in Australia, most building and infrastructure delivery is carried out remotely by highly automated facilities in Southeast Asia, and then assembled on site by foreign workers with corporate training certifications (e.g. Toyota certified technician). Dramatic cost breakthroughs are enabling home buyers and asset owners in Australia to acquire high-quality buildings and infrastructure within available capital constraints

Wages of the remnant industry have plummeted from the highs of the early 2000s. Automated recycling of old buildings and low cost for new builds has confined renovation activity to heritage-listed buildings. The depressed economy and low-cost real estate and wages in Australia (and Queensland) is attracting some overseas companies to invest in new production facilities as part of a global expansion. This investment is bringing new opportunities for the old construction workforce to pivot into technical jobs for agile manufacturing operations, and reinvigorating domestic expertise in mass customisation. Associated niche industries are emerging in ‘smart’ design to help home buyers and assets owners unlock the potential of advanced manufacturing and digital technology.

Scenario 4: Rise of the Robots

The developing world, particularly Southeast Asia, has been battling major natural hazard events and associated impacts on vast urban populations. Australia has also been impacted by natural disasters, but relatively low government debt has afforded the flow of funds for reconstruction. With one of the world’s highest innovation rankings, Australia is an integral part of a Southeast Asian-Oceania Union (akin to the European Union), which is fostering coordinated responses to the crisis.

AI and robotics has transformed construction globally, and Queensland is at the forefront of developing and using this technology. The state’s construction industry is central to a regional implementation of smart robots to natural disaster hit areas. Living labs are dotted around the state, testing and evaluating new generations of disaster recovery and reconstruction robots, and new sustainable and climate adaptive materials and infrastructure. Queensland’s ‘climate resilience’ standards are globally respected. Know-how in sustainable and climate resilience engineering is a significant export, along with new products and services to support new and reconstructed cities.

Historical trades and jobs have given way to a workforce of technicians and knowledge professionals in robotics engineering and programming. Construction is a science with significant data flows and real-time feedback to construction workers and clients. Enabled by smart sensor technology, AI optimisation is offered throughout the design and construction process, and beyond to the maintenance and operations of buildings and infrastructure. Queenslanders are demanding early adopters, expecting the most advanced, cost-effective, environmentally sustainable and climate-resilient products. Restoration and renovation work is limited to historical buildings; it’s far cheaper to demolish and recycle materials into new, better performing buildings.

Queensland’s proximity to Asia, political stability, strong innovation culture and high-trust environment is attracting foreign investment and world-class scientists and inventors. As a cultural melting pot, the state is also renowned for embracing and benefiting from cultural diversity through an egalitarian approach in the workplace.

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Building a scenario analysis around two key variables to produce two positive and two negative outcomes is a well-known technique. They explain these as two spectrums of uncertainty and impact on construction jobs and skills. “One of these spectrums is the extent to which task automation advances over the coming decades. The other spectrum relates to the extent of the industry’s willingness to embrace new technology – its willingness to adopt a culture of innovation. Once these two spectrums are crossed, they define the scenario space and lead to the development of plausible scenarios in each quadrant.

Initiated by Construction Skills Queensland, a training organization, the project bought CSIRO scientists together with 80 industry representatives to develop the industry profile and technology trends used in the scenarios. Each scenario has a specific political, economic and environmental context. The industry input grounds them in current issues and perspectives but, on the other hand, has limited the extent of possibilities considered to those within the imagination of the participants. If there is a weak point in the analysis it is the focus on trade skills, which of course reflects the project’s sponsors’ concerns. The form and functioning of the materials suppliers, manufacturers and professional services industries is not discussed, except in the broadest of ways, despite the importance of the supply chain in the construction technological system.

Nevertheless, this is an interesting set of scenarios. Scenario analysis is part of the larger field of strategic management, so for firms and organizations thinking about the future of building and construction these would provide good starting material for a planning workshop.