Three industry scenarios
McKinsey’s Artificial Intelligence: Construction Technology’s Next Frontier (Agarwal et al 2018) is one of a series of recent papers from the management consultants on AI, automation and infrastructure. They identify five AI-powered applications, and use cases that have already arrived in other industries, that can be applied to construction. This is a practical approach that seems to target major contractors, and is a different approach to previous reports that could have been primarily intended for public sector clients. McKinsey has been seriously developing their infrastructure practice for some years now, positioning themselves for the global infrastructure boom they forecast over the next few decades. The five industry applications are:
- Transportation route optimization algorithms for project planning optimization;
- Pharmaceutical outcomes prediction for constructability issues
- Retail supply chain optimization for materials and inventory management
- Robotics for modular or prefabrication construction and 3-D printing;
- Healthcare image recognition for risk and safety management.
Each of these has a short discussion with some examples of crossover potential. They are all plausible extensions of current technology, and in robotics, 3-D printing and drones, leading construction firms are already well advanced. Using AI for optimization is obvious (Gans 2018), and is addressed below (see figure 2), but construction firms typically contract out specialized tasks such as design and logistics, rather than invest in the hardware and software development needed (Manly and XXX). Its questionable whether McKinsey makes a convincing case for using AI in construction. Are these are the pathways into construction for AI, or the only ones?
McKinsey also looks at some
machine learning algorithms that are relevant to contractors, and briefly
assesses their potential engineering and construction applications. Despite
their extensive reporting on BIM elsewhere there is no discussion of the potential
use of AI in design and engineering, or in restructuring processes. They do
have a generic framework for types of machine learning, and they suggest
algorithms will be useful for: refining quality control and claims management;
increasing talent retention and development; boosting project monitoring and
risk management; and constant design optimization.
If McKinsey has a more nuanced story to tell on pathways for AI into construction it might look something like the scenarios depicted by the World Economic Forum and the Boston Consulting Group in their Future Scenarios and Implications for the Construction Industry (WEF/BCG 2018). This scenario analysis is the second, final step in their Future of Construction project, which has involved people from industry and researchers from a wide range of organizations, after the Shaping the Future of Construction report (WEF/BCG 2016). They use infrastructure and urban development Industry (IU) to describe what has elsewhere been called the built environment sector.
The three future scenarios the WEF describe make technological context central to the future form of the industry. The scenarios depict three extreme yet plausible versions of the future. Each scenario is used to extrapolate implications for the industry, identifying potential winners from technological transformation, and the range of examples and ideas shows the value of such a widespread collaboration between industry, government and academia. The WEF does not say how far into the future they are looking, although it seem to be a lot further than McKinsey:
1. In Building in a virtual world, virtual reality touches all aspects of life, and intelligent systems and robots run the construction industry. Interconnected intelligent systems and robots run the IU, software players will gain power, and new businesses will emerge around data and services.
2. In Factories run the world, a corporate-dominated society uses prefabrication and modularization to create cost-efficient structures. The entire IU value chain adopts prefabrication, lean processes and mass customization, with suppliers benefiting the most from the transition and take advantage of new business opportunities through integrated system offerings and logistics requirements.
3. In A green reboot, a world addressing scarce natural resources and climate change rebuilds using eco-friendly construction methods and sustainable materials. Innovative technologies, new materials and sensor-based surveillance ensure low environmental impacts, so players with deep knowledge of materials and local brownfield portfolios thrive on the new business opportunities around environmental-focused services and material recycling.
It is important to keep in mind that scenarios are not predictions of the future. Rather, they outline a broad spectrum of possible futures. In the real future, the construction industry will most probably include elements of all three, as the supply side of changes in demand for different types of building.
One issue is where the industry is at in regard to technology take-up, now that there is widespread recognition of the reality of a digital future. Will construction industry development over the next decades absorb the impacts of new technology and be gradual, changing industry practice over time without significantly affecting industry structure or dynamics? Given the entanglement of economic, social, political, and legal factors in the construction technological system this might be the case, however there are good reasons to think this may be wrong. Machine learning, AI, automation and robotics are an interconnected set of technologies that are evolving quickly, enabled by expanding connectivity and the massively scaleable hardware available today.
In 2016 a scenario analysis called Farsight for Construction, looking at the future of the building and construction industry in Queensland, Australia, was released (Quezada et al, 2016). 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.” In the figure below Australia is substituted for Queensland.
Source: Quezada et al, 2016.
If we think of the structure of the construction industry as a pyramid of different sized firms, there is a broad base of tradesmen and small firms at the bottom, followed by a deep layer of medium sized firms, and a small top triangle with a few large firms. Some of those large firms, and some of their major clients, are clearly on the technological frontier, and their investment in capability and capacity should deliver significant increases in efficiency and productivity, and probably scale. Some medium-size firms are also making these investments, and also have access to technologies like algorithmic optimisation, platform-based project management, robotic, VR and AR applications and so on. The WEF Shaping the Future of Construction report (WEF/BCG 2016) included snapshots of what a range of firms at the frontier were doing. These examples reflect the diversity of the industry, and were missing from McKinsey’s high level analysis.
A period of technology-driven restructuring of the building and construction industry may be about to start, similar to the second half of the 1800s when the new materials of glass, steel and reinforced concrete arrived, which led to new methods of production, organisation and management. There are many implications of such a restructuring. Some firms are rethinking their processes in response to developments in AI, robotics and automation as capabilities improve quickly and the range of new products using these technologies expands. Many firms, however, are not. Meanwhile, firms at the frontier are exploring new technology and pushing the boundaries of what is possible, and are inventing new processes.
Agarwal, R., Chandrasekaran, S. and Sridhar, S. 2016. Artificial Intelligence: Construction Technology’s Next Frontier, McKinsey & Co.
Quezada, G., Bratanova, A., Boughen, N. and Hajowicz, S. 2016. Farsight for Construction: Exploratory scenarios for Queensland’s construction industry to 2036, CSIRO, Australia.
WEF/BCG, 2016. Shaping the Future of Construction: A Breakthrough in Mindset and Technology, World Economic Forum and the Boston Consulting Group, Geneva.
WEF/BCG, 2017. Future Scenarios and Implications for the Construction Industry, World Economic Forum and the Boston Consulting Group, Geneva.