Evolution of the Construction Technological System

General Purpose Technologies and the Construction Industry

The modern construction industry had its roots in the take-off of industrialization in the early nineteenth century, and there was a comparable period of rapid, disruptive technological development not unlike the present one in the late nineteenth century. Between 1860 and 1900 building and construction was restructured as an industry by the rise of large, international contractors, and project management and delivery was reorganized around steam powered machinery and equipment. Major projects like the Suez Canal, railways, tunnels and the new factories for mass production were typically built by new, global European contractors employing workers from around the world on their projects. These projects also required a new organizational form that integrated components, systems and processes.

In materials, the disruptive new technologies of steel, glass and concrete, which came together in the last decades of the century, led to fundamental changes in both processes and products, along Peters (1996) three dimensions of industry development: industrialization, mechanization and organization. Over a hundred years later construction is a mature system, based around standards and professional roles, with a high degree of technological lock in due to the age of the system. The ‘embeddedness’ of the construction technological system is found across the various combinations of the complex array of professional institutes and organizations, trade and industry associations, government regulations and licensing, standards and codes, and insurance and finance providers and regulators.

The impacts of new technology on a mature technological system like the construction industry are often thought to be gradual, changing industry practice over time without significantly affecting industry structure or dynamics. This was the case for twentieth century General Purpose Technologies like electricity, computers and the internal combustion engine. These became universal without significantly restructuring and reorganising construction in the way steam powered mechanization did, because they essentially upgraded existing capabilities. At the starting point for a cycle of development is a new GPT, then industries and products evolve and develop as the underlying knowledge base and technological capabilities increase and become more complex.. If, after a period of development, this GPT gives a technological shock to an existing system of production, it leads to a transition period where the firms involved have to adjust to a new business environment, which in turn leads to a restructuring and consolidation of the industry. This is what happened to construction in the second half of the nineteenth century, with iron-framed and steel-reinforced concrete buildings the industry had to not only master the use of these new materials, but also develop the processes and project management skills the new technology required. With electricity, computers and the internal combustion engine in the twentieth century, the construction industry adopted these new GPTs and used them to improve efficiency, but they did not require a major change in the form of industry organization that had emerged during industrialization and mechanization in the nineteenth century.

How and why a new technology spreads through the economy and society is determined by many factors, however studies of historical cases such as tractors, electricity, TV and phones have given good examples of technology diffusion and its dynamics. A GPT takes time to diffuse through the economy because parallel changes in forms of organization, methods of production and patterns of consumption are required, and these are not decisions firms and households make quickly or easily. Studies on the introduction of new technologies found it takes 15 to 30 years for a new technology to reach 90 percent of its potential market, for example electrification in the US, which took 30 years from 1900 because of the fundamental changes industry and households needed to make to take advantage of electrical power. Another example is how the tractor displaced horses and mules in US agriculture between 1910 and 1960. Horses and mules declined from about 26 million in 1920 to about 3 million by 1960, while the number of tractors rose from zero to 4.5 million by 1960. One reason for the slow spread of tractors was the incremental innovation needed to increase their reliability. A second was an increase in farm wages after 1940. The relative price of labour and mechanization has been found to be the most significant factor in technological innovation, diffusion and automation of work.

How firms utilise technological capabilities differentiates them within a diverse, location-based technological system. It is widely recognised there are differences between industries in the way that technology is adopted, adapted and applied, but differences within industries generally get less attention. The technology adoption literature discusses rank effects, which are the different individual characteristics of firms such as their size, and how they affect the rate and extent of adoption of new technologies, and the effects of competitive dynamics, which is how the adoption of new technology by one company in an industry influences the adoption of technology by other companies in that industry. For building and construction this is significant, not only because of the number of small and medium size firms, but because of the size and reach of the major firms. A global contractor might have over 50,000 employees, suppliers of basic materials and sophisticated components are large multinational or multilocational industrial firms, many of these firms are publicly listed, and so on. These firms have the management and financial resources required to invest in twenty-first century technology, if and when they decide to do so. The issue may be the ability of incumbent firms to capture knowledge externalities, adopt new technologies, and adapt to the impacts of emerging technologies and their requirements.

Importantly, there is a class of more nimble, faster growing firms that have been identified as technology leaders, some of which are incumbents but often are not. Andrews et al. (2015) called these ‘frontier firms’, or firms pushing at the technological frontier through experimentation and development. Frontier firms bring with them radical new production technologies that rely in various ways on smart machines, like the three studied by Hall et al. (2019) and firms like Katerra, Esko, FBR and Daqri (from Table 3). Those firms are new entrants, but incumbents are also on the frontier. Examples are Trimble and Autodesk, Skanska embedding wireless sensors in buildings, Arup’s data collection systems and Atkins water infrastructure design system.

The technological frontier

The construction technological system is wide and diverse, and the various parts of the digital construction technological system are in various stages of development (Gruska et al. 2017). There are many possible futures that could unfold over the next few decades, recent industry scenarios for AI include Agarwal et al. (2016), WEF/BCG (2017) and Quezada et al. (2016), but there is little probability of some breakthrough technology that leads to some different, new industry. Instead, development of AI and associated digital fabrication and production technologies will more likely reshape the existing industry, led by fundamental changes in demand (the function, type and number of buildings), design (the opportunities new materials offer), and delivery (through project management). The fourth industrial revolution has already affected demand for structures like renewable energy sources and buildings like data centres, warehouses and retail, ‘dark’ kitchens and supermarkets for online delivery services. Some of these buildings and structures already use forms of applied AI in their management and operation.

At the end of the second decade of the twenty-first century, automation technology is at the point where intelligent machines are moving from operating comfortably in controlled environments, in manufacturing or social media, to unpredictable environments, like driving a car or truck. In many cases, like remotely controlled and autonomous trucks and trains on mining sites, the operations are run as a partnership between humans and machines, or as Brynjolfsson and McAfee (2014) put it “running with the machines not against them”. These innovations might reasonably be expected to affect site processes and project organization, as concrete and steam power did in the past. Table 1 has examples of where the technological frontier is in 2020 for plant and equipment, also for construction materials, as an indication of the range and extent of this wave of innovations. Missing from these lists is smart contracts using blockchain.

Table 1. The construction technological frontier in 2020

Plant and equipment

New materials

Autodesk BUILD Space – Boston UK construction manufacturing hub Exoskeletons – Esko, HULK Remote control equipment – CAT, Komatsu Drone monitoring – Skycatch, Icon, Vinci Smart helmets –  Trimble Hololens, Daqri Platforms – Katerra Apollo, Project Frog Build autonomous skidsteer FBR Robotics ‘Wall as a service’ Otis ‘Elevator as a service’ Sensor fitted cranes Automated engineered wood factories

3D concrete printing with boom system – ICON, Aris, 3D Constructor 3D concrete printing with gantry suspended nozzle – D-Shape, BIG, US Marines 3D metal printing – GE, MX3D, Aurora 3D printing of combined steel and concrete - Autodesk Roller press printing of smart fabrics 4D printing of reactive and shape memory materials Molecular engineering of materials  Improved concrete additives and sealants Components with cloud-linked sensors Cloud-based fixtures and fittings

Invention and innovation based around BIM, digital twins, digital fabrication and advanced manufacturing technology, is starting to fundamentally affect the production system through economies of scale. Over time this will alter the balance between on-site and off-site production of building modules and components, and how they are handled, assembled and integrated. The combination of BIM and digital fabrication could be transformational if it allows on-site production of building components, fundamentally altering the economies of scale in the industry. Mass production will always have a role, but market niches currently occupied by some manufacturing firms may disappear, replaced by new production technologies based on digital fabrication and online design databases. Adding new materials to the fabrication palette through molecular design and engineering may be significant, or other new materials, or upgraded versions of existing structural materials. Combining robotic and automated machinery with digital fabrication and standardized parts opens up many possibilities. Exoskeletons combine human skill with machine strength.

While firms involved in construction of the built environment are facing technological advances that will affect many aspects of the technological system, this is a process that happens over years and decades. Lipsey et al. (2005: p. 211) found “the gestation period of individual GPTs does not seem to have shortened much since the industrial revolution” and it takes 50 years between invention of a GPT and its use becoming widespread (their examples were discovering the double-helix and biotechnology, the dynamo and electricity, and the first electronic computers in the 1940s). For the tractor and electrification cases used above, starting from the date of invention of the internal combustion engine and dynamo would add around three decades to those timelines. 

In fact, how long a transition to a new technological system built on automation and digital fabrication coordinated by AI takes is unknown. While machines can replicate individual tasks, integrating different capabilities into solutions where everything works together is another matter. Combining a range of technologies is needed for workplace automation, but solving specific problems involves specific and organizational technical challenges, and once the technical feasibility has been resolved and the technologies become commercially available it can take many years before they are adopted. Importantly, this suggests there will be many new jobs in construction over coming years, for project information managers, BIM supervisors, integration specialists and other fourth industrial revolution roles. Because these jobs will be primarily on new projects, they will not quickly replace the many existing jobs in the industry required to maintain the built environment. McKinsey (MGI 2017) sees construction as an industry where AI does not significantly reduce the number of jobs. In their paper on ‘Construction 4.0’ de Soto et al. (2019) conclude: “there will be a time in which conventional construction and robotic technologies will coexist, leading to a higher job variability and new roles.”

Nevertheless, the technological frontier is moving again, and new construction projects will generally utilise the most cost-effective technology. Current AI technology provides services such as GPS navigation and trip planning, spam filters, language recognition and translation, credit checks and fraud alerts, book and music recommendations, and energy management systems. It is being used in law, transport, education, healthcare and security, and for engineering, economic and scientific modelling. Advanced manufacturing is almost entirely automated. As expected with a new GPT, there are many new applications under development (Mitchell 2019).

The next level of AI envisages those capabilities extended in the near future to a group of intelligent machines that have been individually trained to collect and manage data from the stages of a construction project, and that outsourced business processes can provide such data for intelligent machines, supervised by users and helping them manage complicated processes. An AI acting as an overall project data manager could integrate the data from many sources to continually update a project’s schedule, work plan and cost estimates, matching progress and performance to iterate those plans for the project’s managers. This AI assists users’ decision-making by generating and evaluating options. Such a system would be operated by a voice activated interface, with the progress updates included and access to expert systems for specialist areas provided. It would generate design options and provide full visualisation of a shared BIM model linked to the schedule and site work plan. There would be real-time supply chain data on fabrication and logistics through cloud-based platforms. The AI can iterate the schedule and cost plans for a project, based on that data, allowing the project management team to match performance with plans, in real-time, for every aspect of a project.The data required for the coordination and management role of intelligent machines can come from widespread use of standardized, outsourced cloud-based business processes. That data then becomes a series of training sets needed for deep learning, the current level of AI technology. 

References
Agarwal, R., Chandrasekaran, S. and Sridhar, S. 2016. Imagining Construction’s Digital Future, McKinsey & Co

Andrews, D., C. Criscuolo and P. N. Gal, 2015. Frontier Firms, Technology Diffusion and Public Policy: Micro Evidence from OECD Countries, OECD Productivity Working Papers, 2015-02, OECD Publishing, Paris.

Brynjolfsson, E. and McAfee, A. 2014. The Second Machine Age: Work, Progress and Prosperity in a Time of Brilliant Technologies, New York: W. W. Norton & Co.

de Soto, B. J., Agustí-Juan, I., Joss, S. and Hunhevicz, J. 2019. Implications of Construction 4.0 to the workforce and organizational structures, International Journal of Construction Management, DOI: 10.1080/15623599.2019.1616414

Gruszka, A., Jupp, J. R. and de Valence, G. 2017. Digital Foundations: How Technology is Transforming Australia's Construction Sector, Sydney: Startup Australia.

Lipsey, R. G., Carlaw, K. I. and Bekar, C. T. 2005. Economic Transformations: General Purpose Technologies and Long-term Economic Growth, Oxford: Oxford University Press.

MGI, 2017. A Future that Works, McKinsey Global Institute.

Mitchell, M. 2019. Artificial Intelligence: A Guide for Thinking Humans, New York: Farrar, Straus, and Giroux.

Peters, T. F. 1996. Building the Nineteenth Century, Cambridge, Mass. MIT Press.

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, 2017. Future Scenarios and Implications for the Construction Industry, World Economic Forum and the Boston Consulting Group, Geneva.

Construction as a Mature Technological System

Technology and industry structure

An industry with a deep layer of specialised firms that form a dense network of producers, suppliers and materials was called a ‘technological system’ by Thomas Hughes:

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 1987: 53).

Hughes was an engineer and historian of technology, who saw technology as “craftsmen, mechanics, inventors, engineers, designers and scientists using tools, machines and knowledge to create and control a human-built world”. 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.” (Hughes 2004: 65).

When viewing the construction industry as a technological system, the age of the system is the most obvious feature. Most of the various elements of the modern industry came together over the nineteenth century, pushed along by ever larger and more complex projects building canals, roads, bridges and tunnels, railways, factories, offices and housing. During the 1800s the world was urbanising as population rapidly increased and major cities attracted migrants and businesses. In the second half of the century heavy industry and manufacturing spread around the world, from England and Western Europe to America then Japan. New industries needed new types of buildings, typically larger, higher and stronger than traditional methods and materials could provide. Bowley (1966) for the UK and Fitch (1966) for the US are well known histories.

It’s a remarkable fact that the building and construction industry we have today is a technological system that has been developing for 150 years. As a mature technological system, this can be expected to be in many places a quite concentrated industry, run mainly by finance and management types, and having a high degree of technological lock in due to the age of the system. Many of the industry’s global leaders are well-established, Bechtel for example is over 100 years old, and others like Hochtief, Skanska, and AECOM can trace their origin stories back over a similar period. Shimizu is over 200 years old.

Building and construction as an industry cluster has quite different characteristics to the industries studied by Thomas Hughes, and how the modern form of the industry developed over the twentieth century is another interesting story in its own right. The most obvious difference to the industries used as examples by Hughes is the size and diversity of building and construction, because statistics on the industry includes the enormous number of firms and people engaged in the alteration, repair and maintenance of the built environment as well as contractors and suppliers for new builds. The broad base of small firms is a distinctive feature of the overall construction industry as we define it. However, the part of the industry that is engaged in delivering projects (that is, part of a problem-solving technological system) is made up of larger firms than this long tail of small, typically family-owned, businesses.

With industrialised production, prices of manufactured goods decline over time as economies of scale and scope kick in, and over time those cheaper prices allow new technologies to spread and find new uses. Moore’s Law and the price/performance relationship of computers is athe best known example. An example of this price effect in building and construction was machine-made nails. Originally nails, like everything else, were hand made, and in fact were more expensive than screws, “but by 1828 the cost was down to 8c per pound [two kilos] and in 1842 to 3c. Dimensioned lumber and cheap nails made possible a whole new order of speed and economy in wood framing.” (Fitch 1966:121). Combining these two innovations a new system of building known as the ‘balloon frame’ came out of Chicago in the 1840s, and with nailed light timber frames two people could do the work of twenty using traditional methods. This very large increase in productivity came from two relatively simple innovations that, together, had a major impact. Balloon frames were sold in catalogues in many styles, and were used to build the new railway towns and suburban housing spreading across America over the following decades. This highlights the importance of understanding how a combination of new innovations within a technological system is often more significant than the individual new technologies themselves.

This also highlights the fact that the single most important factor in technology uptake is the price/performance relationship, or the gain in productivity or other measure (time, quality, safety, choice) the new technology delivers for a given level of investment. To successfully displace an older technology a new technology has to provide an overwhelming economic advantage to overcome the inbuilt conservatism of an existing industry, due to the investment by incumbents in the current system.

Between 1800 and 1900 there were a series of technological shocks to building and construction, as the new materials of iron, glass and concrete opened up opportunity and possibility for designers, for both what was built and how it was done. Iron and steel divorced the building frame from the envelope between the Crystal Palace in 1851 and the rebuilding of Chicago after the Great Fire of 1871, and with the separation of the frame from the envelope came mass produced infill materials to replace load-bearing construction. Then the combination of steel and concrete made possible the development of reinforced concrete and steel skeleton structures. Both ‘building art and the art of building’ were transformed, not once but several times, over these years as the methods of industrialised building with iron, steel and reinforced concrete were refined.

Over the 1800s the increasingly widespread use of concrete had changed its status from hobby or craft to a modern industry, as scientific investigation into its material properties revealed its shear and compressive characteristics. With the development of reinforced concrete there was change in architectural concepts of structures and approaches to building with concrete. The industrial standards of concrete technology influenced ways of thinking based on building systems and standardized building elements, and became identified with what was known as the Hennnebique System, a simple to use system of building with reinforced concrete columns and beams patented in 1892. According to Pfammatter (2008), by 1905 this system had spread across Europe and elsewhere, and Hennnebique’s company employed 380 people in 50 offices and had 10,000 workers. Concrete then set the agenda for the development of the construction industry as a technological system over the next hundred years, driven by the modernist movement in architecture, which explored the possibilities of these materials, and the increasing height and scale of buildings.

In these examples the relationship between technological change, conceptual thinking and organisational form is clear. While the striking thing is the interrelationship of these three aspects, the driver of these changes is technology, or more precisely new technology that fundamentally changes existing industry practices and delivers a shock to the existing system. With the advent of iron-framed and reinforced concrete buildings the construction industry had to not only master the use of these new materials, but also develop the project management skills the new technology required. That organisational change, in turn, was based on the deeper change in the way of thinking about the world that was fundamental to the industrial revolution and the invention of the scientific method (Landes 1972).

So, why would be experience of the industry over 100 years ago be relevant today? There are two parts to the answer. The first is that the nineteenth century is the only other period of disruptive change we have for comparison. The second is that the effects of technological change on industry structure and performance might plausibly again be in the same key areas as the organisation of projects and the mechanisation of processes, but in the twenty-first century these effects will be heightened and quickened by the network effects associated with digital platforms and artificial intelligence. Because industry structure (the number and size of firms) is fundamentally determined by technology (Sutton 1999), the emergence of new technologies and periods of rapid change can lead to new industries, but can also extensively restructure existing industries (Kamien and Schwartz 1982).

The construction technological system is extraordinarily wide and diverse, and the various parts of the digital construction technological system are in various stages of development. There are very many possible futures that could unfold over the next few decades. However, it is clear that the key technology that underpins these further developments, and upon which new combinations of technology will be based on, is intelligent machines operating in a connected but parallel digital world with varying degrees of autonomy. These are machines that can use data and information to both interact with each other and work with humans, and importantly this digital world will be one designed and built by humans. We are at the point where intelligent machines are moving from operating comfortably in controlled environments, like car manufacturing or social media, to unpredictable environments, like driving a car or truck. In many cases, like remote trucks and trains on mining sites, the operations are run as a partnership between humans and machines, as the saying has it “running with the machines not against them”.

The impacts of new technology on a mature technological system like the construction industry are generally thought to be gradual, changing industry practice over time without significantly affecting industry structure or dynamics. There are good reasons to think this may be wrong because of the current surge in advances in machine learning and the broadening potential of AI. A period of rapid restructuring of the industry similar to the second half of the 1800s may be about to start, when the new materials of glass, steel and reinforced concrete arrived, bringing with them new business models, new entrants and a greatly expanded range of possibilities. In the various forms that AI takes on its way to the construction site it will become central, in one way or another, to all the tasks and activities involved. In this, building and construction is no different from all other industries and activities, but the path of AI in construction will be distinct and different from the path taken in other industries. This path dependence varies not just from industry to industry, but from firm to firm as well.

The full conference paper Construction as a Mature Technological Sysytem can be downloaded here or read on ResearchGate here.

 

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