Disruptive Change in Construction

Why the Nineteenth Century is Relevant

The building and construction industry we see today is the outcome of a long development path. The modern industry has its roots in the beginning of industrialization in the early nineteenth century, a period of rapid, disruptive technological development not unlike the present one. Between 1800 and 1900 the building and construction industry was transformed as an industry, driven by the introduction of new technology, in the form of the new materials of iron, glass and concrete. At the same time the industry was restructured by the rise of large, international contractors and, over a series of major projects, by steam powered machinery and equipment. Today technological change in the form of new materials, expanding abilities and new organizational concepts is once again pushing against the custom and practice of an old, mature industry.

While the specific trends and issues the industry faces today are obviously different, this is the only comparison we have to the disruptive technological changes that are affecting the contemporary building and construction industry. The similarities are significant. It was the beginning of urbanization, and one of the great challenges to the building industry in the nineteenth century was housing for the rapidly growing population of cities. Infrastructure needed to be built on a scale never before attempted, and emerging industries were demanding new types of buildings.

Preindustrial building was similar at the beginning of the nineteenth century to that of the Romans, and many of the hand tools in use then have also been found in excavations of ancient cities in Mesopotamia and Asia. During the preindustrial age, building was seen as a practice rather than a process. Their projects were built manually by large numbers of workers, with a few skilled craftsmen supervised by a small elite. Two hundred years later construction sites at the beginning of the twentieth century were still labour-intensive, with many workers and supervisors on-site, but there was also an impressive range of machinery, plant and equipment in common use. This transition began with the building of the first canals in England, and eventually led to the modern industrialized building industry, and with it the professions of surveyors, engineers and architects who managed these projects.

The canals built in Britain from the early 1700s are the first recognizably modern construction projects, and drew on the expertise of military engineers with experience in embankments and fortifications. Canals, and their associated cuttings, tunnels, bridges, locks, lifts, gates, aqueducts and viaducts, led to technological developments in both materials and organization. In 1781 the first cast iron bridge was opened over the Severn near Coalbrookdale, called Iron Bridge, afterwards iron became widely used as a structural material by engineers like Thomas Telford in Britain (Ellesmere Canal 1805) and Albert Gallatin in America (Erie Canal 1825). The methods used by the engineers who tested these materials, and designed and built the projects, began to be carried over to building projects in the nineteenth century.

In 1800 building and construction used three basic methods, known since the Romans. Work was done by craftsmen using hand tools working under a master builder who was also usually the architect. In American Building James Marston Fitch says two related factors determined the character of building and construction at that time:

1. Aesthetic standards were determined by what was possible, the technological level of building. Neither the building materials of stone, brick and wood, nor the structural theories of post and lintel, load-bearing wall and arch-and-dome, differed in any important respect from those used by the Greeks and Romans.
2. Building types required by the economy were relatively few and simple, and could be readily fabricated with these traditional materials along traditional lines.

 When change came to building and construction, it came rapidly. Fitch goes on to describe how, after the Civil War ended in 1860, “the building process began to be industrialized, independent artisans became skilled wage workers, and specialization set in” He says:

 New tools, new materials, and new processes appeared with staggering rapidity to serve as new media for the builders. The metallurgical industries, enormously accelerated by the exigencies of war … Portland cement manufacture … wide development in ceramics and clay products - necessary for fireproofing the new steel skeletons. Production of glass was industrialized, and the huge plate-glass windows of the Victorians were possible.

While the idea of technological disruption is well-known and we are familiar with sunrise and sunset industries, the idea of a technological trajectory, or direction, is also important. Over time industries and products evolve and develop as their underlying knowledge base and technological capabilities increase. The starting point for a cycle of development is typically a new invention, something that is significant enough to lead to fundamental changes in demand (type and number of buildings), design (opportunities materials offer), or delivery (project management). This sort of invention gives a ‘technological shock’ to an existing system of production, and leads to a transition period where the firms involved have to adjust to a new business environment, which in turn usually leads to a restructuring and consolidation of the industry. This is what happened in the second half of the nineteenth century.

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. Both ‘building art and the art of building’ were transformed, not once but several times, over these years as the methods of industrialized building with iron and reinforced concrete were refined. 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 as well as steel skeleton structures.

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 Ulrich Pfammatter, by1905 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.

So, here we see the relationship between technological change, conceptual thinking and organizational form. 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. In both cases, 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 organizational 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.

So, it’s interesting question whether there is anything to be learnt from these previous periods of disruptive change in building technology, materials and processes. As the Industrial Revolution gathered momentum canals were followed by new roads and buildings, leading eventually to the railway boom of the mid-1800s that spread industrialized construction around the world. At the same time, the new materials of iron, glass and concrete were being introduced and steam powered machinery was being used to manufacture tools and components. In America, where there was a shortage of labour, steam powered excavators and earth movers were appearing on construction sites by mid-century. By then, steam powered hoists were widely used in both the US and UK. Over the last few decades of the nineteenth century the construction industry was transformed.

But 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 organization of projects and the mechanization 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.

Fitch, J. M. 1966. American Building: The Historical Forces That Shaped It. New York: Shocken Books.

Pfammatter, U. 2008. Building the Future: Building Technology and Cultural History from the Industrial Revolution until Today. Munich: Prestel Verlag.

Construction as a Mature Technological System

The Construction Industry Technological System – Part 2

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. Heavy industry and manufacturing spread around the world, from England and Western Europe to America then Japan.

The three megatrends in construction in the nineteenth century were industrialisation, mechanisation and organisation:

1. Industrialisation of production methods with standardisation of components and mechanised mass production, and the development of new materials like steel, plate glass and plastics. This led to a new design aesthetic, with more modular components and internal services, and separated the envelope from the structure for the first time. The infrastructure of materials suppliers and equipment producers developed, and scientific R&D joined the industry’s traditional trial and error approach to problem solving.
2. Mechanisation of work based on steam power, with cranes, shovels and excavators common by the mid-1800s. This in turn led to a reorganisation of project management, with the new form based around logistics and site coordination to maximise the efficiency of the machinery and equipment.
3. Organisation of the modern construction technological system was clearly in place by the mid-1800s. Large general contractors had emerged by the 1820s, undertaking projects on a fixed-price contract often won through competitive bidding. This system of procurement was supported by the new professions of architects, engineers and quantity surveyors, which had emerged during the eighteenth century and were institutionalising in early nineteenth century London.

 It’s a remarkable fact that the construction industry we have today is a technological system that is over 150 years old. 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 AECOMcan 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 the building and construction industry, because 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 these small, typically family-owned, businesses.

The contractors who delivered major projects ended up as the core of the construction technological system at the end of the twentieth century. By this stage the system had a clear outline, and a very clear structure, for bringing together the producers, suppliers and materials needed for building and engineering projects. It’s problem-solving prowess in delivering increasingly challenging and complex projects had never been greater, and the system had stabilised around a very particular form of procuring, financing and managing those projects. In many respects the industry is an exemplar, as with its flexibility in adjusting to changing levels of demand and managing temporary organisations. On the other hand, as a mature system, it is conservative. To quote Thomas Hughes again:

A grievous flaw in the reasoning of enthusiasts for radically new technology, as contrasted with that of the advocates of postmodern architecture, lies in the former’s failure to take into account how deeply organisations, principles, attitudes, and intentions, as well as technical components, are embedded within technological systems. (1989: 459).

With the various combinations found of the complex array of professional institutes and organisations, government regulations and licensing, standards and codes, insurance and finance, the ‘embeddedness’ of the construction technological system is also wide and deep. Nevertheless, towards the end of the second decade of the twenty-first century there are signs that a new wave of technological change is coming to affect the construction industry. Just how radical these new inventions will be remains to be seen, in Hughes’ sense of radical. Despite the extent of technological change expected over the next few decades, it’s unlikely some entirely new industry will appear to take the place of building and construction. There’s no obvious opportunity for a system builder to reinvent an industry as old as time.

What is likely is a series of interconnected technological advances that will fundamentally change many aspects of the current technological system over time. Many of the market niches currently occupied by major manufacturing firms may disappear over the next two decades, replaced by new production technologies, for example. However, because the system is mature the effect of new technology and the changes it brings will happen slowly across the industry as a whole, and unevenly because of the many small and medium size firms. There may, however, be a class of more nimble, faster growing small firms around the frontiers of the technological system.

How firms utilise technological capabilities will increasingly differentiate firms within a diverse, location-based 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. Not only because of the number of small and medium size firms, but also because of the size and reach of the major firms. A global contractor will have 50,000 employees (give or take), suppliers of basic materials and sophisticated components are large industrial firms, many 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.

While construction is a mature system and thus a conservative industry, it has also become used to a constant flow of new and upgraded products and services from suppliers. There is a quite efficient system in place to promote and distribute these new products and services, and many have to survive in quite competitive markets. This is an interesting dichotomy, at the system level the industry is in the consolidation and rationalisation phase of Hughes' Cycle 2, but many firms in the system are heavily engaged in Cycle 1 R&D and innovation as they seek growth and competitiveness. As the underlying pace of technological change will continue to increase, due to the constantly expanding range of new scientific discoveries and recombinations of existing knowledge, this type of Cycle 1 churn will be typical of most industries. For both industry majors and frontier firms this ongoing Cycle 1 churn offers many possibilities.

How this will play out is interesting question. The only previous comparable period of disruptive change in the construction industry occurred during the nineteenth century, and if that is any guide we can expect technological changes to operate today over the same three areas of industrialisation of production, mechanisation of work, and organisation of projects that they did then. And, just as in 1800 when no-one knew what the industry would look like in 1900, today we can’t really see the industry in 2100. That is a long way out, and we can only guess at the level of future technology. We can, however, use what we already know from both history and the present in a sensible way, to form a view of what is possible over the next few decades based on what is understood to be technologically feasible. 

 

Hughes, T.P. 1989. American Genesis: A Century of Invention and Technological Enthusiasm 1870-1970. Chicago: University of Chicago Press. New ed. 2003.

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.

*

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.

*

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.