According to McKinsey in 2017, the industry has failed to keep up with the global averages for productivity growth, with global productivity only growing by 2.8% over the past 20 years. They also found that construction projects typically take 20% longer to finish than scheduled and are up to 80% over budget.
The construction sector is one of the largest in the world, employing close to 7 percent of the world’s working-age population and with a yearly spend of around $10 trillion on construction-related goods and services. Reports show that in North America, construction costs are up between 5% and 11% from last year, and we’re currently in a double housing crisis, with a lack of buildings and a lack of affordability. How, then, is an industry that has so much importance to the economy and housing, with wide financial support behind it, remaining stagnant? How does the industry evolve?
“Construction is one of those industries where adoption is typically ten years behind most industries,” says Larry Brinker, Jr., CEO of Brinker Group, a family of commercial construction companies. “A lot of that has had to do with the individuals who were at the project management and executive level in construction. Typically they were not as tech-savvy based on their background, so the adoption rate has definitely been lower when it came to new technologies.”
Historical lack of technology adoption in a leading industry would cause many with the capability to create technologies to optimize to focus on other industries instead. Healthcare, transportation, retail, and manufacturing are a few industries that have seen rapid growth due to both need and the creation of new technologies, especially during the pandemic.
René Morkos, CEO of ALICE technologies, a construction optioneering platform, shares a similar perspective as to why construction has, classically, been one of the hardest areas to evolve and digitize. “One of the reasons is that digital information in the construction field has long been incomplete and compartmentalized; it's been difficult to share between different technology providers. Pair that with construction professionals, especially older generations that have been in the industry for longer, historically have been reluctant to change their processes.”
While technology can be the golden ticket for many industries, why is the lack of adoption holding the industry back so drastically? Brinker, whose companies have been responsible for over $4 billion in construction projects, explains that 30% of all construction work being done is typically rework. “It adds cost and time to a project because you’re often identifying the updates and reworks to the project while you have labor in the field, which means now the project or that scope of work has to stop while architects figure it out, but also it decreases the actual productivity and efficiencies of the labor. Therefore the timeline increases and the cost increases.”
In order for construction to evolve, you not only need the right type of technology that will bridge gaps in digital information and sharing, but you also need groups of professionals who are ready and willing to adopt the new technology. While others may have been unenthusiastic about creating technology that could help an unwelcoming sector, Morkos invented the world’s first generative construction simulator that ingests BIM models and user-defined rule sets, which then generates millions of valid simulations to build a project. He then founded ALICE technologies in 2015, which is actively working to reduce the cost of construction by 25% globally. They just received $30 million in Series B funding to continue their work.
“Our technology holds the potential to reduce global construction costs by 25%; millions more people will have access to healthcare and infrastructure, and elevate their standard of living. In addition to lowering costs, optimizing with this technology can also reduce carbon emissions from construction,” shares Morkos.
ALICE uses AI to offer tools that assist with the planning stages through project delivery. The technology explores scenarios that make the most efficient use of project resources: materials, equipment, labor, and more. ALICE is unique in bringing AI to construction scheduling and helps contractors by creating a myriad of different construction plans. They can create different scenarios and chart a path that makes it more likely that they not only deliver on budget but on time.
Wes Asao of Hawaiian Dredging Construction Company, the largest general contractor in the state of Hawaii, utilized ALICE in their construction planning to create an affordable senior housing project in downtown Honolulu. “ALICE helped us in the planning of the facade, where we looked at different ways of how we were going to attack and put up the facade in a 20-start building that's very tight with the adjacent buildings. ALICE helped us in the planning and sequencing of the exterior skin of the building using the hanging scaffold. ALICE did a 3D model in time and actually visualized what our plan was going to be.”
Both Brinker and Morkos share that with a new generation of project managers and construction executives, they’re seeing stronger relationships with tech, more rapid adoption, and an enthusiasm for the evolution.
“The construction renaissance is upon us,” said Morkos. “With the rise of the ‘contech’ segments, companies are getting better at sharing digital information. Customers demand it, and companies are therefore adapting. Companies are becoming increasingly comfortable with bringing new technologies to bear. This is particularly true with ‘next-gen’ construction professionals — our digital natives. They see the advantages that ‘contech’ can bring and are becoming vocal advocates for tech adoption within their organizations.”
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