10 INDUSTRY NEWS
AI laying its foundations in construction, but cultural change needed
published its construction sector deal with a focus on transforming the industry through a ‘bytes and mortar’ approach to smart construction.
DRIVEN FROM TOP DOWN, BUT CHALLENGES REMAIN
Digital transformation appears to be a strategic priority for the leaders of construction firms, the report found, with CEOs (52 per cent), CIOs and CTOs (32 per cent) among the biggest drivers of such projects.
While organisations are already starting to implement new technologies, cultural change is still a barrier to completely embracing technological change, according to a new report from Zen Internet.
Surveying over 100 IT decision makers across the construction industry, Zen’s ‘Bricks, Mortar and Digital Transformation’ report found that 55 per cent of large construction firms, and 28 per cent of smaller organisations are already using artificial intelligence (AI). The industry is looking at what technologies could help them in the future, with virtual reality (28 per cent), cloud computing (24 per cent), software defined networking (20 per cent), blockchain (19 per cent) and Internet of Things (17 per cent) all seen as key to future development by those in larger organisations. According to Tech Nation’s 2018 report, technology is expanding 2.6 times faster than the rest of the UK economy, and yet the construction industry has been slow to implement digitalisation strategies that could bring increased efficiency and collaboration as well as reduced costs. Mark Farmer’s landmark 2016 report, ‘Modernise or Die,’ warned that failure to innovate poses a serious threat to the UK construction sector. Later, the Construction Leadership Council
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Despite this top down approach, cultural change (51 per cent) is cited as one of the biggest challenges to imple- menting a digital transformation project, highlighting the need to get “company- wide buy-in”. This is only topped by the importance of communicating the value of digital transformation to key stakehold- ers and investors (62 per cent). 89 per cent of companies surveyed claimed to have already completed a digital transformation project, noting that cultural changes are needed from within to make it a success. Failed projects can cost an average of £655,000 to the bottom line, yet despite this, almost all (86 per cent) construction organisations surveyed overlook the importance of a good technology partner as an enabler of an effective digital transformation.
SPEND MONEY TO MAKE MONEY With 83 per cent of construction firms surveyed stating that they have either completed a digital transformation project or have one currently underway, 61 per cent noted improved efficiency and reduced operational costs (58 per cent) as direct advantages. Furthermore, following the initial investment, 66 per cent of companies noted a subsequent reduction in costs as a result of the new technology deployed and 33 per cent reported increased sales. The benefits of implementing a digital
transformation project can also go beyond the organisation itself, with 50 per cent of respondents claiming it has enabled increased collaboration stemming from streamlined communication and networking. When progressive technology is fully embraced, a more streamlined approach to conducting business across the supply chain can be achieved,” commented Zen Internet.
Construction awards up, though activity moves from capital
The value of all construction contract awards in June 2019 was £5.2bn based on a three-month rolling average, accord- ing to Barbour ABI, which is an increase of 5.5 per cent on May. Regional analysis also showed that the North West was the leading region for contract awards in June with a 36.6 per cent value share. The latest edition of the Economic & Construction Market Review from Barbour ABI highlights levels of construc- tion contract values awarded across Great Britain. The overall outlook for June contract awards increased by 5.5 per cent on May 2019. The infrastructure sector accounted for 37.2 per cent of total value of contract awards, due to the SPRS Construction Programme at the Sellafield Site – valued at £1.5bn, which boosted the north west’s project share. London reportedly dominated in only
two of the eight sectors for June 2019 - residential with a 26.2 per cent share, and commercial & retail with a 23.7 per cent share of total contract awards. Construction activity has moved out of the capital for June, with a more even spread of contract awards across the UK. The East Midlands dominated the indus- trial sector, largely due to investment in warehousing and storage. The south west took the top spot for hotel, leisure & sport and Scotland took the lion’s share of projects in the medical & health and education sectors.
Commenting on the figures, Tom Hall, chief economist at Barbour ABI said: “London has dominated project awards every month in 2019. However, for the first time this year, we see a shift in the spread of project awards across the country. Likewise, for the first time this year, we see infrastructure investment overtake the residential sector which has been the most active sector of construc- tion for over six months.”
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