Digital transformation in the construction and engineering industry – part one

23 May 2017

There is no doubt that the fourth industrial revolution has the ability to transform businesses and even whole industries.

According to research carried out by Virgin Media Business with Oxford Economics in March 2016 (The UK’s £92Bn Digital Opportunity), the construction industry ranks as the third industry most likely to benefit from digital transformation.  When looked at through a wider lens, it’s estimated that the global  digital transformation market will grow from around $150 billion in 2015 to approximately $430 billion in 2021 – a CAGR of more than 19 percent (this includes services, hardware and software) [Zion Research, November 2016].

The Digital Opportunity report also predicts that while digital disruption will eliminate 24,000 jobs across the UK construction industry, as many as 70,000 new jobs could be created - a net increase of 46,000 jobs. A further report from MIT Sloan Business School says that up to 53% of revenues could be at risk within large (turnover >$7 billion p.a.) organisations - and one third across businesses in general - as a result of digital disruption.

So what does this all mean for the engineering and construction industry? There are three key areas to consider. The first is the emergence of new technologies and a world in which everything is connected to everything else. The second is the development of ‘digital twins’ and advanced simulations using analytics. And the third key development is the fact that digital technology can enable entirely new business models.  Let’s begin by looking at the first of these developments. 


New technologies and ubiquitous connectivity

Today we’re seeing the emergence of new technologies and a world in which everything can be connected to everything else. These new technologies include virtual reality, augmented reality, drones, 3-D printing, sensors, photogrammetry, beacons, AI, robots and blockchain – each raising new opportunities in their own right. But the real opportunity arises when companies become end-to-end digital players, using new technologies and new business models to achieve previously unimaginable results. We are entering an age in which players in all industry sectors have to re-imagine themselves as software, devices, analytics and security players. In the construction industry, for example, it could mean embedding sensors that will record the lifetime energy and structural performance of a building. Or think about creating complete digital models of a building or asset before construction even starts. How about the ability to use laser scanning technology to create a precisely-measured and detailed 3D map of any existing site?

Cisco estimates that by 2020 there will be 50 billion connected devices in the world. There are even sensors that can operate without power sources, using energy culled from mobile telephony radio networks. Connecting all these sensors together makes it possible to achieve a whole new range of capabilities within the built environment. Sensors that can detect the number of people in a building, for example, can automate many elements of safety and security. Or those that measure how lifts are behaving can automatically optimise their operation. Of course, there is a downside to connectivity, which is that if it can be connected it can also be hacked.  For example, a connected digital lock could be ‘picked’ over the internet. That makes security an important upfront consideration.

But overall, technology now provides the ability to gather data at scale, very accurately, very precisely and very cost-effectively. So, laser-scanning, for example, can model an entire space so that the technology can be used not only in the design and construction of a building and structure but throughout its life.  Another example, is an augmented reality helmet that enables workers to ‘see’ a virtualised image of a completed building, its subsystems, etc. while construction is still in progress.

Visit again to find out how the development of ‘digital twins’ and advanced simulations using analytics, as well as new business models will impact the construction and engineering industries.


Carlo Gagliardi

Carlo Gagliardi | Partner and Co-lead of Digital Practice
Profile | Email

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