Digital transformation in the construction and engineering industry – part two

23 May 2017

In my previous blog, I discussed how the fourth industrial revolution promises to transform the construction and engineering industries, focusing on new technologies and ubiquitous connectivity. In this second part, I’m exploring the impact of the development of ‘digital twins’ and advanced simulations using analytics, as well as new business models.

Digital twins, advanced simulation and real-time analytics

Possessing huge amounts of data about a building or an engineering asset makes it possible to create a ‘digital double’ of that asset.  So for example, it’s possible to create a ‘digital double’ of a wind turbine that could be used to monitor all the forces acting on the wind turbine in a physical location. This creates a real-time view of performance and behaviour, enabling smart exchange of signals from the actual asset to its digital twin, and of performance-optimising controls from the digital twin to the physical asset. The advanced real-time analytics happens in the digital twin, and the interventions on the physical asset are made by a human operator, by software or even by robots.

This digital twin concept also applies to buildings of all kinds: a bridge, airport control tower or even an oil platform. In an office building setting, this technology could show in real time how many people were in the building at any point – even on a room-by-room basis. And the digital twin is able to support new capabilities during the design, construction, operation and even demolition of the building.

The adoption of BIM Level 3 (BIM = Building Information Modelling) in which all participants work off a single integrated digital model of the project is an example of application of digital twins to the construction industry.

New business models

New technology is also making entirely new business models possible. One example is the ability to integrate all the participants in large and complex construction and engineering projects. This could help overcome challenges such as incompatible software between different partners that have in the past caused costly delays. Another digitally-enabled new business model is the access to construction equipment on an ‘as-a-service’ basis. The sharing economy concept, empowered by digital platforms, enables businesses to use online tools such as to hire, rent out or buy equipment. And that’s creating a new way to shift capex to opex and move assets off the balance sheet. This model can even be pushed one step further. Embedded sensors make it possible to pay for equipment on the basis of the units of construction achieved. And these outcome-based business models enable an entirely new way to cost projects. For example, a crane could be charged for on the basis of the “lifting work” (measured in tonnes by feet) performed.

So what lessons should players in the construction and engineering industry take from this? For historical reasons, the industry has operated with a fairly conservative approach. That’s often manifested in the way that building projects are procured, focusing largely on price. If contractors are squeezed hard on price down the value chain, effective integration between them is likely to be more difficult. So while technology will be able to, in theory, create much tighter integration between contractors, it alone will not be able to overcome the challenge of achieving effective integration across the value chain. Industry cooperation will be essential.

Overall, leaders in the industry have much to gain from the technology advances that we have outlined above. But there is no room for complacency. The changes we describe will happen faster than many imagine. They need to engage with emerging technologies now, and also update their tech deeper down in their engine rooms.  This does not mean having simply a digital strategy for construction. Rather, it’s a case of developing a new vision of what construction looks like in the digital age.

Carlo Gagliardi

Carlo Gagliardi | Partner and Co-lead of Digital Practice
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