Technology is reshaping the construction industry
Technology is reshaping how the construction industry operates. Given industry challenges – including increasingly bigger projects, an aging workforce, and a shortage of skilled labor -- new construction tech tools are offering project owners, contractors and their insurers new ways to improve jobsite safety, boost efficiencies and minimize project risk. Two big advocates of construction technology adoption are AXA XL’s Gary Kaplan and Pillar Technologies’ Alex Schwarzkopf. They foresee tremendous benefits ahead for the industry in early adoption of the construction technology available today. Here’s why.
What are the biggest tech trends shaping the construction industry?
Kaplan: Technology is certainly not a new phenomenon in the construction industry. BIM, or Building Information Management, is widely used by most of our larger contractors. BIM is an intelligent 3D model-based process that gives architects, engineers, and contractors the opportunity to more efficiently plan, design, construct, and manage buildings and infrastructure. Modular Construction is becoming much more common. We’re seeing it in the construction of large scale projects like bridges, as well as building expansion in the healthcare, prisons, higher education and hospitality sectors,
Another technology we see tremendous upside is in digital monitoring, including jobsite sensors created by Pillar Technologies to monitor jobsite atmospheric conditions. Others are available to help contractors monitor the movement of people and equipment or create video records and documentation. These are starting to be used by some progressive contractors and we see significant opportunities for others to take advantage of them.
What are the top benefits for contractors?
Kaplan: Different technologies offer different benefits. BIM prevents the need for rework and change orders. Modular gets older workers into controlled conditions and can improve quality of the pieces being assembled. Site sensors offer a lot of benefits – potential for increased productivity, increased jobsite safety because of early detection of bad conditions on site, the opportunity to combat potential insurance fraud because of constant and consistent documentation. The whole idea is not to be like “big brother” but rather what can we do to make sure it doesn’t happen again. Overall, I think these new technologies will encourage better behaviors. And, in the long run, they will help contractors increase productivity and continuously improve project performance.
Schwarzkopf: New technology is definitely going to change the game. From a property damage perspective, technologies can help keep watch on the jobsites and identify potential risks posed by temperature, humidity, and particulates to prevent a disastrous situation. For instance, they can signal preconditions for a fire or detect a water leak early to minimize damage. And as Gary mentioned, sensors like ours can boost jobsite safety. This is big benefit when looking to meet changing regulations. Consider dust particulates. OSHA changed its standard for respirable crystalline silica last year. In the past, industrial hygienist would come out to a site maybe once a month. Fines for non-compliance are large. Now, these new technologies allow owners and contractors to implement better, real time processes – that reduce their exposures. We had a contractor in Boston significantly reduce their dust particulate levels within a month of implementing the system because they knew where problem areas were.
How aggressively are contractors adopting these new technologies?
Schwarzkopf: Construction typically lags other industries in implementing new technologies. It’s challenging to make these kinds of changes in construction. Contractors do not have permanent, fixed-site operations. A jobsite is a temporary operation. Contractors build something and then move on. Consider how much easier it is for an industry like manufacturing to make these changes. You set it up once; you tune it. You make millions of units. Construction – you build a building and then you hand it over for someone else to operate it. One time use makes it challenging to do something because contractors are in the business of one-off projects. It’s a combination of companies building flexible, simple to use technologies and contractors developing a culture that rewards innovation and change.
What’s going to prompt more adoption is the realization that new technologies can increase productivity to where it needs to be."
What’s going to prompt more owners and contractors to integrate these technologies in their operations?
Kaplan: What’s going to prompt more adoption is the realization that new technologies can increase productivity to where it needs to be. The construction industry has struggled with productivity growth and generating greater efficiencies. These technologies are offering data, often in real-time, that is giving contractors information that they did not have readily available before. And this new found data is allowing them to take action. Plus there will be more technology available at more affordable prices. According to a 2017 McKinsey Report — more than $10 billion has been invested in construction technology between 2011 and 2017. This kind of investment will only spur more innovation, helping to make these emerging technologies more practical and affordable for owners and contractors.
Schwarzkopf: One barrier to entry in tech adoption is price. Fortunately, as tech scales, price will come down. For instance, our sensors at Pillar can scale up and scale down based on the project and we can ship systems anywhere in the US because of our remote install model. As we scale our price to service a customer will fall and we can pass that savings along. Eventually too, contractors will begin to reap big benefits from the real time data that they will have at their fingertips to make better decisions and to boost project performance.
With new tech comes new risks, are insurance carriers prepared for them?
Kaplan: New technologies do raise different liability issues. For instance, modular construction moves the risk to transit exposure or perhaps even product liability issues. BIM, sensors and other digital technologies can pull in privacy issues and raise concerns over cyber liability related issues. That’s why an insurer like us, with a broad portfolio of products and underwriting expertise can do a lot not only to raise the liability issues, but to also look for ways to address them.
Looking ahead, how do you think industry will transform over next 5 years?
Kaplan: I think more and more owners and contractors will see how the benefits of these new technologies heavily outweigh the costs of implementation. And, as insurers, we can’t just sit back and hope that this happen. We have to encourage adoption through the risk transfer and management functions. Eventually, I do see that implementation of these technologies will factor into our risk selection process. And because it certainly helps us manage the risk we assume, we are looking at ways to encourage greater use by possibly incorporating new technologies as loss control services, as part of our risk assessment and potential new product offerings.
Schwarzkopf: I think new technologies are going to change behaviors, at all levels, and not only on the jobsite. I think we will see behavior change at the planning phase when owners are planning capital projects and considering the technologies that will be used in the project. Overall I don’t see new technologies being a large part of the cost of the construction. If they are considered as part of the cost, and get bid into the project, we’d see increased adoption. For instance, recently Pillar’s sensors have been written into a contract. More planning and collaborative incorporation of technology between owners and their contractors, who see the cost benefit potential will drive adoption and industry change. As more data becomes available, both contractors and owners will be able to see clear trends that show how the costs of embracing new technologies deliver immense benefits in terms of increased productivity, quality levels and safety.