Construction: Productivity and Technology

The construction industry has had the lowest productivity growth of any industry, according to McKinsey. Construction companies now find themselves trapped between a shrinking workforce and stagnant productivity due to the sector’s fragmented structure and a reluctance to invest in capital during the frequent downturns that afflict the industry, and there is a need for change.

Technology could provide a solution to some of these issues and the industry is sitting up and taking note of that; almost half of Construction business leaders are investing in technology to improve business efficiency and productivity, according to our latest Risk and Confidence survey.

Technology does have the potential to improve productivity, but when the innovation of processes occur they are likely to change the nature of how the Construction industry works altogether.

These changes are likely to come in three ways:

• Digitalisation: The shift towards digitalisation of parts of the construction process such as planning looks set to increase. Processes such as Building Information Modelling (BIM), which involves the generation and management of digital representations of physical and functional characteristics of places, are creating a shift towards off-site manufacturing. From a Professional Indemnity perspective the increased adoption of BIM should lead to both a reduction in errors and the amount of rework needed on a project plus provide a mechanism for clash detection.

• Speed and efficiency: Unmanned Aerial Vehicles, or more commonly known as Drones, are now taking on more dangerous and labour intensive tasks on construction sites. Drones can scan and recreate 3D maps of sites quickly and identify potential hazards; they provide a more efficient remote monitoring solution and ultimately may cut labour costs. In terms of risk management for an insured it could mean potential problems are identified early and dramatically cut down project delays. 3D printing or Additive Manufacturing is another process that could produce things more cheaply. From individual components to entire buildings, 3D printing should allow for more complex designs to be produced more accurately coupled with a reduction in waste and reduced costs. Both of these technological innovations could increase the speed and efficiency of construction projects.

• Workforce skills: Findings by the Federation of Master Builders published in Q4 2017 show that the shortage of construction workers in the SME space has hit its worst level on record. A separate survey by RICS reported that skills shortages are severely impeding the sector.It is clear that in addition to the need to invest in training and apprenticeship schemes, looking to the future, the adoption of new technologies in Construction is desperately required and will likely change the skillsets needed by the industry’s workforce. It could open up opportunities for new skills in production management, logistics, supply chain management, collaborative systems and data analysis.

Natalie Boardman, Underwriting Manager for Professional Indemnity