Future of Construction Like The World Depends On It (Part 1)

Published: Wednesday, May 17th, 2017 by Lenora

While most industries face the bite of digital, consumer and other disruptions, construction and real estate have thus far managed to grow without threat to their core business models. The Shaping the Future of Construction initiative led by the World Economic Forum and the consulting firm the Boston Consulting Group suggests innovation is seeping into engineering and construction and, by association, real estate. The industry is “slow to adopt new technologies and processes and over the past 50 years has undergone no fundamental change.”

Slow moving but under pressure to refresh.

Stasis can be either shocking or unsurprising given the trends, risks and needs in the report’s summary of megatrends (see below). This report and the previous do an excellent job of summarizing the unique challenges and sensitivities faced by construction and engineering companies.

World Economic Forum: Megatrends shaping the construction industry

Given the challenges, it’s refreshing that the second publication of this collaboration, Inspiring innovators redefine the industry, uses “10 Lighthouse Innovation Cases” to illustrate early industry transformation efforts (find the first report here). Arcing from materials innovation to building information modeling to lean manufacturing and beyond, the case studies and lessons presented here dive into a range of best practices, including:

  • the role of advanced technology and materials
  • lean, improved and rigorous processes, projects and procurement
  • sustainability as a core value of business model innovation
  • long-term people and organizational development for high performance businesses
  • ecosystem-wide collaboration for standards, industry marketing and external engagement

The world depends on innovation in construction.

Thankfully, in moving beyond high tech and high end, the report nods to the social value and importance of the construction industry. Most importantly, it highlights the wide industry ecosystem from design to engineering to manufacturing to real estate.

The case studies, best practices and lessons also press the urgency of innovation and industry transformation, first due to buildings as a major generator of greenhouse gases (30% of the total globally). Construction is also at the core of how cities grow to accommodate urban migration. Construction will have to meet affordable housing shortages (everywhere). The urban building stock, present and future, has to be climate change ready and disaster resilient. Aging infrastructure has to be replaced in developed economies. Inclusive, sustainable and economically viable cities have to be built in developing economies. Automation, the future of work and increasingly electrified and shared transportation will profoundly affect our urban world.

Ideally, all this innovation envisaged in the Future of Construction will drive down the cost and time to build while improving quality – a benefit to society as a whole. For now, the report recognizes that benefits are unevenly distributed with innovation advancing slowly.

Putting inclusive innovation in the spotlight, moladi and Winsun are among the report’s case studies. moladi, the pioneer of plastic formwork for affordable housing in Africa, is elevated for emphasizing local economic development (see our feature on moladi here). Despite a long track record of innovation, moladi still encounters conservatism and incomplete supply chains. Winsun, a Chinese company deploying 3D printing technology, is the other (potentially) affordable housing innovator in this report. The company is still working to commercialize 3D printed low cost houses.

Spreading bad habits not best practice.

To what extent are the worst habits of developed markets being exported to emerging markets with damaging consequences for innovation? Future of Construction might better illuminate the conservatism of real estate development and investment in addition to the role of ethics and governance. Both play a role in slowing both innovation in emerging markets and capital flows to good but less known or smaller companies.

This blog will look at examples from the Future of Construction and other recent work on innovation in construction to mine insights for housing enterprises and investors, especially those seeking social and environmental impact with their capital. Most Future of Construction examples seem like distant innovations for high end markets. Green building and total energy and emissions analysis (including transport) is still not pervasive in affordable housing despite the problems of energy poverty and high transit costs.

We have a long way to close these gaps but important opportunities lie ahead to make the next generation of cities sustainable and inclusive, as well as economically vibrant and attractive for investors. Stay tuned for more in coming posts.

World Economic Forum: Key success factors for innovation in the construction ecosystem