Businesses at the leading edge of technology pitched their views and visions on how to close construction’s gigantic productivity gap at the inaugural Contech event.
“This industry is at an inflection point; it is changing as we speak.”
So said Jan Mischke, senior fellow at McKinsey, in his keynote speech to the inaugural European Contech Summit, organised by Construction News in partnership with GenieBelt. The event pitched five up-and-coming tech innovators in front of 40 investors to make their case not just for financial backing but for where the industry is heading.
Mr Mischke’s point was that after decades of flatlining productivity – 50 years was his conservative estimation – the situation has reached a point where it simply has to change.
As pointed out by a recent McKinsey report – Reinventing construction: A route to higher productivity – closing the global construction productivity gap so that it performs in line with the world economy could result in $1.6tn a year of added value, representing half of the world’s annual infrastructure spend.
Mr Mischke said the prize is there for the taking: “There is escalating demand due to rapid urbanisation. There are also huge infrastructure gaps and projects are increasing in complexity. There are affordable housing challenges, and sustainability requirements also increase [project] complexity.”
On the supply side, technology that can enable construction to rapidly improve its productivity is starting to emerge. GenieBelt chairman Klaus Nyengaard alluded to this development in his opening remarks, adding that true transformation will require major investment.
“It’s important that VCs [venture capitalists] understand the opportunity,” he said. “It’s a big opportunity for the industry and it will lead to better companies, better housing, more housing, better infrastructure. We need to work together – and we need a lot of money. It makes sense to give us that money – we will give it back with nice returns.”
In the sessions that followed, five major players from Europe’s construction technology industry set out not just their own innovations but the wider opportunities available to investors, construction firms and taxpayers alike. Here, we outline the key takeaways from each.
European Contech Summit 2018 Thomas Goubau CEO and founder AproPlan DSC 055
Thomas Goubau, CEO and founder, AproPlan
Aproplan is an app designed to be used collaboratively by contractors, engineers, architects and clients to facilitate communication on projects. The app can, for example, be used by engineers to follow a scheme’s plan and ensure it complies with Building Regulations, or log health and safety reports.
The company’s chief executive Thomas Goubau began his presentation by identifying some of the headline issues the industry faces. On average, he said, projects take 20 per cent more time to complete than originally promised, while 80 per cent of schemes go over budget. The primary cause of such alarming statistics, he added, was the fragmented nature of the industry that left it overly reliant on projects managers.
“A lot of it depends on the team you have on site. A good project manager comes in with a lot of checklists and so on. If you have a bad one it is completely chaotic”
Thomas Goubau, AproPlan
“What a lot of people don’t realise is that there are very immature project definitions,” he said. “A lot of it depends on the team you have on site. A good project manager comes in with a lot of checklists and so on. If you have a bad one it is completely chaotic.”
As a result, he believes products such as AproPlan have a vital role to play in increasing effective communication and therefore accountability. “They need to be compatible, portable – they’re used on site – and finally user-friendly,” he said. “Then there are a number of features that the technology needs to have. They need to be able to interact because the end goal is to talk to the design. On site that never happens – [and you] don’t see the global picture.”
Mr Goubau referenced the €1.5bn Schools of Tomorrow initiative in Belgium, which involved work on 182 schools, and which used AproPlan among other technologies to increase efficiency. “There was only nine months delay in total over five years, which for such a programme is pretty impressive, and 93 per cent of projects were on time.”
European Contech Summit 2018 Felix Neufeld co founder and CEO Disperse io DSC 056
Felix Neufeld, co-founder and CEO, Disperse.io
Based out of offices in Dubai, London, Oxford and Yerevan, Disperse.io specialises in using optical recognition technology to improve productivity in construction.
The system provides a complete visual interactive chronology of a construction site, allowing the company’s clients to manage and inspect their projects from a remote location and providing a visual audit trail for settlements and claims.
Unusually, the starting point for the business was not a problem that needed to be solved but the technology itself, which co-founder and CEO Felix Neufeld thought could help companies in charge of large and busy assets manage their spaces more effectively.
“Construction is in a pretty bad place right now. It gives you the feeling that if you succeed you can have an enormous impact”
Felix Neufeld, Disperse.io
“We were excited about the idea of helping companies manage large-scale infrastructure through machine learning,” he said. “The problem we identified was that infrastructure was super-hard to manage. We looked at airports and ran some very successful projects. But we realised that the path to revenue was very difficult.”
Disperse.io identified construction as the suitable target for its technology, not least because it spotted significant room for improvement in its processes. “We talked to dozens of different stakeholders and came to the conclusion that construction was absolutely the right industry for us,” Mr Neufeld explained.
“The most important point is what impact you have. Construction is in a pretty bad place right now, and that just creates so much opportunity. It gives you the feeling that if you succeed you can have an enormous impact.”
Disperse.io has found construction firms were more than happy to engage. “Everyone was all of a sudden very keen to do something,” he said. “I grew up in the construction industry and 10 years ago that certainly wasn’t my impression.”
European Contech Summit 2018 Ulrik Branner CEO and partner GenieBelt DSC 062
Ulrik Branner, CEO and partner, GenieBelt
A former investment banker, Geniebelt chief executive Ulrik Branner was clearly shocked at the waste and inefficiency he found when he started looking at construction. He began his presentation by reeling off a laundry list of facts and figures exposing the industry’s shortcomings.
“It’s a $10tn industry spending less than 1 per cent of revenue on IT, so hunting is more digitalised than construction,” he said. “It has 30 per cent efficiency when you’re on site and it doesn’t matter where you are – it’s the same numbers. You pay someone and they build for you [for] 30 per cent of their time. And what they do build, 15 per cent is torn down and built again. These are some of the figures you get hit with on a daily basis.”
“Clients will take control – they will step in and take ownership of the data. We’re at a tipping point right now”
Ulrik Branner, GenieBelt
The underlying problem, he suggested, was the fundamentally broken supply chain structure within the industry. “It is coded for mistrust and disaster,” he said. “There is no clear communication path. If I went to town and met [my ideal partner], the first thing that happens is not drawing up a contract for what will happen when we leave each other. That’s what you do in construction.”
Accordingly, Mr Branner created GenieBelt to provide transparency and accountability on projects by requiring all involved to share data on their contributions.
The technology has obvious application for clients. As an example, Mr Branner referenced its work on a building for the University of Construction in Copenhagen. “We were taken on and the measurements that came back were that by using transparency there was a 7 per cent decrease in cost,” he said. “It can be done.”
As such findings start to emerge, Mr Branner predicted that clients will want to wrest back authority from contractors. “My view is that clients will take control – they will step in and take ownership of the data,” he said. “We’re at a tipping point right now. The change is happening.”
European Contech Summit 2018 Colin Smith non executive director Causeway DSC 069
Colin Smith, angel investor
Angel investor Colin Smith used his time at the lectern to reflect on where the industry had been and where he believed it was now heading.
Referencing both the Latham and Egan reports on construction, he said: “A lot of what I’m seeing and hearing right now I’ve seen and heard before. I think we are entering a period of great opportunity.”
Mr Smith’s reasoning was that the collapse of Carillion and the Grenfell Tower tragedy were prompting introspection, both within government and industry. It was inevitable, he argued, that this would lead to a raft of initiatives that will fundamentally change construction.
“I think the thing that’s interesting is what the government is going to do,” he said. “I think there will be more reports and legislation and that will provide opportunities for technology providers to meet new requirements.”
Mr Smith said most construction businesses had poorly integrated IT systems, but warned firms away from paying large sums to single IT providers. Rather, he suggested they strip systems to basic back-office functions and then build bespoke operational solutions around cutting-edge products.
“I think subscription-based computing will be the way forward, because it will mean technology providers become part of the team”
Colin Smith, angel investor
“Most of the apps I see do one thing and they do it really well,” he explained. “I tell them to keep their back-office systems, chop off all the bits they have modified, make the core really solid and then surround it with really sharp new applications that you can buy from these young folks with massive brains. You do that for the ‘doing the work’ part of the business.”
Mr Smith added that using multiple solutions would not necessarily involve big upfront costs. “I think subscription-based computing will be the way forward, because it will mean technology providers become part of the team. If they don’t deliver then they won’t get paid next time. I think there will be lots of focus on solving specific problems.”
European Contech Summit 2018 Matthew Jackson global manager BIMobject DSC 073
Matthew Jackson, global manager – Hercules Platform, BIMobject
At just five years old, BIMobject is already listed on the stock market and is said to host the biggest collection of BIM objects – digital representations of physical objects – in the world. Given the pressures on housing and infrastructure, global manager Matthew Jackson cautioned that such resources were becoming not just useful but essential.
“We need three billion homes in cities by 2050 and the associated infrastructure. As the industry exists today, we won’t achieve that. We will build crap”
Matthew Jackson, BIMobject
“We have a big problem in the industry,” he said. “We need three billion homes in cities by 2050 and we don’t just need the homes – we need all the associated infrastructure. As the industry exists today, we won’t achieve that. We will build crap. Without good data we will build at cost, but not value.”
The critical point, according to Mr Jackson, was that having architects redesign basic elements bespoke to each and every project represented a huge waste of time, energy and money. “We allow architects to download digital versions of a door, a chair, a floor, so they can worry about producing a quality design for a clients, rather than drawing all the bits and pieces – it’s digital Lego,” he said.
Given the challenges ahead, Mr Jackson added that clients – especially governments – will want to get far more involved and have sight of as much data as possible to control costs. “We’ve started experimenting with how we can bring designs to the client,” he said. “We can send a link to a client and they can start interrogating it for information.
“For every £1 we spend on design, we spend tenfold on construction and 100-fold on managing a facility. If we can provide the data then departments can manage their estates effectively and know how much it is going to cost before they build it. The big question is how we can move data from product manufacturers across the supply chain and then onto the client. At the end of the day, the money comes from the client.”
Following the individual presentations, the speakers reconvened for a panel discussion on the issues raised. They were joined by Arcadis head of strategic research and insight Simon Rawlinson, who set out his take on the sector and how technology could be used to prevent further tragedies such as Grenfell.
“There are some really big problems and that does create some opportunities for people who can think outside of the box about how we are going to transform an industry that evidently hasn’t transformed itself,” Mr Rawlinson said. “That’s where people in this room come into play. There are some really big opportunities for people to help solve the problems.”
Picking up on Colin Smith’s point from earlier in the day, Disperse.io’s Felix Neufeld said technology had the potential to improve safety. “Our focus is on helping people get more granular feedback from sites,” he said, adding Grenfell meant a greater need to better understand the issues around cladding procedures.
GenieBelt’s Ulrik Branner agreed: “I think mid-to-long term the data is needed, especially with something like Grenfell. You need to understand who did what and when. But if you flip that around, what is driving our technology is that it is also protecting subcontractors. You don’t push subcontractors just because it is good for the clients; you also do it because it is good for the subcontractors. Accountability goes both ways.”
Mr Rawlinson agreed that Grenfell had changed everything. He said that had the tragedy not happened, it was possible that nobody would have seen the point of driving investment in technology. “The transparency debate gets to the heart of it,” he said. “Organisations could [also] go to the wall because they can’t demonstrate what they have said they have done.”