Don’t we all share that romantic notion of a self-managed construction site, where planning and execution are seamlessly integrated and fully automated? Well, we at Foundamental aren’t known for being the biggest romantics (though we all share a big passion for construction and tech), but we sincerely believe that construction is set to become an orchestrated economy. Now, I know what most will say: If wishes were horses, beggars would ride. But hear us out, here is what we mean by it and how we think it’s going to happen.
Construction is big, inefficient and undisrupted. It accounts for ten percent of world’s GDP, but productivity dropped by 27 percent in the last 25 years, while most other industries have seen steep increases in productivity. Construction seems to be left behind in an era of rapid change. While in other sectors half of all companies have been acquired or gone bankrupt in the last 20 years, 85% of construction companies are still there. Unchanged and undisrupted. Fragmentation and inaccessibility obviously hinders change from within and outside. All this won’t be much new to you, but it perfectly makes the case why our beloved sector is in urgent need of some tech. Especially as lots of construction is yet to come. Until 2060, we will add the floor area of Japan to the planet – every year.
To make matters worse, construction is hamstrung by an aging workforce. Between 25 and 41% of the construction workforce today will be retired by 2030. This is a problem in itself, but it gets worse: while 74% of young adults (18-25) now in what field they want to pursue a career, only 3% are interested in the construction trades.
What isn’t changing is the unique set of first principles that construction is made of:
Given construction’s first principles, we at Foundamental only see one way out: construction becomes an orchestrated economy. Orchestrated by autonomous and circular supply chains that build on integrating all the data pools that currently emerge as known problems or simple tasks get solved with technology. Once those data pools are connected, you get closer to achieving transparency over entire processes and using data to improve them. But how to get there?
First, we need a better vertical view of a site, a warehouse, a plant — to understand the processes and, more importantly, their local contexts. Who does what, when and why. Which material flows at what time, and why. There are new innovative solutions providing real-time visibility and transparency, tracking jobsite health to minimize schedule surprises. A select few are also providing immediate value during COVID-19 crisis tracking (labor) density & prolonged proximity. As an example: IndusAI, a Foundamental portfolio company, offers such a look through a keyhole to make data-driven decisions with actionable insights whilst decreasing time on claim disputes and subcontractor coordination.
Second comes the horizontal view. By this we mean having the ability to see a workflow end to end (something we also call the “critical path view”). As we shift focus upstream, we need a better understanding of specific construction workflows and, again, their context. Just think of the interplay between batch plant, truck and site. Remember, the bird’s eye view helps you identifying every step on-site, including arriving trucks and their loads. Now, imagine these trucks are equipped with telematics and your system is able to factor in that data as well (something Loconav does very well already today in India). Such solutions will be able to request more or fewer trucks at the concrete plant and can even advise the truck to hurry up or take its time to perfectly arrive on site. All this can be done autonomously and in real-time. To be honest, we also don’t see a reason why robots shouldn’t take care of the pouring. Especially in times of COVID, but that’s a different story.
Our point here is simple: always start with data that creates context either vertically (what happens on a site) or horizontally (what happens in the workflow end to end).
That is the shortest road to orchestration.
The winners will be those who orchestrate supply chains end-to-end and are able to build a reliable, predictive engine that is able of both schedule generation and management as well as resource optimization and sequencing. They become the system of record across the full lifecycle of the project, from planning, procurement, and supply chain management, all the way through construction execution. From there one can flirt with the romantic notion of a “self-managed construction site”.