Digitalizing the construction industry: A case study in complex disruption

I, along with a Robert Hillard and Peter Williams, have a new essay published by Deloitte Insights, Digitalizing the construction industry: A case study in complex disruption1)Evans-Greenwood, P et al. 2019, ‘Digitalizing the construction industry: A case study in complex disruption’, Deloitte Insights,<https://www2.deloitte.com/insights/us/en/topics/digital-transformation/digitizing-the-construction-industry.html>.. The case study elaborates on one of the examples we used in Your next future.2)Evans-Greenwood, P & Leibowitz, D 2017, Your next future: Capitalising on disruptive change, Deloitte University Press, <https://dupress.deloitte.com/dup-us-en/focus/disruptive-strategy-patterns-case-studies/capitalising-on-disruptive-change.html>.

In that essay we made the distinction between simple disruption – disruption due to a particular disruptive technology, the thing the comes to mind first for most people when they think of disruption – and complex disruption – where the disruption is due to a confluence of (mainly social) factors. Think the telegraph (simple disruption) vs the global multi-modal container network (complex disruption). Many current disruptions – artificial intelligence, blockchain, etc – tend to be complex (rather than simple) disruption. We’re seeing an environmental shift, as individuals and firms realise that the current environment (with many things available cheap and on-demand) presents opportunities to find new ways to use old technologies to create new ‘disruptive’ operating models, rather than there being a massive wave of new technologies as many pundits claim.

One of examples we used to illustrate the shift was the building industry. There’s a lot of noise about technologies such as 3D printing or brick-laying robots disrupting the building industry, but this is unlikely as the industry’s product is the building process, not the buildings it produces. Builders will simply integrate these new technologies into their process if and when they become commercially viable. The invention of a new building process, however, where a builder uses old technologies in new ways to create a new, and superior, operating model has the potential to disrupt the industry.

Your next future mentioned a design for manufacture and assembly (DFMA) process – where a building is completely modelled in 3D before the model is split up and feed to numerically controlled machines in a factory, with the components shipped to the construction site for assembly – as potentially disruptive. Versions of the process current at the time of publication were roughly 30% faster than a conventional build (due to moving some work to the controlled environment of a factory where rain delays aren’t a problem, and enabling the optimisation of vertical transport on site). They were slightly cheaper, and had the potential to be much cheaper. And there’s the possibility to integrating new materials into the process, materials which couldn’t be used in a conventional process due to on-site restrictions.

Since that essay was published what was then a potential disruption looks like it might be about to tip into actual disruption. This is the subject of the case study.

In 2018 a project in the Melbourne CBD hit problems as the cranes and trucks required to move materials onto the site would block a lane that was the sole access to the homes of many local residents. The solution the builder (Hickory) came up with was to build at night: the machinery would arrive around 9 pm and lift DFMA components (via the Hickory Building System) onto the site, installing an entire floor in four-six hours. Once a floor is complete the floor below is weather-proof and there are no lives edges. The machines are gone before the residents wake. During the day the trades go through the completed floor and finish the interior. There was some skepticism as building is considered noisy, though a trial one night showed that the residents would hardly notice the nighttime construction.

And here’s where we might be seeing a potential complex disruption crystallise into actual disruption. The build proceeded, and the city council was so happy they are considering that all high-rise building to be done at night. This would, with the stroke of a pen, bar conventional builders from the market until they undertake the multi-year journey to develop their own operating model based a DFMA process.

The case study looks at the development of DFMA building processes, the challenges they faced and how they’ve been overcome, and the potential impact on the market. It also looks at how firms might also anticipate similar complex disruptions in their own market, pointing out that conventional market-scanning practices looking for disruptive technologies can actually be counter productive as they cannot predict complex disruption, and we’re in a market with there appears to be more complex disruption than simply disruption.

It’s an interesting story, and a local story which is nice, so head over the the Deloitte web site to read Digitalizing the construction industry: A case study in complex disruption.

References   [ + ]

1. Evans-Greenwood, P et al. 2019, ‘Digitalizing the construction industry: A case study in complex disruption’, Deloitte Insights,<https://www2.deloitte.com/insights/us/en/topics/digital-transformation/digitizing-the-construction-industry.html>.
2. Evans-Greenwood, P & Leibowitz, D 2017, Your next future: Capitalising on disruptive change, Deloitte University Press, <https://dupress.deloitte.com/dup-us-en/focus/disruptive-strategy-patterns-case-studies/capitalising-on-disruptive-change.html>.

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