Innovators shake up the tradition-bound construction industry

    Download the World Economic Forum/Boston Consulting Group report, Shaping the Future of Construction: Inspiring Innovators Redefine the Industry, at

    New technologies are transforming the engineering and construction sector at an accelerated pace, according to a new report compiled by the World Economic Forum in collaboration with The Boston Consulting Group (BCG). The report, Shaping the Future of Construction: Inspiring Innovators Redefine the Industry, analyzes 10 innovation leaders, identifies key success factors, and makes policy recommendations for accelerating innovation in construction.

    Relative to other industries, productivity in engineering and construction has stalled during the last 50 years. Technology was not making any fundamental advances, and companies remained averse to changing their traditional methods. Recently, however, transformative technological developments have emerged, and some pioneering firms have adopted them for current projects. These developments — 3D printing, building information modeling (BIM), wireless sensing, and autonomous equipment, to name just a few — are already starting to turn traditional business models upside down.

    The 10 “lighthouse” innovation cases in the report illustrate the value of embracing innovations. Prominent flagship projects — such as Dubai’s Burj Khalifa, the world’s tallest building, and The Edge in Amsterdam, the world’s most sustainable office building — showcase state-of-the-art innovation. So too do the various pilot projects or startups that the report analyzes, such as the 3D printing of houses by the Chinese company Winsun or the predictive analytics of construction data by the Chicago-based firm Uptake, Forbes’s hottest startup of 2015. Jointly, their inspirational stories give a glimpse of the industry’s future.

    “To paraphrase William Gibson: the future of construction is here now — it is just not evenly distributed. Innovative companies and projects, as described in the report, demonstrate the art of the possible and how to address the challenges involved,” said Philipp Gerbert, a BCG senior partner and coauthor of the report. “The impact of these innovations on the traditional construction ecosystem will be interesting to follow. We see a widening gap between the innovation laggards and leaders, in particular with regards to their digital transformation.”

    Spearhead transformation

    On the basis of BCG’s analysis of these successful innovators, the report suggests ways for companies to stimulate innovative ideas, turn those ideas into reality, and ultimately succeed in the market. Pioneering firms, for instance, create an innovation-friendly culture that rewards risk taking; they take a longer-term product perspective, rather than thinking in terms of individual projects; and they proactively shape the regulatory environment. Companies have nothing to gain from delaying. Once they implement innovations, the benefits — lower costs, shorter delivery times, and reduced environmental impact — can begin to accumulate.

    The report highlights the following key success factors for innovation in the construction ecosystem:

    • Develop a vision and instill an innovation culture that challenges the construction industry’s status quo.
    • Create talented, multidisciplinary teams and devise an agile organization to accelerate innovation.
    • Take a customer-centric approach to devising innovations, starting from the pain points of construction clients and asset end-users.
    • Establish product platforms rather than taking an individual project perspective, to create the business case for innovation.
    • Develop pilot projects and prototypes to demonstrate the potential and provide proof of value.
    • Nurture the broader ecosystem necessary for implementing innovation by developing the (local) supply chain and partnerships.
    • Embrace business-model innovation alongside technological innovation in engineering and construction.
    • Advocate new ways of contracting to enable and incentivize effective collaboration with project owners from Day 1.
    • Shape the regulatory environment proactively to enable and promote adoption of innovation.

    Governments’ crucial contribution

    Governments are crucial participants in the transformation of the construction industry. They need to create an environment conducive to the adoption of innovative technology as a regulator, strategic incubator, or project owner.

    The report recommends that governments should update building codes, move to performance-based and forward-looking standards, and introduce more flexible procurement models in infrastructure projects to overcome typical hurdles for innovation. In fact, infrastructure is again high on the agenda in almost all regions of the world.

    In the words of John Beck, president and CEO of Aecon Construction Group, one of Canada’s leading construction companies, “There has always been a mismatch between the need for infrastructure assets and the capital to fund them. We now have a new opportunity to narrow that gap — by leveraging all the remarkable innovations that have emerged in recent years.” For infrastructure and other built assets alike, innovation will boost the value over their entire life cycle.

    As construction companies reap the benefits of innovation, so too will their clients and the community at large. “Incremental change is not an option; by redefining the ultimate frontier, leapfrogging innovations in construction will finally help to address major societal challenges, from mass urbanization to climate change,” said Michael Buehler, head of infrastructure and urban development at the World Economic Forum. “The widespread adoption of these innovations is going to make a serious difference, both economically and environmentally.”

    Information provided by The Boston Consulting Group (