Digitalizing, at the very least, the planning of major projects could reduce budgets by 80% and expedite execution by 20%. Yet, only 42% of the construction sector is digitalized. We will examine the reasons based on reports and consider further benefits of this paradigm shift.

 

A journey through the brief yet intense history of digitalization in construction

In 2016, consultancy firm McKinsey released a report detailing the construction sector’s digital transformation progress, which by then had already enveloped all industries. The document unequivocally concluded that there was still a long way to go: in a list ranking 22 industries by their level of digitalization, construction was second to last, just above agriculture and hunting. Additionally, it highlighted two frequent flaws in large project planning: they often took 20% longer than estimated and exceeded the budget by 80%.

That same year, another consultancy, Roland Berger, published survey results on the same topic, showing a stark contrast between expectations and reality: while 93% of industry stakeholders believed that digitalization would soon impact all processes in construction, less than 6% of companies were fully utilizing digital tools.

 

The COVID-19 crisis accelerated the wave of technological transformation in many sectors, and construction was no exception. Yet, compared to others, the era of digitalized construction is still in its early stages. Considering that nearly 40% of global CO2 emissions come from this industry, continuing to invest in technologies that make construction more sustainable is more urgent than ever.

 

What does digitalizing construction mean?

Amazon, which evolved from a book-selling business into a digital giant, defines digital transformation as “the process by which an organization integrates digital technology into all areas of business”. It is also understood as replacing analog processes with digital ones. For example, a construction contract would no longer be solely on paper, or the plans for a future building would be developed using specialized software.

“The digitalization of construction implies significant improvements and advancements—still underdeveloped—in the construction processes, for projects of any scale, use, function…”, explains José Luis Esteban Penelas, PhD architect and professor of Architecture at the European University of Madrid. This, he assures, will lead to “a great evolution,” and have a significant impact on sustainability in the sector.

The expert lists some examples that, although “they may seem utopian,” are already being applied in construction. “Being able to generate or develop works and construction processes remotely, optimizing and simplifying complexity, or achieving greater efficiency in planning. Alongside this, using, of course, computer programs and artificial intelligence to visualize and advance results”, he illustrates.

 

Five benefits of construction digitalization

McKinsey listed five benefits of digitalization in their report:

• More precise land inspection and geolocation. It prevents the discovery upon starting construction that, in fact, the plot is not suitable for building.
• BIM 5D. Building information modeling (BIM) platforms are no longer rare in the industry. The two extra dimensions refer to time and costs, two aspects that the sector needs to improve greatly.
• Digital collaboration and mobility. Moving from paper to digital environments hosted in the cloud opens many collaboration options among various agents, without the need to be in the same space. In a field like construction, which still relies heavily on physical documents, this is a significant step forward.
• The Internet of Things (IoT) and advanced analytics. IoT allows machinery, materials, etc., to communicate with each other and with a central hub to know, for example, if repairs are needed or more materials need to be ordered.
• Design and construction with a future guarantee. New materials such as aerogel or self-healing concrete are more sustainable, allow increased agility, and improve efficiency.

 

What is the current state of the digital transformation process in the sector?

Eight years since McKinsey’s report, things do not seem to have advanced much further. According to a survey conducted at the end of 2022 by RICS (Royal Institution of Chartered Surveyors), 42% of companies did not use any digital technology in any of their projects.

“If we compare it to other markets like aerospace engineering, naval engineering, or computing, the construction field still has a significant journey ahead”, points out Esteban Penelas. “There is a need to promote and develop a convincing effort to all the agents influencing the construction processes, from the project generation phase to the development and planning of the work, in its construction, as well as in its promotion and subsequent dissemination,” he adds.

As for what is already being done, the professor indicates that in some cases, digitalization processes are already being implemented “step by step.” Additionally, architecture schools are already emphasizing the topic “so that future professionals are fully trained right from the start.”

 

Why hasn’t more progress been made in the digitalization of construction?

In 2019, after a new survey, McKinsey identified four significant barriers that were hindering the advancement of digitalization in construction: fragmentation (several specialist companies, contractors, and subcontractors participate in each project); the uniqueness of each project, requiring changes to be applied individually; the involvement of different teams and organizations in each project; and the decentralization of agents, with company divisions working independently. Moreover, they added that when digitalization occurs, it is most common for each company to develop its own solution, which creates coordination problems with other participants in the construction.

A report by Planradar added another reason: 20% of respondents in Spain (where 77% still consider the introduction and development of advances related to new technologies in their business as difficult or very difficult) pointed to “the excessively traditional methods still prevalent in the sector as the main cause for the introduction of new technologies, along with the lack of government incentives, such as subsidies or similar”.

For Esteban Penelas, this reluctance to try new things is largely to blame. “The digitalization in construction processes primarily faces obstacles derived from a construction tradition that is established and that, in some way, still relies on the postulates of last century’s construction processes”, he explains. “Considering that the market for materials and assembly systems has evolved significantly and that there is a new way to conceive and plan works, it seems that the key is to adapt to the new processes demanded by today’s society”, he notes. Adapting to this societal demand, which seeks to have “more ecological, sustainable, efficient, and beautiful buildings”, will be achieved through the use of digital tools.

 

Will digitalization help make construction more sustainable?

One of the major reasons why it is imperative to digitalize construction, beyond the increase in efficiency that the change will bring, is precisely the pursuit of sustainability. “Examples of buildings and even urban projects where digitalization has been applied yield optimal results in terms of sustainability and bioclimatism. They produce projects that are much friendlier and more respectful to the environment”, concludes Penelas.

Other environmental benefits from digitalizing construction include reducing paper use, minimizing emissions, waste, and debris produced. By being able to plan and verify in a virtual environment whether certain interventions are possible or will work, it prevents starting works—or specific operations in a project—and wasting all the resources used in that start if it ultimately needs to be retracted. Additionally, digitalization facilitates analyzing variables such as water consumption or determining which materials will be more durable in each case considering data on humidity, sun exposure, etc. On the other hand, the use of 3D printing can reduce the amount of materials used by up to 60%, according to the Roland Berger report.