The future of the construction industry

We recently sat down with Jeremy Hay, Managing Director of RCP and Tony Kemp, Director of Project Workshop and Design Director for Commercial Bay on behalf of Fletchers, about their involvement in the country’s largest construction project of the decade. You can read the article on Commercial Bay here.

As part of an ongoing discussion, we asked Jeremy and Tony a couple of questions regarding the future of the construction industry in New Zealand, here’s what they had to say:

ArchiPro: According to a recent McKinsey report, a survey of 400 construction industry executives revealed that 78 per cent of respondents believe the industry will undergo radical change in the coming 20 years. What changes do you see happening to the industry at home?

Jeremy Hay: The construction industry internationally is one of the least productive industries in the world, yet it is also one of the biggest by global GDP, hence it is ripe for, and in need of, disruption. This includes New Zealand. As a consequence, we will see global tech giants investing heavily in the industry with technology that will hopefully improve production, however, we would be naïve to think this alone will fix the industry.

The key changes I believe we will see include a greater impact of technology on not only the development of design but its integration with planning, procurement and ultimately construction delivery. Development of ‘digital twins’ more than design models and design, cost, time and production databases, which will enable more off-site manufacturing in controlled environments, reducing the time and cost implications we see prevalent on sites today. This will happen but it will require a major investment in time and money from the industry to realise these benefits.

Tony Kemp: New Zealand has historically taken cues from our Australian neighbours—particularly in the main contractor space. The regulatory body role and input on projects continues to evolve and, obviously, technology advancements will certainly shape our industry in the years ahead. Top 5 of note for me:

• Main contractor risk profile and margins
• Contract models
• Consenting pathways and requirements
• Designer scope responsibilities
• Technology—particularly BIM

AP: In the same report, 69 per cent of respondents believe that investment in technology and facilities will either accelerate or significantly accelerate as a result of the COVID-19 crisis. Furthermore, 60% have increased their own spending in this area? Are we doing enough in New Zealand to adopt or invest in new technologies?

JH: I think we are starting to see the early signs of this investment but, similar to the advent of CAD in the design industry some 25 years ago it will start slowly and rapidly accelerate as the benefits are realised. I imagine buildings we design in five years’ time will be much more information intensive, however the key question will be if the industry has and is willing to invest the capital required to realise the benefits of this information, particularly in the subtrade market, which in many areas remains very manual.

TK: No. Technology is constantly evolving and there’s always something else that may bring real value to a project. This research, development and introduction requires constant investment in components and systems—and the people who will utilise them. The industry is clearly grappling with the challenge of ‘old school vs new school’ when it comes to technology and systems. The integration of new technology in the short- and intermediate-term will be fascinating; and some companies are certainly more evolved than others.

This is particularly evident at subtrade level. It’s critical that technology adoptions are targeted at those that add meaningful value and can actually be operated by the Project Team members, rather than introducing new technology for the sake of innovation and change. We were fortunate at Commercial Bay to have implemented technology with a targeted purpose and to a sensible extent—this included the use of the Aconex project management platform, Revit BIM model use by certain designers and subtrades and, an online-based defecting platform with live & real-time access and tracing available to all Project Team members.

AP: We are, as an industry in New Zealand, reliant on sourcing and importing many of our construction products from overseas. Given that some are predicting that COVID-19 is just the latest in what is likely to become the 'pandemic norm', how sustainable is this reliance on international markets and is there anything we could be doing in New Zealand to mitigate similar incidences?

JH: I think if anything this will increase, ie. supply of offshore materials. Any hindrance from COVID-19 will be more than offset by acceleration in technology and global supply chains. Technology and the development of extremely sophisticated ‘just-in-time’ supply chains globally has already seen an increase of global shipping by 20 per cent above pre-pandemic levels. COVID-19 had a short-term impact on this, but if anything it demonstrated to the world the importance of technology to mitigate the impact of such events.

TK: The range of products desired and specified by clients and designers is not always available from NZ-made suppliers and many raw materials required for locally-made products are obviously also sourced off-shore. New Zealand will continue to rely on international markets for products and raw materials—that is inevitable. Commercial Bay is a great example of a project with a world-map of sourcing—and the sudden events of COVID-19 certainly impacted supply of products, with materials stuck overseas and their status uncertain.

These experiences have certainly highlighted the need to continue to carefully plan materials procurement and delivery—and avoid just-in-time wherever possible, investigate and understand shipping and logistics arrangements prior to committing to products and suppliers and, to certainly continue to specify and buy NZ-made where we can.