The coronavirus pandemic has forced many in the architecture, engineering and construction industry to find creative ways to remain competitive. Many contractors have had to lay off workers once they complete projects that started before the pandemic because private owners and public agencies are wary of new construction, according to the Associated General Contractors of America. A plethora of industry reports suggest that the status quo is no longer an option in business strategy. Here are three opportunities that haven’t been discussed widely, but can help businesses gain an advantage.
1. Rethink tech investment and IT billing
Despite construction and engineering companies’ efforts to retool cost structures, many firms continue to feel the sting of increasing material costs, contract extensions and cost overruns on projects. A post-election report from Deloitte offers three strategies to overcome these challenges. The first two, prefabrication and advanced materials, have been touted for many years, but the third suggestion is somewhat novel.
“Firms should make technology investments that solve business-level efficiency problems instead of stand-alone project-related issues,” the report states. “Through enterprise-scale technology investments, E&C companies can develop a connected construction foundation—a dynamic, always-on network that provides continuous access to information, analytics, and insights. Benefits are expected to include as much as a potential 10% to 30% reduction in engineering hours, up to 10% reduction in build costs, and up to 20% reduction in operating costs, improving overall margins for E&C firms throughout the entire project life cycle.”
A separate survey from JBKnowledge suggests firms can also approach IT billing differently. It claims 40% of companies are missing out on the opportunity to bill for a portion of the technology that helps them achieve project efficiency. Only 16% of respondents to the survey indicated they use indirect billing for IT expenditures, and only 7% rely on direct billing.
“Even implementing simple indirect billing protocols can help companies positively impact their bottom-line with minimal effort,” the report says.
2. Smart retrofits with digital twins
The Rockefeller Foundation estimates that in the US alone, a $279 billion investment in smart retrofits across the residential, commercial, and institutional market segments could yield more than 3.3 million cumulative job years of employment.
An estimated 80% of today’s buildings are expected to remain in use by 2050, but 75% of that stock will be energy-inefficient by then, according to a December report by construction technology provider Asite. The report claims the majority of buildings predate modern energy standards, and that none of the world’s largest and most advanced countries are equipped to achieve the mission of the Paris Agreement under their current trajectory.
Asite acknowledges there is increased awareness about the need for decarbonization and smart retrofits, but notes that financing, supply chain capacity and project disturbances linked to refurbishment work are significant barriers. The report concludes that digital twins “offer the most comprehensive resource for retrofitting at scale as a composite of a variety of technologies” to track assets in real time while supporting decarbonization. Markets & Markets estimates the global market for digital twins will grow from $3.8 billion in 2019 to $35.8 billion by 2025, at a compound annual growth rate of 45.4%.
3. Designing for centralized delivery
The coronavirus pandemic has set the stage for the growth of the delivery economy. It has also increased the need for reduced touch points throughout businesses.
One integrated design firm, Mackenzie, is responding to this need by creating centralized delivery centers for business parks, corporate campuses and downtown districts. In addition to reducing touch points, these centers “reduce traffic congestion in business areas, save building space and make deliveries more efficient on both sides,” says Matt Butts, director of civil engineering and transportation planning at the firm. He says one client has already seen the benefits of a center that allows it to go “touchless as needed.”
But before committing to such a design, firms must work with clients first to evaluate space needs to find the right location — ideally some place new. The traffic pattern to get there has to be clearly mapped out and communicated to anyone that could use the space, according to Butts.
“If the solution isn’t easy to follow and use, it won’t get used,” he says. “Drivers will continue to come into the building, stop on multiple floors, etc. The idea is convenience, so getting there has to be more convenient than what’s currently in place.”