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· A new report from the World Economic Forum considers new digital technologies and megatrends and recommends preparatory actions
· It concludes that companies in the engineering and construction industry must act now to avoid future disruption
· The report presents three scenarios: building in a virtual world; factories run the world; and a green reboot
· To download the full report, click here
Geneva, Switzerland, 5 June 2018 – Dramatic changes on the horizon indicate an uncertain future for the engineering and construction (E&C) industry and its more than 100 million employees worldwide. Advancing digital technologies, which include building information modelling, prefabrication, wireless sensors, automated and robotic equipment and 3D printing, are affecting the entire industry. The substantial impact of full-scale digitization could help the industry escape its decades-long lack of productivity progress and generate an estimated $1.0 trillion-$1.7 trillion in annual cost savings.
In parallel, global megatrends should motivate E&C companies to rethink industry practices that have not advanced over the years. Rapid urbanization – with more than 200,000 people a day relocating from rural areas into cities – climate change, resource depletion and the widening talent gap are just a few of the most powerful of these trends. Shaping the Future of Construction: Future Scenarios and Implications, a new report from the World Economic Forum and The Boston Consulting Group (BCG), is the first to integrate consideration of the new technologies and trends into consistent scenarios of the future.
“The investigated scenarios and their implications clearly show that incremental change is not an option any more. 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 game-changing innovations that consider a variety of possible futures is going to make a serious impact, socially, economically and environmentally.”
Over the past year, the World Economic Forum and BCG worked with more than 30 leading companies from the E&C industry, conducting workshops in Berlin and London. The result of those workshops was the development of three future scenarios for the E&C industry. Although all three scenarios, outlined in the report, are extreme, they are plausible. In the “building in a virtual world” scenario, which many experts consider highly likely, design and engineering software systems are powered by artificial intelligence, and autonomous construction equipment replaces most manual work throughout the E&C value chain.
Although the report indicates that it remains unclear which scenario or scenarios will unfold, there is little doubt that the future will include elements of all three. Michael Burke, Chairman and Chief Executive Officer at AECOM and co-chair of the World Economic Forum Future of Construction initiative, said: “Current business models, strategies and capabilities will not be sufficient in any of these future worlds. This underscores that players along the construction value chain need to prepare strategically to thrive in the face of anticipated disruption.” In addition to recommending specific actions in response to each of the scenarios, the report provides a set of actions that will be relevant in any possible future.
The report states that 74% of the E&C company chief executives who participated in the World Economic Forum Annual Meeting 2018 in Davos in January said they considered that attracting new talent and improving the skills of the existing workforce to be among the top three actions for keeping pace with upcoming disruptions. The other two priorities they named were improving integration and collaboration along the value chain (65%) and adopting advanced technologies at scale (61%). For each scenario, the report describes the most important changes that E&C companies must anticipate; explains how customer requirements, segment demand, regulations, processes and technologies would change; and provides details on how the competitive position of existing industry players would be affected, what new entrants could be expected and what new business opportunities will arise.
Luis Castilla, Chief Executive Officer of Acciona Infrastructure and until recently a co-chair of the World Economic Forum Future of Construction initiative, summarized the relevance of the new report: “The construction industry’s decision-makers should understand the disruption outlined in the future scenarios as a wake-up call and use the identified key actions as a foundation for companies in the construction industry to prepare and shape a prosperous future that will allow the industry to fulfil its role in promoting economic growth, social progress and environmental responsibility.”
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All opinions expressed are those of the author. The World Economic Forum Blog is an independent and neutral platform dedicated to generating debate around the key topics that shape global, regional and industry agendas.