Digitization in the construction industry

1 THINK. ACT. BEYOND MAINSTREAM. June 2016. 2015. Digitizationthe Mastering in the Transformation construction industry Journey A comprehensive Building Europe'sguide road to to " construction reinventing companies ". 2 THINK ACT. Digitization in the construction industry TREN. D. 3. R A DA. THE BIG fo r t h e R. G. constr erman uc indust tion ry P. 9. 93%. of construction industry players agree that Digitization will affect every process. Page 3. <6%. of construction companies make full use of digital planning tools. Page 13. 100%. of building materials firms believe they have not yet exhausted their digital potential.

2 Page 7. THINK ACT 3. Digitization in the construction industry There is no alternative to Digitization . Even on the building site. construction needs to catch up. Digitization is about businesses encountering connect- dustry and service providers despite the fact that the ed systems at every link in the value chain. It is about needs and approaches of different actors vary very con- working with tools and practices based on information siderably. Producers of building materials tend to fo- and communication technology. This understanding cus more on digitizing production and distribution is changing the role of digital technologies.

3 They are no (along the lines of industry and the design of the longer mere tools to help companies do the same customer journey, for example). By contrast, construc- things a bit better. Instead, they fundamentally change tion companies concentrate primarily on the digitiza- the way business is done. Digitization permeates every tion of planning, construction and logistics (building part of every company: multinationals and midcaps, information modeling BIM and the connected all-rounders and specialists alike. "building site "). For their part, building material A glance at other industries shows the extent to traders add a strong focus on digital sales (online trad- which Digitization is turning proven and familiar prac- ing) to their logistical considerations.

4 Tices on their head. In the music industry , for example, Clearly, the industry is aware of the importance of digital offerings already account for 46% of total sales the megatrend toward Digitization . The problem lies worldwide. On this kind of scale, it is certainly reason- rather with implementation. This is the finding of an able to speak of a revolution especially as one has to exclusive Roland Berger management survey, above all assume that Digitization has replaced legacy business among construction firms and their suppliers in Ger- models in their entirety. many, Austria and Switzerland.

5 The results of the sur- A large majority of players in the construction in- vey paint an up-to-date picture of how industry players dustry today recognize how Digitization is affecting ev- rate the potential of Digitization and the extent to ery part of their business too. According to one study which implementation has progressed. We call the pic- by the Association of German Chambers of Commerce ture that emerges " construction ".1. and industry (DIHK), 93% of companies agree that dig- itization will influence every one of their processes. 1 A. lthough building material traders were not included in the survey, This perception places construction on a par with re- this paper occasionally touches on the impact of Digitization on this tail and only just behind both the manufacturing in- segment and the opportunities it affords.

6 4 THINK ACT. Digitization in the construction industry Four keys to unleash the potential of Digitization in the European construction industry . Digitization gives players in the construction industry ed to nearly 40 companies of all sizes (whose business ways to improve their productivity. While other indus- focuses on construction and building supplies). The tries are already benefiting along the entire value respondent firms reflect the following revenue break- chain construction still lags behind. Few players have down: yet turned to the potential of Digitization as a way to > Less than EUR 10 million: 13%.

7 Resolve this problem. > EUR 10 million to EUR 100 million: 26%. Such hesitant implementation is all the more sur- > EUR 100 million to EUR 500 million: 32%. prising when one considers the trend in productivity in > EUR 500 million to EUR 1 billion: 6%. the construction industry . Over the past ten years, pro- > More than EUR 1 billion: 23%. ductivity in Germany has edged up by a meager To clearly show how the potential of Digitization is rat- By comparison, productivity across the whole of the ed across individual divisions, departments and func- German economy has increased by 11% in the same tions, we split it into four key areas: digital data, digital period.

8 The gap between construction and industry is access, automation and connectivity. Digital data cov- particularly wide: Manufacturing has seen productivity ers the electronic collection and analysis of data to rise by on average over the past decade, against gain fresh insights into every link in the value chain a gain of for the whole of the secondary sector. and then put these insights to good use. Automation In other European countries, productivity in the con- groups together those new technologies that create au- struction sector has actually declined by 5% per an- tonomous, self-organizing systems.

9 Digital access de- num in Italy and Spain in the period from 2010 through scribes the potential afforded by mobile access to the 2015. France just about managed a 1% per annum gain internet and internal networks. Lastly, connectivity in the same period. explores the possibilities to link up and synchronize To find out more about where Digitization is at in hitherto separate activities. A. the world of construction , we conducted a survey of One crucial factor regarding the vast potential of top management in the construction and supply in- Digitization is that each of these four keys can be dustry in Germany, Austria and Switzerland.

10 Our sur- turned at every link in the value chain. For players in vey also included in-depth interviews that let us drill the construction industry , the value chain breaks down down into specific approaches and problem areas. To into the following links: capture the mood of the industry as a whole, we talk- THINK ACT 5. Digitization in the construction industry A. FOUR KEYS TO THE DIGITAL TRANSFORMATION. Four key aspects are useful to get Digitization up and running. Their importance extends across every link in the value chain. DIGITAL DATA AUTOMATION. Electronic collection and analysis Use of new technologies to create of data autonomous, self-organizing systems DIGITAL.