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Construction - March of the Machines

The construction site of the future will be safer and more cost efficient through the use of new technology. As the use new materials and machines takes hold and reduces the overall cost to undertake a construction project, firms that don’t embrace innovation will be left behind.

Technological innovation is not arriving at the construction site in one, great, seismic shift, but rather in pockets across the industry. With so many changes occurring in so many places, new risks can emerge quickly and sometimes from unexpected quarters. It takes a seasoned construction insurer to understand the ramifications of change on the industry and those that operate within it.

With an in-depth knowledge of the industry and the innovations taking hold, QBE is perfectly placed to underwrite construction risks, from the day to day operations of a sub-contractor, up to the largest construction firms. Here, our team gives you the insight you need to understand the implications of technological change at each stage of the construction cycle.

A challenging start

Opinions about Building Information Modelling (BIM) differ among contractors, but, like it or not, it use is pervasive. While there is currently no Canadian Government mandate, 78% of Canadians surveyed believe BIM is the future of project information, with 67% of respondents confirming they have used BIM.

For the uninitiated, BIM is the process of collaboratively developing and managing an integrated digital model containing a structure’s geometry and lifecycle information. The model acts as a ‘single-source of truth’ and supports the activities that are involved in the design, construction, operation and management of a built structure.

“While it has its problems, firms recognize that to deliver on complex projects with extensive supply chains, it is critical that information can be managed and shared. The visualizations available through BIM can support the effective delivery of projects of any size,” says Derek Reedie, Underwriting Manager for Course of Construction at QBE Canada.

New possibilities for BIM

BIM-controlled materials sequencing and ordering is on the horizon. Onsite engineers will be able to feed job status notes into a system that will automatically order new materials for the next stage, allowing for just-in-time delivery by the prefabricators. “That would be a huge help to project managers – particularly on tight urban sites with little lay-down space,” says Reedie.

But the connections which make BIM so impactful also create the biggest risk of its use. As companies create digital links through a BIM, it creates possible new entry points for criminals into each participating company’s network.

“Where there is only one project manager or large engineer hosting the BIM, there is one point of access which you can protect,” says Angela Feudo – Cyber Underwriter at QBE. “As other companies connect to a BIM, you have to be sure that each party in your project holds them self up to the same network security standards that you use.”

With the possibility that every onsite digital system could eventually connect to a BIM – where the model begins to physically control machines and influence the activities of people onsite – it is critical that businesses start to protect themselves now against this cyber risk, rather than chance a catastrophic failure.

Prefabrication is transforming the supply chain

Another opportunity construction firms and contractors are seeking to take advantage of are the advances in offsite fabrication. With so much wastage on a building site and the potential for materials and equipment to be stolen, broken or damaged, pre-fabrication of materials in a factory environment is an opportunity to save costs. Consulting firm McKinsey estimates that some parts of the construction industry can expect to boost productivity between five and ten times by moving to a manufacturing-style production system[1].

For their part, manufacturers are increasingly looking at better ways to supply ever more complex pre-fabricated products to construction sites, as well as designing them for quick assembly onsite, right from the outset.

The integration of electrics into offsite fabrication is one area experiencing significant interest. Large scale wiring and ducting is making way for the much simpler connection of pre-installed systems by the time a unit reaches a site.

There are ramifications to using pre-fabricated materials that need to be considered before their use can be widely embraced. These include longer lead times; additional transportation costs, space constraints and site access problems, as well as possibly needing special equipment to lift large modules into place.

While the use of pre-fabricated materials is changing the way buildings will be built, it’s use will have another effect which is much more profound.

Shifting Liability

There is a subtle shift of liability away from construction firms and more towards manufacturers and distributors, says Richard Newman– Underwriting Manager, Casualty at QBE. “If a contractor orders a bathroom pod, built by somebody else, they are buying a product. If that product fails or is defective, the contractor could attempt to seek recovery for the costs incurred to rebuild the structure in which the faulty product was imbedded. There is a clearer line of sight as to who is responsible for what than there was 10 years ago.”

“Customers are asking more questions about the offsite element of their projects than ever before,” adds Reedie. For example, if a company is utilizing prefabricated components to build key elements of a hotel, and there is a fire in the manufacturing facility, your project stops. Brokers and their clients are now thinking much more broadly about the risks inherent to their business.

“A contractor’s reputation is built on its ability to deliver a project on time and on budget,” Reedie concludes. “Insurance is but one tool amongst many risk management strategies which contractors need to embrace to protect their firm’s reputation in the face of such risks.”

Site-prep is taking to the skies

Construction sites are cluttered places. To date, robots have found this clutter difficult to deal with, both from an object-recognition perspective as well as a movement perspective. But there are rapidly widening areas of the industry where robots are successfully taking over tasks.

Drones have becoming an increasingly common sight on construction sites and are perhaps the most obvious adoption of robots. Construction giant Komatsu is using semi-autonomous quadcopter technology on as many as 10,000 sites across Japan[2]. They are being used for the aerial surveyance of sites and stockpiles to improve material wastage and just-in-time efficiencies. These machines can generate maps within five-centimetre accuracy and can survey a site in minutes rather than the days required by land-based lasers.

Market opportunity

According to a recent report by PwC, the total global addressable market for drone use as a business service is $127 billion[3]. Of this, infrastructure represents a staggering $45.2 billion[4] across a wide range of applications.

One way drones are being utilized on construction projects is to monitor sites for criminal activity, including trespassing and theft of inventory. More broadly, drones can quickly and accurately monitor the progress and quality of work being undertaken on a site, allowing for comparisons to be made relative to the material usage that was calculated in the design for a given stage in the work schedule. Any deviations from the plan can be identified and swiftly acted upon, with data from the drone possibly being used as evidence in litigation. PwC cites an investor saving approximately $2.94 million in claims settlement litigation thanks to the unparalleled evidence of their claim. Then there is safety. PwC’s Drone Powered Solutions unit has estimated that number of life threating accidents on an average construction site monitored by drones has been decreased by 91% .

Next step for site automation

Safety gains and cost efficiencies are also expected from the wider adoption of automated vehicles on a building site. Firms like John Deere and Caterpillar are taking advances in the automation of vehicles in the transportation, agricultural [5] and mining sectors – using technologies like telemetry, mapping and visual processing technology – and applying them to heavy earthmoving equipment used in construction.

These different applications of similar technology are combining to form new machine eco-systems. Traditional companies and start-ups like Built Robotics [6] are plugging three-dimensional terrain modelling into their heavy equipment and allowing them to work semi-independently [7] onsite. Komatsu says it will soon use data generated by its drones to assist in the operation of the autonomous construction vehicles that it has in development.

The implications of these innovations could be truly profound. McKinsey estimates that productivity in the construction sector has remained static since 1945. Yet, in that same time, there has been a 1500% boost in productivity in agriculture, manufacturing and retail – largely due to process automation. As construction firms adopt technologies, like autonomous vehicles, it is estimated the industry could improve productivity by 50 to 60% [8].

New hardware, new risk

But new machines create new dangers, the use of drones being a case in point. At this time, Transport Canada regulation requires anyone flying a drone for work or research to get a Special Flight Operations Certificate. You can seek an exemption if the drone weighs less than 25kg but those seeking one do need to have $100,000 of liability insurance, which can pay for damages caused to property or injury to people.

“It is obvious that a 25kg object dropping out the sky poses a threat,” says Newman. “We engage in a regular dialogue with our customers about the new technologies they are using so we can better understand the risks they face. With the advent of genuinely autonomous machines onsite, that understanding will be even more critical to crafting the right coverage for our clients.”

Some risks are improved

A technology field with enormous potential to reduce risk and make worksites safer is the integration of personal protective clothing (PPE) with worker wearables, networked communication, and augmented reality overlay (AR, also known as ‘mixed reality’).

Some of this technology was first created by Google, but it wasn’t an immediate success. In fact, Google Glass augmented reality headsets proved a massive flop with the general public when they ceased sales in 2015 – just a year after launch. But several savvy small businesses began buying up the technology so they could customize it for deployment in factory settings.

The success of these early adopters has led to an explosion in Glass-like technology [9], because of the variety of possible applications. By giving shop floor workers access to diagrams, assembly instructions and workflow charts right in front of them as they go about their business, both skilled and semi-skilled factory workers and managers are able to improve accuracy and efficiency very quickly. Company data scientists are also able to extract meaningful information from the systems to apply to new workflows and management tools.

The construction industry should take note. AR wearables are being deployed by progressive construction firms already. Their use will inevitably spread as costs fall and their utility rises.

Vancouver based wearable tech pioneer Fatigue Science has been supporting construction firms for over 10 years. Their ‘Readiband’ product reports sleep and fatigue data from the users in real-time, scoring it in their app, helping organizations to prevent injuries which may result from fatigue. UK Construction firm Morgan Sindall has been using the bands for over a year, helping them to compensate for a problem that is estimated to cost to the Canadian economy $21.4 billion per year and result in 78,861 lost working days [16].

Joining the revolution

Other firms whose innovations are shaping how construction firms operate are positioning technologies specialist, Trimble [11], and German augmented automation and intelligent robotics manufacturer, Essert [12].

Trimble recently introduced a new AR adaptation for hard hats. The Trimble Connect for HoloLens mixed-reality solution combines digital models from different contractors like structural, mechanical and electrical trade partners. The system creates ‘precise alignment of holographic data on a 1:1 scale on the job site’, allowing workers to remotely access information previously only available from a laptop, or more likely, in an office.

Essert offers a scenario of how its AR could help those undertaking tunnel construction, where any downtime by a boring machine is an expensive problem. In this situation, a site worker was capable of fixing the problem “without any detailed knowledge of the system or documentation but with a toolbox and a helmet… that is equipped with smart glasses for augmented reality support.” [13]

Perhaps that most exciting advancement of all is the potential to use augmented reality to visualize BIM within the physical context of a construction activity or task. London, UK mega project Crossrail is an example of where BIM integrated AR and remote-sensor technology was trialled. Field Managers, overseen by the project’s dedicated BIM working group, utilized tablets loaded with augmented reality software to view 3D plans which were overlaid on the actual site.

The introduction of new technologies has significant implications for the future employment needs of the construction industry. While institutions like the World Economic Forum forecast 500,000 construction jobs globally will be lost in the next five years [14], a large swathe of the construction workforce may instead need limited retraining for more generalist roles. Tools like AR wearables could complement existing skill sets, or substitute them entirely, allowing workers to become more adept at different tasks which span the construction cycle. There are some jobs, however, that will almost certainly disappear from construction sites for good. Most likely, basic, repetitive manual labour will soon to be supplanted by machines in a variety of areas.

Re-training is inevitable

With the introduction of new technologies, mass re-training of construction workers in Canada is inevitable in the next two decades. While some jobs will change or be eliminated, new jobs will be created as a result, including for: software engineers, information management specialists, machine controllers as well as generalist technicians who can support and work with the new technology.

Adoption of these new technologies should result in construction sites that are safer, with work completed more cost effectively. As the industry changes, QBE is ready to insure the new risks that such changes will create.