The internet of things (IoT)—it’s a clumsy term that the construction industry better get used to. Gartner estimates there will be more than 26 billion connected devices by the year 2020, and McKinsey researchers peg the potential economic impact of IoT technologies to be between $2.7 trillion and $6.2 trillion annually by 2025.

Put simply, the IoT allows objects to be sensed or controlled remotely across an existing network infrastructure. In the built environment, that translates to devices and fixtures with embedded sensors that gather critical information and integrate to provide advanced levels of intelligence and analytics. The payoffs are improved efficiency and lower operating expenses.

What building owner wouldn’t want that?

Moving Toward Silo Integration

Today’s smart buildings provide enhanced control over systems such as lighting and HVAC, resulting in better occupant experiences, significant energy savings and the ability to meet environmental goals. Automation and sensor technologies have become more affordable and available in common devices, and installation and commissioning has become easier. Online training is more widespread as well.

“Components continue to move toward common interconnection protocols, allowing integration of sensors and control sub-systems from multiple manufacturers,” says Paul Lemley, executive vice president of BC Construction Group (BCCG), Brighton, Mich. “This trend will continue, with cost and risk reducing.”

Yet as it stands, much of today’s connected buildings are essentially a series of siloed smart systems that collect data on lighting, HVAC, badge readers, motor diagnostics, etc., that may be made available via a cloud-based user interface. In the next phase of industry adoption, building and occupancy data will be collected through a network of connected sensors that gives users visibility to all systems at the portfolio level.

“This means the building will no longer operate with separate smart systems, but rather an interconnected sensory system that assesses its environment as a whole,” says Evan Petridis, spokesman for the IoT-Ready Alliance™ and chief system architect at Enlighted, which provides smart energy solutions.

“Going forward, by leveraging the rapid developments of data sciences, there is an almost limitless pathway for improvements in building operations,” adds Mark Milligan, Enlighted’s vice president of product marketing. “Combining the huge amounts of data now captured by advanced IoT sensors and stored in cloud databases, with advances in machine learning and artificial intelligence, we are truly on the cusp of an IoT revolution in commercial real estate.”

Joseph Aamidor, a smart buildings consultant based in the San Francisco Bay area, agrees the technology model is poised to mature in the next five to 10 years. “I think we will see a more standardized platform and technology stack,” he says. “Some vendors will provide hardware that can integrate with everything (e.g., sensors and edge processing gateways) and other vendors will have data layers in the cloud that will enable startups to build purpose-specific applications.”

Active Sectors

So, where is the IoT transformation taking place? A few sectors have emerged as early adopters: office, manufacturing, hospitality and mission-critical facilities, with health care and education gaining ground.

Aamidor sees the most activity in offices, especially large corporations looking to tackle HVAC and lighting efficiency, occupant productivity, indoor air quality and space utilization. “If the average employee can work in 175 square feet instead of 200, that saves a huge amount of money on facility management,” he says. “Co-working enables higher space utilization, but there is a data collection component required so the firm can track how the use of space changes over time.”

Supporting this analysis, research published by MarketsandMarkets found the smart office sector “holds great potential across the building automation industry” and is expected to be worth $43.31 billion by 2020, with compound annual growth of 10.7 percent.

According to Schneider Electric, a leader in energy management and automation, data centers were very early adopters because of the need to monitor and control temperatures. Hotels top the list as well due to the need for in-room controls and maintaining energy efficiency, while schools recently have emphasized solutions for communication and safety systems.

“Additionally, we’ve had a lot of recent engagement in the food and beverage sector, including grocery stores, where temperature controls are important,” says Mike Montanari, vice president of partner projects business in Schneider Electric’s Nashville, Tenn., office. “There’s significant opportunity in this sector for companies that need to understand the status of a particular part of the food process.”

Health care facilities likely will be another bastion of prospective work, with a recent study commissioned by Schneider Electric revealing 36 percent of respondents (who represent hospitals, health systems and physician practices) have power systems built more than five years ago—before the benefits of IoT were known. Only 18 percent have invested in significant IoT-enabled technologies to manage power distribution, with budget being the main barrier to implementation. Still, more than half plan to invest in power distribution and management in the next year.

From Montanari’s perspective, upgrading a building is a great way for owners to gain IoT experience because they don’t have to wait as long to learn the ROI. “Giving them information that helps them make decisions and better their processes is what’s important,” he says. “They can try the technology in a certain area as a trial and then expand it into other applications and processes or parts of a building.”

While transforming a building from analog to digital doesn’t require ripping open walls and rewiring or rebuilding from the ground up, some clients are reluctant to implement smart building systems piecemeal unless they have a master plan to convert the entire facility over time. But IoT execution in a new building requires a coordinated effort among the owner, general contractor, trade subcontractors and specifiers.

“It takes time to get that sequence to where everyone in the value chain is operating with a similar approach,” Montanari says. “This works best in a design-build or design-assist setting.”

Adds Lemley: “Some of our clients are not interested if the payback exceeds a year in a renovation situation. They are more likely to wrap it up in the cost of a new building instead.”

What Owners Want

Like any construction project, contractors and IoT systems providers are tasked with getting to the root of what’s important to building users. Hospitals are all about the reliability of power, driving patient satisfaction, preventing shutdowns and managing assets (nurses, medical devices, etc.). In contrast, a hockey and events arena cares most about ice temperature and the potential disruption of power during concerts.

“We ask clients to walk us through a week of the building use to look for opportunities to exercise control of the systems. Understanding the types of equipment in the building, the use of spaces and the expected performance guide us to help the client understand the options for automation,” Lemley says. “They are really looking at the risk/reward equation; there has to be a return on investment."

Aamidor concurs, emphasizing that building owners want solutions to their problems or ways to run their business better—not new technology for technology’s sake. “In many cases, new technology isn’t presented with a really strong value proposition,” he says. “Owners don’t want to go to the trouble to simply have a dashboard of data, but would do it if they got a valuable outcome, such as longer equipment life or higher space utilization in an office.”

Contractors must be prepared for these types of conversations or risk being cut out of the competition. Faith Technologies, Menasha, Wis., is reimagining its role as an electrical contractor by making it a standard process to communicate to clients about the value of implementing sensors and smart systems. At this juncture, the response is mixed depending on what drives the owner’s business.

“Some look at the investment and can’t make it today. Other are asking more questions and diving into details to analyze how long it will take to earn back the investment,” says Tom Clark, executive vice president of preconstruction at Faith Technologies. “This forces us to find those answers and put those metrics together so we can help them make an educated decision.”

A decade ago, that’s not how Faith Technologies operated, but it has been gradually evolving into a solutions provider by hiring the right talent and changing the culture so employees aren’t looking at everything solely from an electrical perspective. Additionally, the company opened an Innovation Center in July 2016 with a lab space completed in October 2016.

“We needed a new building to house our engineering and preconstruction teams, so we decided to create a place where we can bring customers and business partners to collaborate, learn and test ideas that will impact our industry going forward,” Clark says. “The lab space has some of Schneider Electric’s latest connected devices that we’re using to monitor the Innovation Center."

To date, the center is consuming about 20 percent less energy as a result of adjustments made based on the power and HVAC data collected onsite. “Business in this country is driven by data and metrics,” Clark says. “Connected devices and the IoT infrastructure are giving businesses the ability to bring that data to life and make good decisions.”