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A recent IFS study found many construction and engineering companies are reimagining their business models to ensure a secure future, using the pandemic-induced lull in business to prepare themselves to get back to operations on a strong footing.

The research shows 70% of businesses have increased or maintained digital transformation spend, despite the COVID-19 pandemic. In the infrastructure, engineering and construction sectors the figure is more than 75%.

There are many challenges the industry will face in the new year following the unpredictability of 2020, but there are also many opportunities. Despite the uncertainties that lay ahead, here are the few trends predicted to impact the sector 2021 and beyond.

1. As total asset lifecycle responsibility becomes the builder’s prerogative, service evolves

Due to the disruption of 2020, the construction industry is intensifying its focus on securing stable and robust revenue streams. This focus has led many companies to transition from traditional construction companies to asset lifecycle service providers, capable of providing facilities management, through-life service and maintenance to clients.

A major implication of this fundamental shift is an increased emphasis on total lifecycle cost instead of the traditional one-time-only build cost, requiring a profound focus change among those companies building the assets. As a result, construction companies will be increasingly expected to assume a lifetime service responsibility for each asset they build, and therefore will need to focus on asset quality, longevity and ease of maintenance. To put it in simpler terms, now that the construction company has to take care of the asset and it is their problem, the company will need to be designed for swift and easy repair and maintenance.

As customers become increasingly interested in the purchase of outcomes instead of brick-and-mortar assets—an example being hospital beds as opposed to the buildings they are contained in—construction organizations will need to become accustomed to providing a comprehensive service offering.

Currently, the majority of construction and engineering stakeholders are doing business through two separate contracts—one to build and one for service. However, in 2021, there will be a clear rise in the number of construction companies transitioning to a single contract that spans the entire asset lifecycle while regulating its output or availability.

Even with the most competent staff in place to attempt this transformation, the impact on construction business models will be profound, as they will need to extend their planning horizons significantly to ensure long-term profitability. It is likely most construction companies will face an initial struggle to establish best practice in service processes that will ensure delivery of new-to-them concepts, including service-level agreements, customer engagement, and field service scheduling and optimization. One-way companies can solve this issue is to look at enterprise software, designed to power the transformational journey from construction-only to through-life service provision.

2. Standardization of processes and materials driven by offsite construction practices

Compared to the past, where contractors constructed a building using materials that had been shipped to a site, offsite construction, also known as prefabrication, is a trend that has been steadily increasing. As part of the trend, many companies are moving the actual construction to factory-like, indoor environments where contractors and tradespeople can build modules or components to be shipped to and assembled on site.

The large majority of traditional construction companies admit to having very little experience in working with elements such as inventory and parts numbers. As construction companies are tasked with managing increasingly complex logistics for each build, a significant rise in companies focusing on implementing supply chain management best practices will emerge. That said, the supply chain-centric work processes of a company such as Amazon will not reflect the current reality of their businesses. Yet, it is this vocabulary construction companies will need to learn swiftly to effectively and profitably manage the logistics challenge of getting hundreds or, in some cases, even thousands of prefabricated components to one or more construction sites—in the right order and at the right time.

Companies will increasingly turn to a manufacturing ethos as the idea of building standardized components with serialized part numbers that can be used in multiple projects instead of expensive, customized solutions, becomes normalized. This will coincide with an acceleration in investments in the construction industry toward business software capable of imposing order on a supply chain-driven transformation that would otherwise spiral out of control.

To put it another way, 2021 will be a year when the inevitable rise of offsite construction encourages traditional construction companies to develop and get control of the urgent need for standardization, in terms of both work processes and materials.

3. As the early bird moves to 6D, 5D reaches maturity

By this point in time, many of those with an interest in the construction and engineering sector know what BIM is and what its major benefits are. As a standalone technology for 3D design, it has had a major impact on the development and building of complex assets. A large number of stakeholders in the industry are, at the moment, talking about 4D BIM, which can take the time and scheduling aspects into account, giving companies a video simulation of how and in what order an asset should be constructed.

However, what is a relatively new concept is the combination of BIM with enterprise resource planning (ERP) software, which is arguably where the most crucial business data is stored. This lack of sophistication is odd, especially given the vast potential that exists in connecting the two—known as 5D BIM.

As the fifth dimension is money, I predict the challenges of 2020 will provide added financial incentive for those companies seeking to bridge the gap between BIM and ERP. The big question many construction companies will begin asking is how they take a BIM model and turn it into a cost estimate and then track the actual costs back to the BIM objects.

Today, in a move that is edging out the traditional bill of quantities, companies are being asked to bid against a BIM model, a cumbersome process that normally incorporates a myriad of manual calculations and measurements. In 2021, as 5D BIM comes into its own, construction companies will begin to demand automated tools for transferring BIM models directly into the estimate module of their ERP software. What will be needed, and what companies will expect, are standard integrations that will enable a free flow of data among different systems, which will facilitate bid teams as they sort and structure data by type of component, separate them into packages of work and automatically price each package.

Fast acting companies that are already implementing, or trialing, 5D BIM/ERP integrations will use their lead to begin investigating the sixth dimension of BIM: maintenance. At this stage in the maturity cycle, the visualization element of BIM takes a backseat to the free flow of information throughout the asset’s lifecycle—from design to build to maintenance. While it is still a few years away, expect a rapid progression to 5D and 6D BIM.

Above and beyond

Even during its most favorable market conditions, construction is a demanding sector where complex networks of projects and project delivery must be navigated effectively. One of the best ways to ensure business value and resilience is the strategic investment in industry-specific technology.

Despite vast unpredictability, there will be plenty of opportunities in the construction, engineering, and infrastructure sectors in the year ahead. However, capitalizing on such opportunities will necessitate strategic fortitude and a clear vision of how technology could, and should, evolve into new and more intelligent forms of working.

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