top of page

Technology and Industry Development

Construction Industry Development

While the idea of technological disruption is now widely known, and with it the division of the economy into sunrise and sunset industries, the idea of a technological trajectory, or direction of development, is also important. Over time industries and products evolve and develop as their underlying knowledge base and technological capabilities increase. The starting point for a cycle of development is typically a new invention, something that is significant enough to lead to fundamental changes in demand (type and number of buildings), design (opportunities materials offer), or delivery (project management). This sort of invention gives a ‘technological shock’ to an existing system of production, and leads to a transition period where the firms involved have to adjust to a new business environment, which in turn usually leads to a restructuring and consolidation of the industry. General purpose technologies like steam, electricity or the internal combustion engine are rare, creating new industries and restructuring mature ones. Intelligent machines and artificial intelligence (AI) are a new general purpose technology, as were computers 60 years ago. Agarwal et al. (2016) look at AI in construction.

Major new technologies take time to diffuse through the economy because they require parallel changes in forms of organisation, methods of production and patterns of consumption. These are the three dimensions of development in an industry, shown in Table 1. Investment in upgrading machinery and equipment happens as cost/performance payoffs improve and old assets get replaced. New technologies are ‘embodied’ in new physical capital, in the way an old car incorporates the technology of two decades ago, when it was made. Digital platforms evolve much faster than physical assets.

There is a relationship between technological change, conceptual thinking and organisational form. The driver of these changes is technology, or more precisely new technology that fundamentally

changes existing industry practices and delivers a shock to the existing system. In the second half of the 19th century, with the advent of iron-framed and reinforced concrete buildings, the construction industry had to not only master the use of these new materials but also develop the project management skills the new technology required. The effects of technological change on industry structure and performance might plausibly again be in the same key areas as the organisation of projects and the mechanisation of processes, but in the twenty-first century these effects will be heightened and quickened by the network effects associated with digital platforms and artificial intelligence.

Construction Technology Developments

The Shaping the Future of Construction report (WEF/BCG 2016), which is now two years old, included many snapshots of what a range of firms at the technological frontier were doing, shown in Table 2 below. Based on these examples, the level of technology used in construction, compared to advanced manufacturing techniques in 2016, is well behind. Companies in the aerospace or automotive industries have developed their automated factories, integration capabilities and use of new materials like carbon fibre. Adidas makes 300 million shoes a year and in 2017 opened a fully automated factory in Germany. There are many examples. The lag is primarily due to the dynamic of a project-based industry, where it is hard for contractors and consultants to spread costs incurred with innovation across projects. Consequently, the manufacturers and suppliers of building and construction products, machinery and equipment do most of the research and innovation because they, like car companies, can spread the development costs over many clients. The role of contractors is to seek efficiencies in delivery, as the examples above show. What these examples also show is that the gap between the industry’s larger, leading edge firms and SMEs is growing, and can be expected to increase because the great majority of smaller firms cannot innovate as fast or as effectively as larger firms.

Some firms are rethinking their processes in response to developments in AI, robotics and automation as capabilities quickly improve and the range of new products using these technologies expands. Many firms, however, are not. Firms at the technological frontier of building and construction are exploring these new technologies and pushing the boundaries of what is possible, and are inventing new processes. These frontier firms range from multinationals to start-ups, and have been identified as the high-growth and high productivity firms that drive industry development (Andrews et al. 2015).

There are many different firms in the construction industry, and many big firms have clearly developed technological areas of expertise that they build their business around, such as tunnelling, or remote sites or bridge building. Chinese firms like Win Sun (3D printed concrete components) and Broad Group (prefab high rise) call themselves technology companies not construction companies. American company Katerra has its own factories producing modular components from engineered wood for its projects, which it designs, fabricates and builds, going back to the integrated model of nineteenth century general contractors. Sekisui in Japan and Ikea in Europe specialise in modular housing. Skanska and Laing O’Rourke have invested in prefabrication plants. New business models are emerging as the capabilities and possibilities of digital construction are realised.

In the foreseeable near future breakthroughs are possible in digital mapping and surveying and 5D BIM, production process automation, advanced analytics, and the Internet of Things. Continued progress in molecular engineering and high performance materials, 3D printing, real-time site data, communications, advanced robotics, roller press printing of smart materials and fabrics, and many more technologies, will feed into the construction industry over coming decades. Mining and agriculture are closely related industries where technologies like drones and on-site 3D printing, autonomous and remotely controlled heavy equipment and machines are now being rolled out. Many of the technologies developed for those industries will be adaptable for use in building and construction.

An example of these spillovers is data visualization, likely to be the entry point to construction for artificial intelligence. Autodesk and others are also using virtual reality and augmented reality to overlay digital models with real-world views. Another construction software giant, US corporation Trimble, is collaborating with Microsoft to use Hololens with the aim of “transforming how architects, engineers, contractors and owners work”. The Daqri smart helmet also uses Hololens, linking the 3D BIM model with the wearer on-site.

A period of technology-driven restructuring of the building and construction industry may be about to start, similar to the second half of the 1800s when the new materials of glass, steel and reinforced concrete arrived, which led in turn to new methods of production, organisation and management. Predicting those outcomes in 1850 would have been extremely unlikely, and very difficult. The role of policy as facilitator is provide opportunities for such new methods of production, organisation and management to be tested and trialled on demonstration projects.

Agarwal, R., Chandrasekaran, S. and Sridhar, S. 2016. Artificial Intelligence: Construction Technology’s Next Frontier, McKinsey & Co.
Andrews, D., Criscuolo, C. and Gal, P. N. 2015. Frontier Firms, Technology Diffusion and Public Policy: Micro Evidence from OECD Countries, OECD Productivity Working Papers, 2015-02, OECD Publishing, Paris.
WEF/BCG, 2016. Shaping the Future of Construction: A Breakthrough in Mindset and Technology, World Economic Forum and the Boston Consulting Group, Geneva.
10 views0 comments

About the Blog

This blog is concerned with the organisation of the building and construction industry, in the economic sense of combining factors of production to create output.


The modern industry's origins in the 19th century can still be seen in many of its characteristic features, and many contemporary issues are also found in projects from the past.


Like many industries, it is being reshaped by unprecedented rapid and widespread advances in materials, technology and capability.

Email List Signup

Recent Posts

bottom of page