By Joe Chan

Bold moves in technology needed for China’s construction industry to meet future challenges

13 Mar, 2018

China is infamously linked with technology. The rapid growth of mobile technology and it’s easy to adopt autopay service via platforms such as WeChat is a prime example of this rapid digital transformation. The convenience and easy to use interface is changing the way millions of ordinary Chinese consumers carry out transactions. However, as technology is rapidly embraced socially in China, is the construction industry as willing to follow suit?

Success in China has largely come from a plan. And with the Chinese government outlining its ambition to manage its growth in population by developing into urban areas, all eyes will be on China to see how well they will adopt, manage and grow with technology, and more importantly overcome digital disruption.

The plan to extend into urban areas was outlined in the 13th Five-Year Plan (FYP), which heavily focuses on green infrastructure technology and sustainable construction policies. This plan should serve as a call to action for the Chinese construction industry to consider bold and creative solutions to the issues affecting our sector in a new era of technological disruption. And, we need to move fast: the 2015 McKinsey Global Institute Industry Digitization Index suggested the construction industry is a laggard compared with other sectors embracing digitalization, noting that our industry’s spending on IT accounts for less than 1% of revenues.

It’s not as though the technology isn’t here. In areas ranging from computer-aided design, to the development of new construction materials and the use of augmented reality: innovations at our disposal have the potential to change the industry as we know it – and for the better, with real business benefits.

The outlook for China’s construction industry is positive. It is the world’s largest construction market and has undergone continuous growth since 2015, with 2016 experiencing up to 17% growth in industry value. However, the focus is changing as the Government encourages a shift away from heavy industry to higher value sectors and the adoption of more information intensive infrastructures to help move up the value chain. Meanwhile, the One Belt One Road initiative should accelerate the development of transport and infrastructure projects in China’s overseas markets.

At Arcadis we believe that investment in technology and initiatives that increase productivity are essential in order to meet challenges in the coming years, including a shortage of both labour and expertise and a pressing need to address cost. As our annual surveys show, China isn’t the most expensive country in Asia for construction, but if digital transformation is to take place, it will be faced with the challenge of upskilling, recruiting and training an ageing workforce.

So how can the construction industry in China respond and move past its legacy way of doing business?

The potential of design software technology to manage construction workflows has gained the most traction in the industry, with many feeling that Building Information Modeling (BIM), which replaces traditional hardcopy blueprints with 3D computer modelling and real-time data collection, will change the way we work forever. The effect of having an integrated platform that spans project planning, design, construction, operations and maintenance will reduce a project’s lifecycle costs by almost 20% and substantially improve completion times, quality and, importantly, safety.

Additionally, the Chinese government has made significant efforts to drive down the total number of work place injuries. In 2016 there was a recorded drop of 18.2 percent in fatalities in 2,174 recorded occupational safety accidents, but still significantly high. The adoption of technology can also address how we hold ourselves to account, and this is no different with China. The use of drones to access remote or dangerous areas will reduce the risk of accidents while wearable technology can monitor the exact locations of workers, with alarms sounded if they get too close to dangerous equipment.

If adopted widely, digitizing could potentially save the global construction industry US$1.2 trillion every year. Nonetheless, some companies still argue that the upfront investment required to implement new digital processes is not justified by the potential benefits. However, if the businesses of China need persuading of the benefits, they don’t need to look much further than the Shanghai Tower where the adoption of BIM throughout its processes enabled productivity enhancement and cost-savings through a reduction in the amount of onsite reworking - a lesson for the rest of the industry.

The other reality is that technology is not just a common understanding. It requires a standardization and changing of working culture, processes and procedures not just within the contracting entity, but throughout the whole supply chain. This again will call for additional training, process alignment and investment.

The benefits are clear, but will come at a price: companies that embrace digitalization can enjoy more streamlined, profitable and safer ways of working. The given is that it’s no longer a matter of being ahead of the game, or simply the smart thing to do. It’s now essential.

Arcadis is the leading global Design & Consultancy firm for natural and built assets. Applying our deep market sector insights and collective design, consultancy, engineering, project and management services we work in partnership with our clients to deliver exceptional and sustainable outcomes throughout the lifecycle of their natural and built assets. We have more than 5000 professionals distributed in 50 offices in Asia and enjoy a successful history dating back more than 80 years. We support UN-Habitat with knowledge and expertise to improve the quality of life in rapidly growing cities around the world.

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Joe Chan

Head of China East +86 21 6026 1552 Ask me a question