Scenarios have the power to anticipate potential systemic transformations, enable the necessary strategic dialogue between key stakeholders, to analyse change and as a consequence unlock novel and visionary approaches. According to the OECD “The goal in using scenarios is to reveal the dynamics of change and use these insights to reach sustainable solutions to the challenges at hand. Scenarios help stakeholders break through communication barriers and see how current and alternative development paths might affect the future. The ability to illuminate issues and break impasses makes them extremely effective in opening new horizons, strengthening leadership, and enabling strategic decisions.”
In the context of the World Economic Forum’s Shaping the Future of Construction initiative, we were able to develop scenarios of how the global social and economic context could look like in the future and then determine the implications on the infrastructure and construction industry drawing the strategic implications for the sector’s key stakeholders.
Please find the latest World Economic Forum report Shaping the Future of Construction: Future Scenarios and Implications here
Figure 1: Potential scenarios impacting the industry: The World Economic Forum and more than 30 leading companies from the construction sector created three future scenarios to prepare the industry for a broad range of possible futures: (a) Building in a virtual world. Artificial intelligence (AI), software systems and autonomous construction equipment replace most manual work throughout the engineering and construction value chain. (b) Factories run the world. Construction activities move largely to factories and the industry uses lean principles and advanced manufacturing processes to pre-fabricate modules that are later assembled on-site. (c) A green reboot. The construction industry uses sustainable technologies and new materials to meet tough environmental regulations; Image: Future of Construction, World Economic Forum, Boston Consulting Group
The initiative created several scenarios of how the industry could look in the future based on global trends (Figure 1). These scenarios clearly show that existing capabilities, business models and strategies will not be sufficient to succeed. The scenarios also pinpoint several common no-regret moves that companies should take to remain relevant. Our key conclusion of applying scenarios is that businesses must act now to circumvent future disruption. Dramatic changes on the horizon indicate an uncertain future for the industry and its more than 100 million employees worldwide. Many proposed actions relate only to a particular scenario, but the following actions will be relevant in any possible future:
- Attract new talent and build up required skills– as any future scenario requires talent with substantially different skills than today’s workforce possesses, and adequate upskilling processes are largely not in place.
- Integrate and collaborate across the construction industry’s value chain– as the construction industry is characterized by a disintegrated and highly fragmented value chain, which hampers the seamless data flows and integrated systems that are essential in any future scenario.
- Adopt advanced technologies at scale– as the construction industry has been slow to adopt new technologies and still heavily relies on manual labour and mechanical technologies, resulting in poor productivity.
- Maximize the use of data and digital models throughout processes – to review existing practices and infrastructure asset portfolios and embrace new business opportunities; and to enable change-management and adaptiveness.
Our derived transformation imperatives could help key players of any system to prepare for a more prosperous future. Our takeaways will encourage decision-makers to think strategically about the future and take preparatory steps sooner rather than later. The myriad potential changes in the industry leads to high ambiguity and makes it impossible to predict the future. However, with scenario planning, involved stakeholders can prepare for a variety of possible futures.
Over the past decade, digital technologies have transformed whole industries, ushering in the Fourth Industrial Revolution. Social media platforms and on-demand streaming services from start-ups such as Facebook, Spotify and Netflix have transformed media and entertainment. E-commerce giants like Amazon and Alibaba have disrupted brick-and-mortar retailers. Digital-based mobility companies are challenging old-line automakers. The new technologies did not just satisfy consumer demands for better entertainment, shopping and transport. In those industries and others, innovations improved companies’ productivity and sustainability and reshaped the skills and competencies needed to thrive.
During the same period, however, the construction industry has continued operating as it has for the past 50 years, with a heavy reliance on manual labour, mechanical technology and established operating and business models. Productivity has stagnated as a result.
Figure 2: Top 10 disruptive technologies in infrastructure and construction; Image: Future of Construction, World Economic Forum, Boston Consulting Group
Only recently, digital technologies started gradually entering the construction industry, changing how infrastructure, real estate and other built assets are designed, constructed, operated and maintained. Those technologies (Figure 2) including building information modeling (BIM), prefabrication, wireless sensors, automated and robotic equipment, and 3D-printing, are affecting the entire industry. The economic and social impact could be substantial, as the construction industry accounts for 6% of global GDP. According to our estimates, within a decade, full-scale digitization could help the industry escape its decades-long lack of productivity progress and generate an estimated 12 to 20%, equal to between $1 trillion and $1.7 trillion in annual cost savings.
In parallel, global megatrends (Figure 3) should motivate businesses to rethink industry practices that have not advanced over the years. Rapid urbanization, with more than 200,000 people per day relocating from rural areas into cities, climate change, resource depletion, and the widening talent gap are but a few of the most powerful of these trends. Shaping the Future of Construction: Future Scenarios and Implications report is the first of its kind to integrate consideration of the new technologies and trends into consistent scenarios of the future. Although all three scenarios, outlined in the report, are extreme, they are plausible.
Figure 3: Megatrends create imperative for change in the sector; Image: Future of Construction, World Economic Forum, Boston Consulting Group
While the report indicates that it remains unclear which scenario or scenarios will unfold, there is little doubt that the real future will include elements of all three. According to Michael Burke, Chairman and CEO at AECOM and co-chair of the World Economic Forum Infrastructure and Urban Development community, “current business models, strategies, and capabilities will not be sufficient in any of these future worlds. This underscores that players along the construction value chain need to prepare strategically to thrive in the face of anticipated disruption.”
The report states that 74% of the industry’s CEOs who attended this year’s annual meeting of the World Economic Forum in Davos reported that they considered attracting new talent and improving the skills of the existing workforce to be among the top three actions for keeping pace with upcoming disruptions. The other two priorities they named were improving integration and collaboration along the value chain (65%) and adopting advanced technologies at scale (61%).
Luis Castilla, CEO of Acciona Infrastructure and champion of the World Economic Forum Future of Construction initiative highlights that “The construction industry’s decision makers should understand the disruption outlined in the future scenarios as a wake-up call and use the identified key actions as a foundation for companies in the construction industry to prepare and shape a prosperous future that will allow the industry to fulfil its role in promoting economic growth, social progress, and environmental responsibility.”
The new report follows two earlier reports from the World Economic Forum Future of Construction initiative published during the last year.
Find earlier reports at:
Shaping the Future of Construction: An Action Plan to Solve the Industry’s Talent Gap