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Dive brief:
- Artificial intelligence does not represent an “extinction event” for AEC companies, but fundamentally it will. change the way construction professionals streamline certain tasksaccording to a new report from global consultancy McKinsey.
- The July 15 report, “How AI is Reshaping the Future of the AEC Industry,” describes two camps of AI users: those who leverage it to automate core tasks and those who use it as a superficial productivity tool. In particular, companies that control proprietary project data, decision-making workflows and the ability to charge for results rather than work processes will see benefits, according to the report.
- “Early adopters are reporting productivity gains in design, modeling and construction feasibility workflows, although these benefits will likely soon be up for grabs,” the report says.
Diving knowledge:
In general, the consultancy advises builders to use technology to transform domains, also known as end-to-end processes. These can be redesigned independently due to their small size while delivering significant impacts to an enterprise, unlike isolated deployments, the report said.
“As the models become widely available, I think the advantage will come from those who can redesign their work, their roles, how they work, how they think about business models more quickly,” Daniel Ahmoye, a partner in McKinsey’s Calgary, Alberta office, said in an interview.
In fact, McKinsey research claims that AI has the potential to automate 39% of non-physical work in the construction industry, according to the report. This compares with 50% of the architecture and engineering sectors.
In total, the consultancy identified 150 workflows in 25 AEC-related domains with varying degrees of potential for AI and automation within the process. In particular, the company says skills like data entry, invoicing and equipment inspection will change the most by 2030.
McKinsey divided these automation goals into three time-based phases:
- In the short term, or the first 18 months, with a focus on streamlining end-to-end workflows. These tasks include bid/no-bid analysis, estimating and proposal writing functions.
- In the medium term, or 18 months to four years, where contractors take advantage of the data. These tasks include using automation to help builders leverage proprietary data, such as RFIs, drawings, specifications, and closeout reports.
- In the long term, or beyond four years, where builders can leverage AI in the workplace. These tasks include the use of autonomous construction equipment and the coordination of transport between factories, yards and the job site.
With those deadlines in mind, however, it doesn’t mean that certain tasks simply go away, Ahmoye said. Only a certain fraction of these tasks can be done by 2030, and that number shrinks when builders consider the roles people play in making them happen.
“Only certain roles can be automated, and it’s more about tasks and activities,” Ahmoye said.
While the number may seem huge and daunting, it is more of a piecemeal component of a whole set of activities.
“And what will really make a difference is how these activities are chained or combined in a way that reduces friction and creates smoother workflows throughout the lifecycle of a construction project,” added Ahmoye.
McKinsey has entered the construction industry productivity debate before, most famously with its 2017 report on the failure of the building sector to keep pace with the rest of the world. Another report shows that from 2000 to 2022, overall construction productivity improved by only 10%McKinsey experts wrote on Construction Dive.
The report also offers a word of caution for builders amid the ongoing debate over whether to build solutions or buy from software developers who provide technology and expertise for specific problems. High-profile builders such as Suffolk Construction i Turner Constructionfor example, they have entered the arena to develop their own internal tools to solve problems.
“AEC companies have historically struggled to build and scale software products, and AI is moving too quickly for most operators today to rely primarily on in-house development,” according to the report. Rather, builders should focus on their advantages that competitors or vendors cannot easily recreate, such as proprietary data or customer relationships.
To this end, a company should build where its expertise is the product. That company should also buy products where another outside source invests more than the company ever could, Ahmoye said.
“So to me, it’s not a question of what to buy or what to build. It’s more a question of, where do we see the advantage?” Ahmoye said.
Going forward, McKinsey highlighted several steps to help manufacturers prepare for AI integration. These include prioritizing three to five high-value work streams; choose where to buy, build or partner; scaling with governance and measuring what matters, according to the report.
