Trimble is a global technology company that connects the physical and digital worlds, transforming the ways work gets done. With relentless innovation in precise positioning, modeling and data analytics, Trimble enables essential industries including construction, geospatial and transportation. Whether it's helping customers build and maintain infrastructure, design and construct buildings, optimize global supply chains or map the world, Trimble is at the forefront, driving productivity and progress.
We tried to combine the products in your guest cart with your saved cart, but we encountered an issue while merging them. When choosing a subscription, please select either monthly or yearly as they cannot be combined. Kindly review your cart before proceeding to checkout.
The software you are trying to purchase is not available in your country or region.
Your currency has been changed to match the currency associated with your account address.
Your cart has been updated for two reasons. First, the prices now reflect the currency associated with your account address. Second, you've added too many of one item to your cart. Please review your cart before proceeding.
While combining the products in your guest cart with your saved cart, at least one item in your cart has exceeded the maximum allowable quantity. Please review and correct your cart before proceeding to checkout.
We were unable to access your account information. Please contact customer support for assistance.
McKinsey published a standout report in June 2020 that's worth reading, called The Next Normal in Construction: How Disruption is Reshaping the World's Largest Ecosystem. It's comprehensive, with 90 data-packed pages, but we recommend setting aside some time to digest it because it offers some powerful insights into the future of construction that you need to understand.
Much of the data McKinsey publishes was collected through a survey prior to the emergence of the COVID-19 pandemic and its unprecedented impact on our industry. But, with months to analyze and recalibrate, indications are that the extended, short-term ramifications of the pandemic will only serve to accelerate the trends that the survey data brings to light.
The heart of the report involves seven key disruptors impacting the construction industry and nine trends for the future that those disruptions have set in motion. While your company may not yet be seeing the seven disruptive influences impacting your local market, they are definitely coming.
Therefore, the smart thing to do is to view the list of trends as a loose roadmap for future planning and investment. As the McKinsey report notes, "Refusing to adapt to this upheaval will only worsen performance, while developing new operating and business models could enable companies to generate more value and profits. New features will combine to erect higher barriers to entry, which will be positive for companies that manage to strengthen their market position and invest."
The construction industry was already experiencing an unprecedented rate of disruption before the COVID-19 pandemic changed everything in the early 2020s. In the coming years, changes in market characteristics and emerging disruptions will continue to drive changes in the way we do business and how construction is accomplished. . The COVID-19 crisis will not delay these changes, but amplify them.
The following characteristics of the evolving market will challenge construction companies to accept the increased need for change and act quickly to implement the necessary changes.
1. Growing customer sophistication and TCO
McKinsey survey responses on the effect of total cost of ownership on the construction industry
With a significant increase in investment from private equity firms and institutional investors, the level of client sophistication is increasing dramatically. In 2019 alone, these sources raised over $100 billion in infrastructure investment, a 24% increase over 2018. The disruption stems from the fact that these clients have very different expectations in terms of delivery times, budget and the level of commitment they receive from their construction firms.
Smart building technologies, energy and operational efficiency, and flexibility of built structures are much higher priorities for this smarter customer, as total cost of ownership (TCO) begins to take precedence over choosing the lowest initial investment. Survey results indicate that 90 percent of respondents believe the shift toward TCO will affect their day-to-day operations in the next 10 years.
2. Shortage of skilled labor and changes in logistics
Labor shortages have long been a challenge for construction companies, and more than half of respondents expect them to worsen over the next 20 years. About 41 percent of the current U.S. construction workforce is likely to retire by 2031, although it is currently unclear whether the consequences of the pandemic will affect those numbers.
3. Updated regulations for safety, sustainability and building code standardization
Regulations on the use of more sustainable building materials and processes are constantly being updated and often become more stringent over time. And they vary widely by location. McKinsey survey responses on the effect of changing regulations on the construction industry 90 percent of respondents see these regulations affecting their work in the next decade, while nearly ⅕ of respondents expect to see an impact much sooner, perhaps in 2021.
At the same time, health and safety standards are also evolving. During the COVID-19 pandemic, the need for social distancing and adequate safety equipment and supplies has required some significant changes in the amount of equipment operating, and there is additional cost. In all likelihood, many of these requirements will remain after the current pandemic has passed.
4. Widespread industrialization
The movement toward an off-site, product-based construction approach has been occurring for years. However, the more controlled factory environment of off-site facilities has proven to be much more manageable during the pandemic, highlighting many of the benefits of prefabrication. As a result, many construction companies are investing in their own off-site manufacturing facilities or long-term contracts with established factories. For example, 40 percent of UK homebuilders confirmed their current or planned future investment in proprietary manufacturing facilities in 2018.
In the future, continued advances in automation, machine learning and artificial intelligence will continue to improve the quality and efficiency of these facilities. Robotic automation, drone technology and robotic imaging technologies will also have an impact on cost control and efficiency in the workplace in the coming years.
Prefabricated mechanical assemblies with the Trimble XR10 mixed reality helmet.
5. New materials developmentOne of the key improvements in building materials in recent years includes lightweight materials such as light-gauge steel framing, cross-laminated timber and ethylene tetrafluoroethylene (ETFE), a glass alternative that is 99 percent lighter and stronger, as well as being more environmentally friendly, more flexible, and better and light-transmissive. All of these lighter and stronger materials will have an impact on cost, as well as on the logistics of transporting materials to a site.
6. Digitization of products and processes
The widespread impact of the digital revolution on construction can be summarized in four main categories:
Smart products and operations: by integrating smart components and sensors with the Internet of Things (IoT), buildings can become highly automated and operations data-driven. Combined with advanced building information management (BIM), this can greatly reduce operational and maintenance costs over time. the digital twin of construction.
Design: State-of-the-art BIM technology allows a complete "digital twin" of a structure to be created before construction begins. With full reliance on this technology, designs can be integrated into the rest of the value chain, optimizing the entire construction process.
Construction and production processes: Through the use of advanced digital technology, on-site collaboration is greatly improved, reducing costly rework and improving efficiency at every stage of construction. These improvements can be seen in the actual construction process, as well as in peripheral activities such as job site security and access control, asset management, and workforce management.
Channels: online marketplaces, which have experienced incredible growth over the past two years, can transform interactions to buy and sell products across the value chain, disrupt distribution and reshape construction logistics. About 40 percent of venture capital invested in online marketplaces since 2018 went to construction-based startups.
7. New entrants in the construction industry
Finally, the emergence of new entrants into the industry is bound to disrupt the status quo. For example, Katerra raised $1.2 billion for a business model that controls the value chain, including design, engineering and outsourced manufacturing. Who will be the next Katerra? No one knows.
In addition, the economic fallout from COVID-19 is likely to result in a wave of corporate restructuring and merger/acquisition activity over the next year or two. That will also create new entrants into the industry that you'll want to keep a close eye on.
As noted in the introduction, these industry trends are supported by significant data and analysis. Ignoring them can be detrimental to your company's continued success and relevance in the industry and, more importantly, in your local market.
Action Item: While it may not be practical to attack all of these areas at once, we recommend analyzing your current situation through this lens, then mapping out a prioritized list of actions you can take over the next year or two that will put you in a better position to weather the changes ahead and optimize your responses.
Trend #1: A product-based approach
In the future, it will be increasingly important to incorporate modular designs and offsite prefabrication into the design and construction workflow. As automation technology and supporting regulations evolve, greater efficiencies will drive higher customer expectations. Highly repeatable processes and consistent quality control will prevail, with a balance between standardized modular components and custom-designed facets of the finished product.
Digital technologies are absolutely essential to this new reality, with the company owning the digital model at the helm, able to price products based on TCO rather than the common cost-plus approach used today.
Trend #2: Specialization
Unlike the general contractor/subcontractor model that has governed the industry for decades, a new paradigm will come to the construction industry as companies improve margin and differentiation levels by establishing specialties in niche projects where they can generate a competitive advantage. This may be specific project types (such as hospitals or manufacturing facilities) or in the use of specific materials or construction methods.
Recruitment and retention of qualified personnel obviously plays an important role in the successful transition to a specialized business model.
Trend #3: Control of the value chain
The future of construction will look more like standard manufacturing (see "a product-based approach" above) in that construction companies will look to control more of the value and supply chains to control costs, create efficiencies and deliver value to their customers. This may involve vertical integration (owning prefabricated facilities and on-site installation) or strategic partnerships with established suppliers that can offer fast, reliable and cost-effective services as needed.
Adopting the latest BIM technology can greatly enhance a company's success in this area, as the entire construction process can be unified in a 5D BIM model.
Examples of 2D, 3D, 4D and 5D BIM-based workflows in Trimble's Vico Office software.
Trend #4: Consolidation
Many of the trends discussed above naturally lead to increased consolidation and economies of scale. For small construction companies, the best option for future success may be to court larger competitors in preparation for a strategic acquisition or merger. For larger companies, keeping an eye out for smaller players filling crucial gaps in their strategic playbook could mean the difference between success and failure in the next reality.
Trend #5: Customer orientation and branding
Having a strong company brand and an exceptional customer experience may be the deciding factor in whether or not your company will attract the attention of broader acquisition interest, or whether smaller companies will want to become part of your organization. As specialization and consolidation drive the evolution of the construction industry, companies that ignored their own brand are likely to be left behind.
Trend #6: Investment in technology and facilities
Across the value chain, the evolution of digital technology is inevitable. The COVID-19 crisis has accelerated what was already a foregone conclusion among construction technology experts: the future of construction lies in digital tools that improve all aspects of the construction workflow.
From BIM to automated prefabrication, augmented reality to drone-driven scanning technology, every tool you acquire that improves quality, efficiency and collaboration will translate into higher profits and productivity in the "new normal."
Trend #7: Investment in human resources
As you digest all of the above trends, it will likely become clear how vital it is to find and maintain qualified personnel who can support the recommended strategies. For example, moving from a generalized business model to a specialized one would require experts at all levels within that specialty. Similarly, adopting digital technologies to support future growth will require a staff you can rely on to make the most of those tools in the new environment you are preparing to master.
In many cases, attracting the right talent will require thinking outside the standard "box" that most construction companies have used when looking for skilled labor. In many cases, the key members of your future team may be computer programmers and data scientists rather than carpenters or masons.
Trend #8: internationalization
The combination of increased standardization and scaling through mergers and acquisitions will remove many of the barriers that currently prevent smaller construction companies from bidding on jobs outside their home country. As companies develop specialized brands and processes, it will become easier to bid on projects that would currently appear unprofitable. But, only if your company is prepared to handle the complexities of cross-border business.
Unlike many of the trends listed here, the economic impact of the COVID-19 pandemic may well delay the emergence of this trend.
Trend #9: Sustainability
building and construction account for 39 percent of global carbon emissions. As time goes on, the issue of climate change will continue to escalate as a driving force behind construction decisions. Businesses will need to consider the environmental impact of materials sourcing, manufacturing and supply chains, as well as resilience. Safety and sustainable practices in the workplace will also influence necessary changes, along with water consumption, dust, noise and waste.
what should I do now?
According to an additional McKinsey survey conducted in light of the Covid-19 outbreak, about two-thirds of respondents expect impending industry change and transformation to accelerate as a result of the pandemic. Fifty-three percent of respondents have also begun to invest more to adapt to the "new normal" they see coming.
are you among the construction companies riding the wave towards a successful "new normal"?
