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Construction and technology: Risk considerations

Technology uptake is on the increase in construction. How should contractors and developers evaluate risks for their projects?
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By Andy Desmond , 

Marsh UK Industries - Construction Industry Leader

28/03/2023 · 10 minute read

Digital processes are transforming construction and introducing new risk considerations. The question is, how should these risks be handled?

As the digital age gains momentum, technology is at the forefront of CEOs’ minds. Indeed, Marsh’s Head of Climate & Sustainability Strategy, Amy Barnes, recently wrote about The risks and rewards of frontier technology.

In 2016, the Farmer Review warned the UK construction industry it would have to “modernise or die”. The 80-page report, written by industry veteran Mark Farmer and commissioned by the UK Government, noted that research and development within the industry was almost non-existent, productivity was low, and cost inflation high. This situation was mirrored in many countries around the world.

In order to modernise and move into the 21st century, the industry has accelerated its uptake of new technologies, including robotics, machine learning and automated planning decisions through digital design.  Onsite, hard-hat sensors and driverless vehicles are coming into use, while digital aids such as artificial intelligence (AI), and building information modelling (BIM) are used throughout the duration of a project.

Top tech risks for construction companies

The adoption of new technology can create a wealth of opportunities for construction companies, including improvements in management, information, speed, accuracy, accountability, costs and reduced risk, but it can also bring new risk.

New technology often has a cyber element and one of the biggest risks is cyber breaches. It’s estimated that cybercrime costs the UK industry £27 billion a year. Construction output in the UK is more than £110 billion per annum and contributes 7% of GDP, making it a very attractive, wealthy industry to target. As relatively new adoptees to sophisticated technology, construction companies risk leaving themselves at the mercy of a wide range of players, from nefarious state actors intent on disruption or wishing to steal information, to hackers who want to profit by the placement of ransomware and siegeware. Understanding vulnerabilities and installing and maintaining cyber risk protection is imperative.

New technology can be pricey. As well as the initial outlay, continuous investment is required to keep it up to date. If the company providing equipment becomes insolvent, and the tech stops functioning or goes out of date, companies could be left with redundant, often expensive, equipment that they can no longer use. Firms are advised to do their own diligence, for example, making sure their tech suppliers have enough working capital to stay in business for the next two years, as opposed to being a start-up that relies on winning new business to keep going.

Another risk arises out of tech choices. If a contractor’s equipment is incompatible with that of its suppliers or sub contractors, this could create operational issues. Many tech companies make their products incompatible with others. The technical term for products that are compatible with those from other vendors is ‘interoperability’. Digital interoperability is a technical mechanism for computing systems to work together, even if they are from competing firms. In economics this is called a ‘network effect’ and overcoming network effects by breaking people free from a so-called hostage situation is difficult without effective legislation.

New technologies being considered by construction companies

Projects procured by the UK Government now require the use of BIM, which offers a central point of building reference in a 3D digital model. BIM software creates a collaborative design and build process that visualises the physical and functional aspects of a building. BIM enables real-time collaboration on a single platform, and is important to contractors of large projects, for both a visual and quantitative model of the build. It is also useful for materials ordering and scheduling. Taking BIM a step further is the digital twin, which creates a digital replica of a finished, functional building.

AI is also taking its place as an important element of a build; it is being used to plan the routing of electrical and plumbing systems in modern buildings. Companies are also using AI to develop safety systems for worksites. AI is being used to track the real-time interactions of workers, machinery, and objects on a site, and to alert supervisors of potential safety issues, construction errors, and productivity issues. It will alter business models in the construction industry, reduce expensive errors, reduce worksite injuries, and make building operations more efficient.

An acronym of ‘light direction and ranging’, LiDAR technology uses the pulse from a laser to collect measurements that are used to create 3D models and maps of objects and environments. The technology measures distances by illuminating the target with laser light and measuring the reflection with a sensor that can be mounted on a range of construction site equipment. The construction industry is increasingly adopting LiDAR surveys, using them to track building projects and produce digital twins for BIM applications. It can also help produce 3D models for the conditional monitoring of structures.

Wearable technology continues to grow in popularity on construction sites, with enhanced safety being one of its benefits. About 59,000 construction workers in the UK sustain a non-fatal injury at work every year, according to the Health and Safety Executive. Connected hard hats improve safety by integrating internet of things (IoT) wireless connectivity with power management technologies, allowing workers’ location, motion, and temperature to be monitored. Use of the technology can warn that a worker might be light-headed or overheated. It can also perceive if a worker has fallen and trigger a call to first responders.

Imagine a world where buildings could “talk”. Smart infrastructure is the outcome of connecting physical infrastructure with digital infrastructure, such as IoT, machine learning, and BIM. It provides improved information to enable better decision making that is faster and less expensive. With smart infrastructure, companies are shaping an ecosystem that connects the real world with the digital world. Making decisions based on data and analytics empowers companies to make their energy systems and processes more efficient and sustainable.

VR and AR have moved beyond the worlds of gaming and entertainment, and are becoming a valuable part of the construction process. VR refers to a simulated environment in which an interactive computer-generated user experience can take place. It typically uses VR headsets or multi-projected environments, as a means of generating images, sounds, and sensations that can simulate a real environment. VR technology allows for the building of 3D models that contain information about the future building and provide an immersive walking around of that building. Thus, clients have an opportunity to view a clear picture of their projects.

AR is a live direct or indirect view of a physical, real-world environment where elements have been augmented (or supplemented) by virtual computer-generated input, such as sound, video, graphics, or information. It is a blend of the real environment with the virtual.

In construction, AR can be used in everything from project planning to communications. It can layer details and elements onto a building plan so stakeholders can get a better understanding of the project. AR can also be used to showcase 3D models and even provide tours, giving clients a solid idea of what a building would look like before it’s built. If a client wants to know what a new installation would look like on-site, AR can bring that vision to life.

Sometimes referred to as additive manufacturing (AM), 3D printing is the computer controlled layering of materials to create three-dimensional shapes. During the process, a 3D digital model of the item is created — either by computer-aided design or by using a scanner. The printer reads the design and lays down successive layers of printing medium (which could be a liquid, powder, or sheet material); these are then joined or fused to create the item. 

Depending on the technique adopted, printing can produce multiple components simultaneously.

The technology has developed so much that companies are able to “print” an entire home faster and more cheaply than the traditional methods. 

An exoskeleton is a futuristic-looking metal framework, sometimes fitted with motorised “muscles” that increase the wearer’s strength. The robotic suits’ framework mirrors the wearer’s internal skeletal structure, and makes lifted objects feel much lighter, reducing the chance of injuries.

Exoskeletons are making their way into the construction industry as a way to improve worker safety, boost productivity, and create a more efficient work environment.

By helping workers perform tasks such as drilling into walls while holding up heavy equipment, these devices aim to reduce accumulated strain from prolonged, repetitive tasks. To achieve this, they provide added support for the back, legs, hands, or any area most affected by prolonged strain.

Exoskeletons can either be passive or active. Passive is when they are without the use of actuators (components that move and control a mechanism), motors, or batteries to help with lifting or hauling. Active exoskeletons use actuators to aid in weight-bearing activities.

Passive systems are becoming increasingly popular in the construction industry, as they are less expensive, and actuators are not necessary to relieve the exoskeleton user of a payload or body weight.

They might be small in size, but self-organising micro robots could be the next big thing in the construction industry. Inspired by the behaviour of termites, and the way they work together to create huge earthen mounds, scientists have developed small construction robots programmed to work as a team and undertake construction tasks. The idea behind the swarm is simple: to use a large amount of robots to build a project according to a plan, without central guidance. The midget devices can be programmed to transport bricks and assemble them into buildings and infrastructure. Each robot works on its own and yet still cooperates with others via built-in sensors that detect the other robots, and follow a set of rules to allow them to avoid collisions and work as a whole.

Could this be a futuristic antidote to construction’s chronic labour shortage? Japanese researchers have developed humanoid robots capable of completing simple tasks such as installing drywall.

They are not highly advanced yet, but the possibilities they open before the industry are endless.

The hurdle that is yet to be overcome is flexibility. Construction jobs are not static: The workers move around a lot, and sometimes in difficult conditions. For now, humanoid workers still have their limitations, and technology will have to tackle them before they are widely used. Right now (and probably for the years to come) the precise human eye and flexible body will be indispensable in construction, but companies might be able to use construction humanoid robots as “helpers” that support workers in tiring tasks (like heavy lifting) or repetitive tasks, keeping the human workers focused on more important duties requiring their expert knowledge and skills.

How to deal with construction technology risks

For companies looking to adopt new technology, risk management is key. Contractors, owners, and developers should work with trusted advisers to ensure all adequate protocols have been adopted in order to identify, analyse, evaluate, and address cyber security threats. This could include outside organisations that are commissioned to discover weaknesses in cyber security systems. These companies engage in activities such as penetration testing designed to find vulnerabilities in a system before an attacker does. It simulates real-world attacks so companies can identify and fix weaknesses before they’re exploited.

Companies also need to speak to their construction broker to review how it will affect risk allocation and insurance, and ensure the risks are covered under their construction insurance policies.

How to gain optimum insurance terms

The construction insurance market has gone through a transition, moving from a market that experienced stable or declining pricing for over a decade, to one in which prices have been rising — though there has been some moderation from 2021.  Underwriters will continue to scrutinise each project in detail as the market remains challenging, seeking detailed risk information for in-depth review.

This is why it is important to engage early with a broker who has expertise in both construction and in wider specialties, including cyber risks, and has the capabilities to respond to the challenging economic and business risks faced by contractors, developers, and owners. With their specific technical and market knowledge, and close relationships with underwriters, experienced brokers are able to expertly navigate periods of tightening insurance markets. Early engagement will ensure the contractual structure reflects the optimal insurance programme design and enable sufficient time to negotiate terms.

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