Construction 4.0 Could Boost GDP By $8b

The adoption of 4.0 technologies in the construction industry will boost productivity and increase wages by billions, BERL research finds.

Construction 4.0 is the name applied to the technologies that are driving the next great industrial revolution, as applied to the construction sector.

The first industrial revolution was powered by steam and helped to mechanise the manufacturing process. The second used electricty to drive mass production and the third employed electonics to automate the process.

The fourth revolution builds on advances oved the last fifty years to fuse physical production with smart digital technology. It is the age of cyber-physical systems.

This is not sci-fi. It is not the realm of filmmakers and futurists.

This change is happening now and promises to transform our industry as much as, if not more than, the introduction of water, steam, and electricity did in the past.

A quick internet search will offer a lot of buzz words and jargon on the theme – IoT, IIoT, CPS, AI, Big Data, and Cloud Computing. The new revolution is comprised of over 30 different digital technologies that, together, are reshaping our world.

In essence, Construction 4.0 simply enables companies to have better control and understanding of their business. Interconnectivity, data, and cyber-physical systems connect and enable collaboration between departments and across the supply chain. They are more responsive to fast-changing environments and consumer demands.

The report

HERA comissioned BERL to prepare a report on the potential economic impacts of Construction 4.0 on the New Zealand economy. The results are striking with modelling suggesting a total GDP gain of as much as $8 billion in the next few years.

The report showed a clear link between the adoption of new technology and improvements in productivity, efficiency and profitability. It applied sophisiticated economic modelling to test assumptions and demonstrate the uptake of new technology on factors such as GDP, wages, employment and productivity.

Mark Cox, Principal Consultant at BERL, asked a simple question: What would happen if we applied Construction 4.0 technology more widely in construction and increased productivity? What would the effects in productivity be?

“The headline effect is that depending in which scenario used to increase productivity, over the next 5-years GDP would increase by 0.5 to 1%. This sounds like small numbers until you factor in that GDP is $260 billion, you are talking an increase in GDP of $1.25-$2.5 billion,” he said.

The findings suggested:

1. GDP will be boosted. Total GDP gained over the five year period could be as much as $8 billion and, even our most pessimistic forecasting revealed a $4 billion increase, compared to the base scenario. By comparison, this is roughly equivalent to the value of a bipartite trade agreement, such as one with the UK.
2. Wages are likely to increase. An increase of almost $3.5 billion over the five year period.
3. The benefits will be felt most by those in the middle-income bracket and is marked by higher incomes and consumption. This reflects the particular mix of people employed in the construction sector.
4. Government spending can evolve. With more money, the government can invest in large-scale infrastructure and wellbeing projects.
5. The construction industry would benefit. So too would other industries along the supply chain from logging to the users of commercial buildings.

The full report can be viewed here and HERA’s ‘Stiring the Pot’ podcast ‘The economic case to adopt Consturction 4.0’, with Mark Cox can be listened to here. The podcast further details the research and the methodology used.

A real-world example

D&H Steel has transformed its traditional business and gained real-world outcomes through the adoption of new agile technologies.

As Wayne Carson, Managing Director says, “We recognised we were creating a huge amount of data every day from BIM models to automated machines resulting in hundreds of pieces, but were struggling with connectivity to make best use of it in our daily business activities. We employed two dedicated IT staff, who are using out of the box Microsoft products including Sharepoint, Power Apps and Power BI to provide unprecedented visibility and feedback on our business operations and therefore decision making.”

In terms of D&H Steel’s future plans in this space, Wayne says, “ We are like kids with a box of chocolates. We’ve reached in and tasted the ones on the top but now realise there is so much more within easy reach. We are so excited and committed to keep reaching in to the box and tasting more of the flavours now knowing there are so many more flavours to bite into.”

An investment

Construction 4.0 promises greater connectivity, innovation, and collaboration but requires investment. An investment in skills, training, and new technology.

The report indicates that those companies that take up the challenge are more likely to be insulated from a rapidly changing global environment and adoption of new technology will lead to significant national benefits.

Dr Troy Coyle brings more than 20 years’ experience in innovation management across a range of industries including materials science, medical radiation physics, biotechnology, sustainable building products, renewable energy, and steel. She is a scientist with a PhD (University of NSW) with training in journalism and communications.

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