Reasons for the low productivity of the construction industry

The reason for the lack of productivity growth and the spread of speculation in the construction industry is the quality of the data used by the participants in the construction process. What is the main problem with data in construction? First of all, in the absence of trust and transparency in 3D-7D systems, which leads to the emergence of risks associated with the human factor and the creation of a multi-level bureaucracy in the main business processes of construction companies. 

To store data and transfer it between various construction participants, you need to trust CAD corporations or organizations that control the development of the IFC format. This situation can be compared to the early development of the Internet, when there was no strong encryption on the network and users had to rely on system administrators (third parties) to protect their data. 

Today, when exchanging data between various 3D-7D systems, we entrust the storage of our data to corporations. To maintain their influence in the construction industry, corporations that do not benefit from the transparency and interoperability of data, monopolized the storage and processing of data. As a result, the suppliers of the main CAD and ERP solutions are constantly raising prices for using their products, and ordinary users are forced to pay a “commission” at each stage of data transfer in 3D-7D systems: for connection, import, export and handling the data that users themselves have created.

As a result of monopolies and lobbyists’ struggle for power over data, the construction industry has become an obsolete system with low productivity, where a certain percentage of speculation is taken as inevitable. To remove the tiered structure of mistrust, control, and pressure, construction companies need transparent business processes and new convenient data storage formats.

Struggle for data in construction

Reasons for the low productivity of the construction industry

The construction industry is one of the most highly regulated and fragmented industries in the world, where almost every construction project is a unique co-creation of a large number of different quality participants.

The life cycle of each construction project is influenced by a large number of specialists of different qualifications and different competencies: budgeting, architecture, statics, structures, estimates, procurement, control and operation. And each participant in the construction process has his own section of 3D-7D data, for which he is responsible. 

For those who are engaged in architecture and design, a 3D model of the future project is important. For the person who will later oversee the processes on the construction site, what is primarily important is the timing of the 4D elements: the order in which the project elements are ordered, delivered and assembled on the construction site. For those who are engaged in purchases, estimates and budgeting, 5D information is important: equipment, materials, man-hours and product numbers hidden behind 3D elements in the project. The performance of the 6D-7D elements is of interest only to those professionals who will be involved in the operation of the buildings after construction is completed. 

Due to the large number of business processes and data management systems used in construction projects, the competences of specialists from different areas (departments) overlap, leading to an increased impact of the human factor, duplication of information and the creation of internal bureaucracy. 

The qualification of 3D-7D specialists and quality of information exchanged between different systems (CAD, MEP, ERP, CDE, ECM, CPM) ultimately have a direct impact on the quality and cost of the construction project, profit and cost effectiveness of the construction company. 

Because of the closed proprietary data in the systems and the lack of transparency of business processes for all participants, construction projects become a quest to assemble pieces of 3D-7D information from engineers into one common puzzle.

The lack of data transparency and quality communication between individual specialists in the process of creating this puzzle has led the construction industry today to the status of one of the most inefficient industries in terms of productivity. 

In the last 20 years of computer-aided CAD design, new construction technologies and materials, the productivity of the entire construction industry has grown by only 21%, while the total productivity of all sectors of the economy has grown by 70% (96% in the manufacturing industry).

The high-performance industries of today are the banking and trading industries, where engineers operate mainly with 1D number properties (contract amount) and 4D time properties (contract time). 

The interaction between these data and business processes in this sector of the economy is almost entirely automated, and the human factor will be reduced to zero over the next few decades.

In addition to 1D and 4D properties, mechanical engineering industry specialists operate with 3D geometry data, 5D cost, and additional 6D and 7D operating parameters. The good relationship between the data developed in the 1990s and the high typology of elements using PLM (Product Lifecycle Management) platforms allows machine builders to mass produce the same product once modelled in 3D and configured in 4D-7D for years.

Successful industries have been able to remove the human factor from their processing of information. The focus of engineers in these industries is now on creating autonomous systems that operate without human intervention: autonomous driving, robotic complexes for machine production in the engineering industry and blockchain technology, smart contracts and DEFI (decentralised finance) in the banking industry.

In the construction world, the human factor remains a major productivity lag factor, with people of varying skill sets working with different formats of opaque data created in software from different software vendors.

Consequences of the lack of transparent interoperable data in construction

The main interest of today’s construction business, which has not yet gathered all the data into a single platform, is focused on the 4D time and cost data of the 5D elements in the project. This data is collected during the construction process of many projects throughout the life of a construction company and having this data is a major competitive advantage for any construction organisation. On this 4D-5D data, ERP (Excel) systems line up budgeting data (investment amount), material purchases and man-hours, work calculations and estimates of individual processes. 

Until the mid-2000s, 4D-5D data could only be processed in expensive (tens or more often hundreds of times more expensive than CAD software) ERP systems (or multi-level Excel spreadsheets), and this data was almost completely unrelated to data, in the form of unrelated 2D drawings, from design departments. 

The lack of automatic (geometrically verified) reliable volume data has created conditions for speculation and concealment of real data in 4D-5D systems. The main scheme for making money in construction is speculation on the prices of materials and works. Overpricing of works and materials occurs through “gray” accounting in internal closed 5D-systems (Excel, ERP, EPM) by adding a certain percentage on top of average market price of material or scope of work. Contractors resort to buying low-quality construction materials solely to save their money to the detriment of the client’s interests.

To start construction means to give yourself up for plunder.

Samuel Johnson (1709-1784)

Therefore, the departments of estimates, calculations and budgeting today are carefully protected from the access of unauthorized specialists, even within the construction company itself.

Without hiding their ‘grey’ 5D accounting, it is almost impossible to survive in the competitive construction market nowadays, and this opacity has been indirectly and directly created and maintained by the corporations that develop the systems in which this data is created and transmitted.

The modern trend towards 3D models and the emergence of automated data on item volumes forced managers of large companies to combine data from 3D models with data from the 5D classifier (estimate items) that already exists in ERP (Excel) systems. As a result, construction companies needed to create data interoperability and adjust the links between separate CAD, ERP, EPM, ECM systems specifically for their purposes. 

The main source of Master Data in all 4D-7D information systems today is the volume data, created by modeling of project elements in CAD systems, where the information is transferred through proprietary closed formats (RVT, DGN, PLN, etc.) or through incomplete open format IFC. The opacity of the formats blocks the creation of exchange automation and makes it almost impossible to work together on a common project puzzle in the same interoperable data format.

Therefore, access to expensive full-cycle 3D-7D data processing systems and the quality and transparency of the data determine the construction cost of projects, profits and, as a consequence, the survival of construction companies in the construction market.

Due to the complexity of the data export and import process, this time-consuming process cannot be handled by simple specialists in 3D design and 5D estimating/costing departments. Only specialists who are familiar with a company’s internal business processes and at the same time have a good understanding of CAD and ERP systems can combine the CAD and ERP systems properly. Therefore, in the construction industry, unlike in banking or engineering, the number of managers responsible for the transfer of information between the various systems (CAD-ERP, FEM-CAD-HVAC, ERP-CPM, ERP-EPM) is increasing, in order to transfer and control “new” data.

In such a forcedly bureaucratised, multi-layered construction project management structure, only a multilevel control through additional managers ensures a quality construction result without lawsuits and financial losses. The consequence of this control has created excessive pressure at all levels of project processing, where engineers must import, transfer and export data in a timely and high-quality manner through closed proprietary products. 

CAD corporations supplying the main 3D modelling solutions offer the construction industry a BIM concept where the exchange and control of information has to be handled by new age managers (BIM managers and BIM coordinators) who can extract data from CAD programs and obtain interoperability between different 3D-7D (CAD and ERP, EPM, ECM) systems.

CAD has borrowed the basis of this new CAD-BIM-ERP concept from the makers of MCAD solutions in the construction industry from the already proven CAD-BOM-PLM concept in the mechanical engineering sector.

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