Construction – the last unreformed industry sector

Productivity in the global engineering and construction sector has stagnated over the past 40 years, prompting the World Economic Forum to investigate why. Hywel Davies summarises its findings

The World Economic Forum (WEF) – a coalition of business, academic, charity and government leaders – has taken a hard look at the current state of engineering and construction. Its recent report takes in the views of engineering, architecture and planning firms; contractors; suppliers of building materials, chemicals and construction equipment; project owners and developers; academics; government leaders; and industry organisations – and the conclusions are a challenge to us all.

The Future of Construction project aims to support change in the engineering and construction sector, and the WEF’s initial analysis, published in May, makes uncomfortable reading. It is not the first time that the industry’s slow rate of innovation and technological change, adversarial relationships and lack of collaboration have been observed – but it is the first time such a group of stakeholders has provided a detailed analysis of where we are and where we need to go.

The world is changing rapidly; its urban populations are growing by 200,000 people per day, all of whom look to the engineering and construction sector to deliver affordable housing, as well as social, transport and utility infrastructure. Construction faces
many areas of change that apply across the globe. In addition to the social challenge of urbanisation, infrastructure must meet the needs and aspirations of increasingly articulate and vocal populations.

Two-thirds of the predicted growth in construction over the next decade will be in the developing world. That is a challenge for CIBSE and for all our members in developed economies. We operate in a global market; the developing world is building huge projects, while developed countries have ageing infrastructure – creating a global infrastructure gap. Construction is the No 1 consumer of raw materials and produces half the solid waste in the US, while our buildings generate a third of global carbon emissions. They also face increasing challenges to resilience from natural phenomena and cyber threats. Politically, too, the world is not getting any easier.



The world’s urban populations are growing by 200,000 people per day, all of whom look to the engineering and construction sector to deliver affordable housing, as well as social, transport and utility infrastructure

Most other industries have undergone major transformations in the past 40 years; look at shipbuilding, car making, steel and coal, air and rail transport, telecommunications, broadcasting, publishing, retail and leisure. They have all changed dramatically, while the engineering and construction sector has been slow to adopt technological opportunities, and its labour productivity has stagnated as a result. The WEF report suggests that, in the US, labour productivity has even fallen over the past 40 years. Construction is the last unreformed industry sector, and its inefficiencies are increasingly hampering our economies.

The slow pace of change matters because the sector accounts for about 6% of global gross domestic product (GDP), rising to 8% in parts of the developing world, such as India. It uses half of global steel production and more than three billion tonnes of raw materials – so improved productivity and successful adoption of innovation would have a major impact. The report argues that a 1% rise in productivity worldwide could save $100bn a year.

‘In the face of such challenges,’ the report’s authors argue, ‘the industry is almost under a moral obligation to transform.’ They identify persistent fragmentation and inadequate collaboration in the supply chain, difficulties recruiting talented workers, and insufficient knowledge-transfer from project to project as major causes of the poor performance of the sector. However, they claim the industry has vast potential to improve productivity through digitisation, new technology, and new construction techniques. By adopting augmented reality, drones, 3D scanning and printing, BIM, autonomous equipment and advanced building materials, the sector can boost productivity, streamline project management and processes, enhance the quality of output, and improve safety.

Some of this is not new; it has been said before and will require a committed effort by the industry to bring about. The report identifies eight topical areas in which the sector needs to change:

  • Technology, materials and tools
  • Processes and operations
  • Strategy and business model innovation
  • People, organisation and culture
  • Industry collaboration
  • Joint industry marketing
  • Regulation and policies
  • Public procurement

It sets out 30 measures, classified in three groups – for private companies; for companies in collaboration with peers or by the industry as a whole; and for government, acting either as the regulator or as a major project owner.

For each topical area, the WEF report identifies current best practice, and offers case studies of innovative approaches – but, above all, it leads with what companies can do. It emphasises the role of digital technologies, so our work on BIM is again underlined, while the report also highlights the importance of data. It focuses on learning from projects, and on the need for knowledge to be developed, maintained and exchanged, and for training across the sector.

The WEF has given us much to think about, and its report deserves to transform our summer reading lists.

Link to the full report.

Hywel Davies is technical director at CIBSE