Risk aversion inhibits drive to adopt new building tech

Risk aversion inhibits drive to adopt new building tech

New technologies and digital tools are becoming more commonplace across various industries and all sectors of Canada’s economy. However, the construction industry is still a technology laggard.

The sector has made some effort to expand its digital capabilities by using integrations like Building Information Modeling (BIM), yet challenges persist and the industry, for the most part, has been slow to keep up with the trend.

The question is why?

A report done recently by a team at the Brookfield Institute for Innovation + Entrepreneurship, and supported by the Future Skills Centre, dug into that question. Researchers drew on interview responses and surveys from 14 leaders in construction as well as companies that innovate specifically for the sector to understand the factors contributing to the low uptick of technological innovation.

They also looked at what construction firms have done to address the situation and what governments and the industry can do to improve the rate of technology adoption.

They found many in the industry have the perception that adopting new technologies runs the risk of physical mishaps, can take long timelines to implement, and the highly competitive nature of the industry discourages information-sharing with other construction firms.

“The main point is that low technology adoption stems from risk aversion,” explains Erin Ellis, manager of strategic partnerships for the Brookfield Institute. “Accidents and mishaps onsite, and the delayed inherent competitive environment of the industry are associated with the risk of using new technologies, creating widespread aversion to implementing them.”

The report, called Laying Foundations: Technological maturity in Canada’s construction sector, is a spin-off to an earlier report that measured digital technology adoption and maturity in Canadian SMEs.

There must be a greater willingness by governments to create new partnerships with the industry, while taking on some burden of risk,

— Erin Ellis

Brookfield Institute

Researchers found only seven per cent of construction businesses had adopted software or databases for purposes other than telework or online sales and only three per cent had automated certain tasks — well short of the technology adoption rates of other industries.

Fear of a physical mishap is a major impediment to adopt technology because insurers are often risk-adverse.

“The risk of physical accidents onsite can result in costly delays or, in extreme cases, physical injury,” notes Ellis. “Structural damage, lost materials, accidents causing material breakage and mistakes that require redoing work are all very real risks. Our interviewees have told us that companies are reluctant to introduce new technologies in these already fragile environments.”

The trial and error of technological innovation and adoption is also often seen as a superfluous cost that will result in longer timelines.

“Innovation, whether process or technological, begins with trying something new, monitoring the effect, learning lessons, and modifying,” says Ellis. “Albeit a critical step in the implementation of new technologies, it will inevitably lead to longer timelines on projects that already take years to complete.”

Tech adoption is only seen as a superfluous cost in relation to the longer timelines — resulting in additional production costs — associated with implementing new technologies, says Ellis.

“An interviewee told us that a faulty piece of equipment or material can yield disastrous outcomes. As a result, innovative materials that are used in projects are often tested to extremes, a process that can take years.”

Fierce competition, thin profit margins and high liability, meanwhile, create an environment that leads to a lack of information sharing across the industry.

Although knowledge-sharing across the industry on the process, implementation and testing of new technologies can mitigate the long timelines associated with implementing it, interviewees told researchers that the highly competitive nature of the industry discourages information-sharing to other firms, says Ellis.

However, the researchers found while new technologies often create risk, they also lower it. For example, better sensors can detect water damage, quickly lower the risk of that particular physical mishap. BIM technology has also proven to be a breakthrough in construction that has increased efficiency.

“Yet, challenges that we uncovered in our research persist, preventing greater technological progress to keep up with emerging trends in the future of work,” says Ellis.

To bring the ship around in construction, the report makes four key suggestions: draw on international best practices; implement a process whereby competing companies can share a solution to a problem; encourage more youth to join building sciences and skilled trades programs; and use government procurement and regulation to encourage technological maturity.

“There must be a greater willingness by governments to create new partnerships with the industry, while taking on some burden of risk alongside firms to encourage technological adoption,” says Ellis.

While getting competing companies to share information might be a tough sell, she says interviewees put forth a recommendation to implement “pre-competitive collaboration,” a process whereby a group of competing companies comes together to develop a solution for a problem that they all share , and from which none of them would gain a competitive advantage.

Investing in building science and skilled trades, meanwhile, would not only elevate the number of qualified people in the field, but it would also make the industry younger, and therefore perhaps more technologically-aware and willing to take risks, notes Ellis.

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