A New Approach to Infrastructure Construction

Autodesk is leading the digitalization efforts in the construction industry by developing software products that help companies manage two distinct aspects of the supply chain: labor and materials.

Have you experienced the inconvenience of trying to drive somewhere and getting stuck in traffic due to a construction project? Infrastructure construction projects seem to take forever to complete. In fact, large infrastructure projects typically take 20% longer than scheduled and run 80% over budget [1]. Delays and cost overruns during infrastructure construction have a ripple effect on the entire economy. Commuters waste time in traffic that otherwise could be used productively working. Additionally, cost overruns steal public funds away from other critical infrastructure investments. Inefficiencies in the construction industry supply chain present an economic opportunity for software companies to offer digital solutions that generate profits and improve project outcomes for all stakeholders. Specifically, Autodesk is leading the charge by focusing on software products that help construction companies manage two distinct aspects of the supply chain: labor and materials.

Labor supply presents a big challenge for general contractors attempting to manage dozens of subcontractor trades on construction sites. Coordination of subcontractor labor falls into the hands of the project manager, who has extensive other responsibilities ranging from assembling monthly payment requisitions, paying suppliers, writing contracts, managing safety, coordinating with the design engineer, and scheduling deliveries. Historically, Autodesk offered software products that allowed designers to develop engineering plans using computer-aided design (CAD). Autodesk is increasing its focus on construction management software that helps contractors manage labor supply. In an August 2017 interview, Autodesk CEO Andrew Anagnost highlighted his excitement for the construction industry and how Autodesk is positioned to add value through building information modeling (BIM) products [2]. For example, Autodesk BIM 360 Field allows construction managers to digitally track construction progress and communicate with subcontractors instantly via an internet platform. Autodesk BIM 360 Field eliminates the need for general contractors to reach subcontractors by telephone every time labor crews are needed on site. Instead, subcontractors have access to the Autodesk BIM 360 Field platform and receive updates in real-time allowing them to better manage allocation of labor across various jobsites. Autodesk’s near-term focus on BIM technology will allow them to capitalize on the digitalization trend in the construction industry as companies seek ways to improve labor utilization.

Autodesk is also targeting longer term digital solutions to supply chain issues in the construction management industry. Autodesk recently invested in ManufactOn, a software that helps contractors manage the supply chains of prefabricated construction materials. Material management practices on a construction site are important for maximizing productivity. If there is too much material on site, then labor crews must waste time relocating materials as construction progresses. On the other hand, if there is not enough material on site, then labor crews experience downtime as they wait for deliveries. One potential solution that improves schedule and reduces costs during construction is to prefabricate materials off-site and deliver them “just-in-time” (JIT) for installation. General contractors are increasingly pursuing prefabricated options, with investment in prefabricated material approaches expected to double in the next five years [3]. General contractors managing a complex supply chain of prefabricated materials–each with various lead times and delivery deadlines–will benefit from digital solutions such as ManufactOn. Autodesk’s investment in this supply chain management startup is a bet on the continued digitalization of the construction industry, and Autodesk has a long-term plan of making ManufactOn compatible with Autodesk BIM 360 Field [4].

Autodesk is well positioned to capitalize on the digitalization of the construction industry in the next decade. Global infrastructure spending will need to exceed $3 trillion annually through 2030 to keep pace with projected global growth [5]. Amidst the vast investment required, contractors will seek to improve the efficiency of their labor supply chain and material supply chain. Increased labor productivity through use of BIM software has the potential to reduce infrastructure construction costs by 15%-25% in the future [6]. Savings of this magnitude on large infrastructure projects can represent hundreds of millions of dollars. Additionally, contractors that incorporate prefabricated elements achieve a 10% increase in efficiency [7], further reducing costs and schedule.

While the benefits of Autodesk’s construction management supply chain products are clear, the construction industry is historically slow to adopt new technologies, with most contractors preferring to follow rather than take the lead [8]. Despite the efficiencies that digitalization could bring to the infrastructure construction industry, one wonders how long it will take contractors to fully embrace the change and leverage Autodesk’s digital tools for managing labor and material supply chains. Large organizations with substantial financial resources are likely more willing to pay for Autodesk’s products, but the success of these labor and material supply chain software programs requires adoption by small subcontractors and material vendors as well. Autodesk should consider offering a simplified software product for smaller family-owned companies to incrementally edge the smaller players in the industry towards digitalization.

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[1] Agarwal, R., S. Chandrasekaran, and M. Sridhar, “Imagining construction’s digital future,” McKinsey & Company, https://www.mckinsey.com/industries/capital-projects-and-infrastructure/our-insights/imagining-constructions-digital-future, accessed November 2017.

[2] “Autodesk’s new CEO,” AEC Magazine, August 9, 2017, http://www.aecmag.com/53-features/interview/1404-autodesk-s-new-ceo, accessed November 2017.

[3] “2017 FMI/BIM Forum Prefabrication Study Reveals Changing Environment,” FMI Corporation, February 9, 2017, https://www.fminet.com/news/2017/02/09/2017-fmibimforum-prefabrication-study-reveals-changing-environment/, accessed November 2017.

[4] Molitch-Hou, M., “Autodesk Invests in AEC Startup for Prefab Management Software,” https://www.engineering.com/BIM/ArticleID/15651/Autodesk-Invests-in-AEC-Startup-for-Prefab-Management-Software.aspx, accessed November 2017.

[5] Garemo, N., M. Hjerpe, J. Mischke, R. Palter, and J. Woetzel, “Bridging global infrastructure gaps,” McKinsey & Company, https://www.mckinsey.com/industries/capital-projects-and-infrastructure/our-insights/bridging-global-infrastructure-gaps, accessed November 2017.

[6] “The Transformative Power of Building Information Modeling – The Impact of Digital in E&C,” BCG Perspectives, https://www.bcgperspectives.com/content/articles/engineered-products-project-business-digital-engineering-construction/?chapter=4#chapter4_section3, accessed November 2017.

[7] Molitch-Hou, M., “Autodesk Invests in AEC Startup for Prefab Management Software,” https://www.engineering.com/BIM/ArticleID/15651/Autodesk-Invests-in-AEC-Startup-for-Prefab-Management-Software.aspx, accessed November 2017.

[8] “Building a Technology Advantage,” KPMG Global Construction Survey (2016), pp. 6, https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2016/09/global-construction-survey-2016.pdf, accessed November 2017.


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Student comments on A New Approach to Infrastructure Construction

  1. This provided a lot of useful information on a topic I know little about. The last paragraph covers what my main concern would be: adoption. While I undoubtedly see the benefit to construction companies, I am concerned about convincing subcontractors to adapt the same technology. In particular, I would worry that subcontractors do not want to pay for a service because a) it is expensive and b) working over schedule and budget may benefit the subcontractors. You also mention that subcontractors can now be reached via BIM instead of phone, but I see a need to continue investing in subcontractor relationships as strong interpersonal relationships seem vital to the industry. That being said, construction is such a capital-intensive yet old school industry that it seems rife for disruption and optimization using digitization.

  2. Sam, you did a great job and I learned a lot.
    Following Darrin’s comment (and your own closing paragraph), I’m also concerned that the digitalization revolution will not be adopted easily and quickly in the construction industry. It seems that there are many obstacles that might hamper the ability to change and reinvent the supply chain in this traditional market. I guess that above all it will be challenging to convince some of the people to learn “new tricks”, and we should also consider the fact that some of the industry professional learned the profession for many years without gaining any practical experience with these advanced systems. The expectation that they will be able to adapt and acquire new skills “on the move” is a bit too pretentious.

    It is interesting to learn and realize that when we think about the “digitization revolution” in our life, we shouldn’t expect that every industry will react in a similar way. As much as the solutions mentioned in this analysis appear advanced and helpful, the “mental leap” that they require from the industry members will force a longer adjustment period.

  3. It’s interesting that companies are adding resource allocation and communication platform to the regular schedule planner (software). One could think that it was the obvious thing to do in the way to optimization and It was already implemented.

    Even though the idea sounds great, I envisioned questions over the % of savings that the software brings and how to back up the figures to call large corporation’s attention.

    Additionally, as the author commented in the article the success of the software lies on the adoption of all the members of the supply chain, small/medium or large players.One idea that Autodesk can develop to maximize the utilization is dividing the software into modules (logistics/planning/budget/raw materials) that can be purchased alone so the small vendors which want to participate in large constructions projects can only acquire this cheaper version. The large corporations can have the complete version of the software being able to take fully advantage of the benefits of labor and material control/planning.

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