The construction industry plays a significant role in the European economy. Private, mostly small and medium-sized companies, plan, develop, and produce new and renovated existing residential, industrial, and commercial buildings for Europeans to work and live in. In addition to the private building industry, many public services and administrations, especially in infrastructure, are integral parts of the building sector in Europe. Infrastructure such as roads and railways for transport, networks for energy, data, or sewage are public concerns as much as they are markets for private businesses. The maintenance of buildings and infrastructure, repairs, and replacement of older structures and buildings have been ongoing literally for centuries and will present building tasks for centuries to come. In 2022, the construction sector in most European countries made up between four and seven percent of their GDP. The EU’s construction revenue amounted to roughly 1.7 trillion euros in 2020, with specialized construction making up the most significant share of that turnover. The European construction market size was approximately USD 2752.75 billion in 2023, and it is expected to grow at a Compound Annual Growth Rate (CAGR) of 4.90% in the forecast period of 2024-2032, reaching a value of around USD 4233.96 billion by 2032.
It is hardly surprising that the digitalization of entire segments of society depends greatly on institutional reforms. Introducing standards for data in current and future business models, administrative procedures, and legislation is crucial for the digital transition. This will open up new opportunities to automate tasks along the typically lengthy life cycles of buildings and infrastructure. So far, Building Information Modelling (BIM) has taken center stage in many discussions and conferences. However, BIM merely offers a new way of understanding buildings and their data. The actual goal of digitalization needs to extend further and lead towards significantly improved buildings, enhanced productivity, greater sustainability, and seamless interactions between smart buildings and equally intelligent infrastructure.
The construction industry occupies a central position in the digitalized construction value chain: the digitalized industrialization of construction is progressing and encompasses planners, building material manufacturers, etc., along the value chain, in addition to the construction companies in the main and ancillary construction trades. They all serve as suppliers in industrial production processes and are integrated into the project at defined points in time. The objective is to utilize the same structured data across all processes, organize trustworthy and collaborative cooperation among all stakeholders, and thereby create better products and services for more satisfied customers. These customers, in turn, are increasingly digitizing and thus demanding their digital twin as added value to the real building.
The European Data Strategy of 2020 provides a comprehensive set of rules that must now be applied to the construction sector. The EU aspires to lead in a data-driven society, establishing a single market for data that facilitates sharing across the EU and various sectors, benefiting businesses, researchers, and public authorities. While large data rooms are planned for health (EHDS) and financial data (FIDA), the building and infrastructure sector is also impacted by the forthcoming Data Act, as well as the already enacted Data Governance Act, Digital Markets Act, and Digital Services Act. Additionally, three further European legislations on Artificial Intelligence are currently in development.
Given the substantial investment and construction tasks required to maintain and modernize European infrastructure, the industrialization of construction must progress swiftly. Leading companies collaborate within Construction Industry Federations on regional, national, and international levels to achieve this. The Bavarian Bayerischer Bauindustrieverband e.V. (https://www.bauindustrie-bayern. de) plays a particularly active role in these networks. Within these associations, industry experts develop new, open, and internationally secured industry standards to significantly enhance productivity while upholding environmental and quality objectives.
Successfully meeting the growing demands for infrastructure quality necessitates exploring new avenues. The digitalization of various construction processes within each company and among numerous firms on every construction site will bring about significant changes in construction. This transformation extends to various applications, such as communication between project partners, suppliers, and subcontractors, digitized planning processes, the networking of infrastructures (IoT), and aspects like billing, mass costing, or construction progress documentation. Occupational safety and the need for research and development in the realm of digitalization will also continue to rise. As a key driver of change in the construction industry, the optimization triad of digitalization, automation, and networking will foster a collaborative approach, early involvement of construction in planning, and the introduction of innovations.
1. Digitalization facilitates the modernization of construction and everyday building practices by introducing changing and automated methods of working, alongside the integration of new technologies.
2. Emerging work methodologies and technologies actively encourage connectivity both on the construction site and among project partners.
3. Enhanced networking fosters more collaborative approaches to working within the construction industry.
4. Collaborative construction practices facilitate early preparation and seamless integration into the planning process.
5. This, in turn, enables innovation and the industrialization of processes within the construction sector.
Construction companies consistently provide optimization suggestions, particularly concerning project implementation and the use of more durable or sustainable building materials. Collaborating with clients in the early stages allows for the creation of innovative solutions, such as those related to electric and autonomous driving or swift implementation of refurbishment concepts. To fully leverage the innovative potential of the construction industry and make optimal use of digitalization, it is imperative for construction to be involved in the planning process as a fundamental prerequisite.
According to McKinsey (2018), there exists potential for significant productivity increases in infrastructure projects, ranging from 30% to 40%, through collaborative efforts between the public sector and the construction industry. This potential improvement spans various areas of action, including aligning planning and construction with the capabilities of digitalization, as well as increasing the adoption of serial construction and lean construction methodologies. McKinsey suggests a permanent implementation of Building Information Modeling (BIM) and emphasizes the importance of involving all project partners in collaborative processes with digital support to achieve these productivity gains.
Fueled by digitalization, the construction industry is witnessing a surge in opportunities for start-up companies to enter the sector. Simultaneously, various forms of knowledge generation are intensifying, involving organizations outside the traditional construction value chain. Additionally, digitalization is likely to propel other developments, such as the increased adoption of industrial and lean construction approaches, as well as the entrance of new market participants, potentially leading to enhanced productivity across the industry.
Industrialization plays a pivotal role in the construction industry. Through industrial and modular production and manufacturing processes, entire components and sections are prefabricated, resulting in reduced construction times. This approach enhances manufacturing quality through standardization and contributes to a decrease in construction site accidents. Series production not only cuts planning costs and times by allowing the development of prototypes applicable throughout Germany but also benefits from economies of scale, ultimately lowering production costs. It ‘s important to note that serial construction is not bound to a specific production method or building material.
Digitalization facilitates the optimization of buildings: The digital twin enables the systematic integration of all essential data and interdisciplinary know-how for products within the construction industry, such as residential and industrial buildings, and infrastructure structures. This comprehensive approach allows for the optimization of these products based on the specific needs of customers, users, and stakeholders. The optimization of the construction process and the final product can occur virtually, well in advance of the commencement of actual construction, providing valuable insights before the first excavator is deployed.
Digitalization facilitates enhanced customer orientation in the construction industry. Complex building models offer personalized information to each user, including customers, builders, users, and even citizens affected by a public construction project. The digital building model surpasses traditional plans in terms of comprehensibility and portrays the customer as a well-informed stakeholder in the construction process. This tailored approach enhances communication and understanding for all parties involved.
New approaches to awarding contracts are necessary: Complex building models must systematically capture the data of a building from the initial stages, ensuring that the principle of “first build virtually, then in real life “ becomes a reality and prevents concurrent planning and construction. As a result, the supplier formulates the design of the building (product policy), communicates the offer to the customer (communication policy), actively sells/ markets the product (distribution policy), and, where feasible, influences the product price (pricing policy). This comprehensive approach to contract awarding ensures a more streamlined and efficient construction process.
Buildings are becoming increasingly complex, driven by new building materials with intricate interactions and a growing number of suppliers introducing more interfaces to the processes. Simultaneously, the demands on buildings and infrastructure systems are expanding, particularly with the need to address Corporate Sustainability Reporting Directive (CSRD) requirements. Achieving alternative technologies and transparent reporting is only feasible through digitalization. However, managing this complexity poses a fundamental challenge in the construction industry. It is a significant reason why planning often has to be conducted concurrently with construction today. The convergence of numerous parallel plans can only be effectively coordinated by the engineers and teams on the construction site, even as production is already underway.
Construction inherently involves both “planning and building.“ The traditional sequential organizational model, wherecontractors are engaged in the project at a late stage and receive only partial building data, has proven inadequate over decades. The resulting necessity of planning during construction poses unacceptable risks in terms of cost and quality. To ensure the creation of high-quality buildings, it is imperative to provide and utilize the necessary planning and execution know-how from the outset and throughout all phases of the construction process. This shift towards a more integrated and collaborative approach is essential for mitigating risks and enhancing the overall quality of construction projects.
The digital twin is evolving into a crucial quality feature: Digitalization introduces tools that, for the first time, enable the consolidation of numerous parallel plans that currently differ. Two-dimensional plans transform into multidimensional building models, often referred to as 5D models. This transition significantly streamlines the planning of buildings. While each building remains unique, recurring processes are becoming more apparent, allowing for increased automation. The outcomes include modularization, prefabrication, and more sophisticated subcontracting processes. The use of structured data enables more comprehensive descriptions of buildings, leading to reduced conflicts during construction. As the model eliminates uncertainties from the project, it gains trust from stakeholders such as customers, planners, product providers, suppliers, and financiers.
Structural change and specialization in construction persist: Given ongoing cost and competitive pressures, construction companies and suppliers are compelled to continually enhance their expertise in technologies and production processes to maintain competitiveness. The evolving landscape necessitates an increased focus on specialized knowledge within the industry.
As an industrial sector founded on the division of labor, the construction industry necessitates digitally controlled business processes both internally and within projects. Numerous suppliers, including craftsmen, providers of prefabricated semi-finished goods, and planners, are essential for constructing a building. As an increasing proportion of many buildings involves automated processes, prefabrication, and assembly, digitalized construction demands qualified and motivated engineers and craftsmen more than ever. These professionals play a crucial role in controlling operating resources (equipment) and processes to ensure the efficient and effective execution of construction projects.
Construction has been a fundamental aspect of every civilization throughout history, and this remains unchanged today. In the face of challenges such as climate change, digital transformation, and the integration of artificial intelligence shaping our way of life, the construction industry stands as a vital source of crucial knowledge. Buildings and infrastructure, developed by the construction industry, play a pivotal role in addressing and adapting to the evolving needs and challenges of contemporary society
