Introductory paper on shifts in construction technology that are leading to significant gains in productivity, supply chain management, materials procurement and project execution The overall evolution of the Construction industry is referred to as "ConTech"

1. Engineering
& Construction
Industry Technology
Introductory thoughts for
Directors & Leaders in a rapidly
changing industry landscape

2. 2 | © 2018 LCC Asia Pacific
The last five years has seen a significant step change in the introduction of various
technologies to the Engineering & Construction sectors (E&C). Numerous factors are
driving this shift, with importantly a number of those being from outside industry.
The abundance of venture capital, particularly in Northern Hemisphere locations,
combined with entrepreneurs seeking opportunities in industries that are yet to be
disrupted, combines to deliver compelling new style business cases.
For leadership teams and members of boards of directors (“Directors”) a critical question is just how
future proofed are their existing business models? The E&C Sector has long been plagued by systemic
issues including productivity, supply chain management, specialist labour availability, fluctuations in
materials costs, uncontrollable weather and technical difficulties in on-site execution to name a few.
Whilst the responsibilities of Directors & Leadership inside the E&C sector will not change, there is
undoubtedly today a higher requirement on understanding the implications of technology shift, and
adopting more flexible near term business plans in order to capitalise upon change.
Examples of historic challenges
The E&C sectors are far from homogeneous. Be it style of project, size of project or indeed the size of
the company undertaking that project, these are industries with a broad spectrum of organisations
(from Tier 1 national / international down to niche specialists).
LCC’s observation is this highly complex sector landscape is a critical factor in driving both complexity
and operational challenges.
Amongst the many issues there are a few which present more often than others. These are:
• Productivity
• Supply Chain Management
• Health and Safety
• Cost of Materials
How is technology positively impacting these?
Disruption is narrowly defined as a“disturbance”, but in the technology usage has been extended.
Old-style industries such as E&C are more prone to major shifts which in and of themselves can have a
positive impact.
The winds of change are
blowing across the Engineering
& Construction sectors
A key question is just how competitive will historic business models remain
against innovators entering the engineering construction sectors from
alternate industries and with highly varied backgrounds.

3. © 2018 LCC Asia Pacific | 3
The productivity of E&C companies has historically been reasonably poor. There are a myriad of
factors that can impact that productivity ranging from shortages of skilled labour, inclement weather
events on projects, through to factors such as sub-standard project management. Productivity is a key
area where innovators are seeking to make step change improvements. The introduction of building
information modelling (BIM), sophisticated off-site construction and highly collaborative in the cloud
project management software solutions are introducing high levels of efficiency and reducing risks on
projects (as an example see : www.plangrid.com).
Katerra (www.katerra.com) is a leader in off-site construction built around a multi faceted assembly
line production, similar to the automotive industry. Only a few years old, already a multibillion dollar
company in terms of valuation, Katerra has raised in the order of US$1.1 billion in venture funding. It
is at the forefront of the off site trend that introduces numerous benefits to the construction industry.
Other players such as Raken (www.rakenapp.com) are focussed on improving productivity via more
sophisticated in field job site reporting.
Supply Chain Management, Bids & Workflows is another area that is undergoing a complete
overhaul. The sequential, step-by-step nature of E&C projects leaves those projects susceptible to any
slight delay which in turn leads to a domino effect on the project timetable‘pushing right’. Understanding
historic costs trends, and how those will impact future projects, is becoming more accessible through a
new breed of service providers (as an example see : www.honestbuildings.com). Efficiency in supply chain
boosts productivity and profitability of projects.
Occupational Health & Safety is another complex area for E&C companies alike. The direct linkage
between lost time injuries and insurance premia is not to be underestimated. In response, companies
are commencing to embrace the use of sophisticated wearables to create both a safer job site
(see as an example : www.smartcap.com.au) to monitoring worker drowsiness (see as an example : www.
optalert.com). These wearables in turn are evolving rapidly to capture significant volumes of data that
can be analysed for project efficiencies (beyond fatigue of individuals).
The input cost of materials has led to entire employee divisions being created to maximise the
procurement function. Savings in material purchasing (sometimes at the cost of quality) are seen to
be one of the easiest ways of boosting profitability. This gives rise to complex supply chains where the
logistics of procurement and cost of procurement can often be seen to be different objectives. With the
introduction of marketplaces for materials and products this function is rapidly changing, and will likely
have significant impact upon the human resource historically needing to be carried in order to execute
that procurement function efficiently. Players such as mSupply (www.msupply.com) are already
operating a construction materials marketplace, in rapidly developing economies such as India.
What does all this mean for leadership?
Whilst there is a significant requirement for investigation and research into the potential impact that
innovation will bring, the good news for leadership teams is that these innovations likely will positively
shift productivity and therefore flow into profitability.
As in any industry the early innovators and adopters of technological change can reap the highest
benefit. This in no small part due to the fact that once change commences it continues, and these early
adopters become more flexible and receptive to future change as they have seen the benefit of being
first movers.
Early innovation adopters are best positioned to maintain an edge – which in
highly competitive industries such as Engineering & Construction can translate into
sustainable above average profits (and therefore have a knock on positive impact
to corporate valuation).

4. Lead Contact
Nicholas Assef
Engineering, Construction & Services Sector Leader
LCC Asia Pacific
naa@lccapac.com
Mergers & Acquisitions I Equity Advisory I Debt Advisory I Strategy
LCC Asia Pacific (“LCC”) is a boutique advisory firm that has specialist expertise in the engineering, construction
and services sectors. Our work with our clients covers a number of areas, from complex cross border transactional
engagements to strategic work that assists Boards of Directors and Leadership teams plan for tomorrow’s corporate and
commercial opportunities and challenges.
To learn more visit : www.lccasiapacific.com
This information has been prepared so as to provide general background only on the topic discussed. It is not advice, nor is intended to be relied upon in any way.
© 2018 LCC Asia Pacific Pty Limited
AFSL 278 054
All Rights Reserved