Ch Ch Ch Changes - Five Fearless Predictions

Geoff Smith Portrait

BY Geoff Smith

POSTED ON APRIL 8, 2013

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Though I’ve been yammering about ‘change’ and the near impossibility of strategic planning for an unknowable future, we still spend significant time here banging around in the dark, trying to figure it out. So, to avoid accusations of complete cowardice, here are five predictions for the future, which I think EllisDon must be ready for. For a bunch of reasons, I think these represent both threats and opportunities, but that’s just MBA talk and hardly the question. The key for me is: Are we headed in the right direction, with at least enough room and time to adjust as things play out? We’ll never get it exactly right; ‘ballpark’ is mandatory, ‘spitting distance’ ideal.

These aren’t the only scary issues; I’m hoping these five might be a bit relevant outside construction:

1: IT Will Change Our Entire Business Model

Let’s jump past the usual stuff: Faster, more efficient and transparent, infuriatingly unreliable, etc. The same software that is going to design our buildings will also supervise the construction and then manage and optimize these ‘smart’ structures over their lifespan. Right now, everyone is looking for the software that will propel their own silo; I believe it’s all going to merge, which will pressure the industry to do likewise. There will be big winners and losers, and mergers between companies that have not previously met, let alone dated. IT is going to make the construction industry unrecognizable within ten years.

2. Cradle To Grave Services

Similar pressure will come from the private sector clients, for different reasons: They will soon demand the same single source/total risk transfer that the public sector has achieved with the PPP model. Neither technology nor skills nor leadership expertise will be enough, you will need the capability and courage to take cradle to grave risk. Design, construct, and asset manage: If you’re not prepared to guarantee the entire outcome for your client, over the long term, you’ll need to align with someone who will.

3. A Revolution In 3D Printing, Prefabrication & Manufacturing Technology

This one scares me the most; I have absolutely no handle on it. The coming manufacturing revolution is the change that is going to push control away from current leaders unless they get on top of it. It will enable international competitors, upend traditional design and construction processes, add new players and potentially restructure the industry hierarchy. Buildings will soon be manufactured rather than constructed. This will accelerate the demise of the unions, unless they change their mindset entirely.

4. Business ‘Partners’ Models Also Under Threat

For generations, our business model has been structured on and dependent upon other industry players (the key ones being the designers and major subcontractors). Our future depends therefore on what happens to them, and their models are also under stress for a whole raft of reasons (those listed above, others as well). My prediction for
both designers and subcontractors is that you will see a cleavage between knowledge providers and production providers, between brains and brawn if you will. Everyone will want to be the ‘brains’, but the producers will make the money. For the last fifty years, these firms have been providing both – that’s about to break down.

5. Darwinian Consolidation

General Contracting resisted consolidation longer than most; it still hasn’t happened even with the severe recent contraction in both the US and Europe, but it’s coming. Canada may be temporarily protected due to our resources, relative economic strength and transportation infrastructure renewal. But in a globalized, high tech, slower growth world, there are way too many contractors; many are going to disappear. I used to have an opinion as to how this would play out, but watching recent developments I now have no idea. But my last prediction is one that the losers won’t die because they had the wrong strategy, it will be lousy execution that kills them. If you can execute,
you will get the opportunity to change.

OK, that was fun, and I’m scheduling five years out to audit my performance, but since I also predict that
I won’t still be blogging, there will be no public accountability. Hah! Thanks for reading.