Most of us know Washington Irving’s story of Rip Van Winkle, the man who fell asleep after drinking and woke up twenty years later to a world very different than what he knew. His son was grown, his wife was dead, the war was over, and the authority of English King George III had been replaced by President George Washington. The old man recognized almost no one and was virtually unrecognizable to those around him.
This also could be the story of today’s construction industry.
History and technology have moved on. However, some sectors of construction look around with their foot-long beards at other industries that have kept pace with the times. Sectors such as retail, automotive, and agriculture have responded to the necessities of change to improve their businesses. Can we imagine the shops, the cars, or the farming practices of the 1970s functioning today (except as curiosities)?
What have we been drinking?
Old Rip may have had the excuse of some too-potent brew to help him sleep for an entire generation, but his desire for a simple life and the allure of the Catskill Mountains was to him an escape from reality. What has kept construction lagging? What contemporary reality is easier to ignore than wrestle with vigor? The answer is complex. A respected industry colleague, Curtis Rodgers of Brick and Mortar Ventures, asserts the construction industry actually isn’t an “industry.” Rather it’s a multitude of businesses in industries of their own: building products, engineering services, information technology, construction trades, and so on. There are hundreds of thousands of players in the ecosystem we call construction. That’s part of the problem – complexity and fragmentation.
Construction is a multi-trillion-dollar collection of individual businesses that often don’t visualize themselves as being associated with something bigger than themselves, or even with their immediate peers. We’re concrete suppliers. We’re mechanical contractors. We’re technology providers for petrochemical production. Individual businesses often can’t see a path to meaningful change. The current ways are what they know. Except for some innovation here and there, it is what it always has been. The thought of a broad-level transformation is complicated and overwhelming, and perhaps unnecessary.
Yet history demonstrates transformation occurs despite passive resistance and the price is steep when we try to avoid inevitable change.
Was Rip Van Winkle’s worldview good enough for the new reality into which he awoke? A revolution had occurred all around him and he’d missed it while in slumber. Upon awakening from his stupor, Rip had a choice – accept the new reality or fade into obsolescence. He missed the opportunity to contribute to meaningful improvement. Some of the construction industry may be snoozing its way into extinction.
Immune to change?
Lest we be too negative, let’s acknowledge the many valuable attempts to modernize construction. Examples like Advanced Work Packaging, Building Information Modeling, modularization, and technologies that enhance worksite safety, labor risk, and other areas abound. Hundreds of new technologies and applications have recently entered the marketplace. Fortunately, CII’s Operating System 2.0 (OS2) is currently attempting to expand our thinking and develop new business models.
A good example of how the construction industry can transform itself is the emphasis on safety, particularly in the industrial sector. The industry knew how to be safe, yet in the late 1980s, the aggregated Total Recordable Incident Rate (TRIR) of CURT and CII members was a now almost inconceivable 7.19, and those companies were among the best. Injuries and even fatalities were far too frequent. Then owners declared enough! and began leading. Standards were set and enforced, dramatic, emulous change began, and TRIR was driven to 0.27 as of 2020. This owner-led change released the industry to innovate and unleashed a culture of safety from which we will never retreat. Even when it was literally a matter of life and death, safety improvement still required key industry commitment as a catalyst. We can make important changes, and relatively quickly when we feel it is important. People say safety is different – it can mean life or death – but so can the economic survival of our companies.
The wake-up call
Imagine if Rip Van Winkle had slept a hundred years instead of twenty. Would he have awakened at all? Would he have attempted to adapt as the story indicates?
Without change, without adaptation, without collaboration and pulling together, the construction industry may crumble faster than we can control. Certainly, the signs are there. Most owners are struggling with capital efficiency, developing projects consistently over budget and schedule. Numerous companies in the supply chain are performing poorly, including some notable bankruptcies. Choosing the projects we can afford to build will become a matter of triage.
When that happens, when forced to choose among fewer viable projects, we lose opportunities, lose money, lose jobs, and lose industry stakeholders. We won’t be able to keep up with global infrastructure needs and population growth – people rely on the built environment for society to function.
The construction industry is a multitude of discrete entities, but our strength and survival lie in connection and collaboration – learning how to work together to develop high-value solutions. Technology alone is not the answer, but it is critical. Collaboration technologies will connect us more rapidly and with less friction. Aligning goals and increasing transparency – features found in Smart Contracts, for example – will allow us to serve our individual interests as well as those of the entire construction ecosystem. Rather than avoid the hard work of improvement, like Rip Van Winkle, we should wake up every day with the kaizen thought, “What can we do today that will help improve outcomes in our built environment?”
PrairieDog’s team of experts has over 100 years of accumulated engineering and construction industry experience, developing and executing capital projects globally. We bring our combined knowledge of planning, project execution, finance, legal, and insurance to the powerfully effective and transformative delivery of Smart Contract technology.