Forewarned is forearmed: how Construction Data Intelligence® helps you better predict and deal with risk

The construction industry still faces a uniquely uncertain environment. Volatile supply chains, elastic lead times and spiking material costs have made big projects increasingly difficult to plan. Yet aviation infrastructure must expand as global passenger demand continues to grow, which means we need better ways to manage systematic unreliability. Building on a huge bank of historic information, data and digital technology can provide a great deal of insight and intelligence, so that whatever the macroeconomic outlook, we can provide more clarity and confidence to how we plan and execute future projects.

It’s been a turbulent few years for the construction industry. In 2021, following the pandemic-triggered global supply crash, steel prices almost trebled and then spiked again upon Russia’s invasion of Ukraine in 2022. Typical lead times soared from around 12 weeks to upwards of a year and remain significantly elevated even now, a year later. What was standard equipment, like panel boards and switchgear, can now be critical path items with lead times running up to 70 weeks.

The impact on projects is enormous, and it couldn’t come at a worse time. Aviation faces a steady expansion of passenger demand, which needs to be carefully choreographed to balance with a low-carbon future. At the same time, competition between airports is growing more intense, which is driving more user-friendly, graceful designs to stand out from the crowd. Those designs are often particularly susceptible to supply chain shocks, reliant as they are on specialty steel for large, arching roof spans and on advanced electrical equipment for a more seamless passenger experience.

The result is a set of interrelated, complex pressures that are hampering confident planning and airports at a critical moment. Yet advances in data now have an unparalleled ability to alleviate this by aiming to restore transparency and guide clients to proactively manage risk. Construction Data Intelligence® (CDI) combines data from past project performance with multidisciplinary expertise to map the future more accurately and robustly. In a world still working out how to transition to Net Zero against the backdrop of a changing climate, it’s more important than ever that we use every available tool to encourage and underpin our construction ambitions.

Only as strong as the weakest link

Supply chain unpredictability isn’t likely to resolve itself any time soon. The demand for construction continues to far outweigh the industry’s ability to deliver. Material costs are still 40% higher than at the start of 2020 and considerably more in other areas. A semiconductor supply squeeze is keeping prices high and lead times long. As most advanced equipment, from heating and ventilation controls to security systems, require semiconductors, delays in receiving them will continue to have a powerful ripple effect. The consequences of even a mild interruption at semiconductor sources can be acute—research shows it takes 200 days to recover from a 10-day closure of a 24-hour Asian production facility.

Meanwhile, construction now faces a worsening skills shortage globally. Labor costs are growing due to reduced trade availability and vary significantly from location to location. Exposed to severe variations in material costs and lead-in times, traditional contract models have also been stretched. If procurement of crucial materials takes over a year, then projects face considerable delays or costly redesigns. In a design-bid-build model, where procurement follows design sign-off, contractors can be months behind from day one. And if you don’t have clear mechanisms for dealing with unforeseen setbacks, then projects can get tied down in claims and litigation.

Airports are particularly affected. Terminal buildings regularly require large-span steel, wide- flange beams and tree columns for their enormous roof spans and increasingly demand technologically sophisticated equipment to manage the complex operational environment of a modern airport. In addition, airports are often challenging places to work at. Security presents a unique logistical challenge to contractors, slowing workers down as they make their way to the site and significantly lengthening their transit distances. That reduced working window limits the attractiveness of a job and often results in fewer bidders. The combined result is a serious challenge to traditional delivery methods.

Bright and early

Sharp, sudden supply shocks aside, the first way to de-risk your project is to get the basics right. CDI is built on the principle that if you invest more in pre-construction, you can mitigate downstream issues so they won’t snowball. That doesn’t mean using data innovatively; you need people to align, collaborate and forge effective working relationships. If you can engage early with your supply chain, you can identify key obstacles earlier and accommodate change orders more easily. Additionally, by working more flexibly and adding more dynamism in contracting models, you can avoid bottlenecks in procurement.

More widely, there is real value to bringing in trusted advisors early. Digital technology is always best delivered in partnership, feeding insight and intelligence into the key decision makers to make big strategic decisions. The earlier those decisions are taken in account, the more influence they can have. Yet all too often in projects, the commercial incentives in a traditional contract delivery preclude an independent, collaborative perspective.

Data-driven solutions

Airports are expert asset operators, but not builders. So, they rarely have up-to-date experience aligning the actual and theoretical costs of, for example, a ventilation system. Data is the answer. We develop predictive algorithms and models to better serve decision-makers with the likely state of future markets. For instance, we’ve mapped 65 different terminal projects in our cost database—a rich, granular and valuable source of data. With a team of mathematicians, economists and engineers, CDI brings sophisticated analytics to inform and simulate thousands of scenarios, quantifying and understanding risk.

Most challenges have no easy solutions. Without a way to clearly differentiate the real value of a decision, it’s often unclear how to proceed. What are the trends of future commodities or longer-term evolutions of the labor market, for instance? We recently worked on a major public-private partnership airport development project to address this exact question. Based on that research, the project team reworked its new terminal design to use 15% less steel, built a management reserve contingency and took pre-emptive action to secure steel supplies. So even with a large price hike, the team had informed mitigations in place to cushion its impact.

The benefits of earlier engagement filter into the execution of contracts too. By working through the specifications of a project and providing a detailed estimated budget, CDI sets out the likely cost ranges. This acts as a benchmark when dealing with later estimates and aligns the design and contractor teams to better deliver within budget. And by better informing pre-construction decisions, not only is the business case more transparent throughout, but it remains more robust in the face of the unknown.

A silver lining

Where stability and predictability breed confidence, uncertainty stifles investment, breaks down trust and invariably hits the bottom line. We can’t do anything about the volatile macroeconomic backdrop we build against, but we can change our behaviors to collaborate more effectively and use innovative digital technology and data science to insulate ourselves from the risks of changing market conditions. It hasn’t been an easy few years for our industry, but the upside is that appetite has grown to develop and onboard better tools to improve our forecasting. Down the line, we all stand to benefit if we can look to the future with a little more confidence.