Disruption and digital transformation in the construction industry

Hit by lockdown orders, shortages of labor, supply chain disruptions and financing strains, the global construction sector contracted by 3.1% in 2020, its worst decline since the 2008 global financial crisis. Even where construction businesses were allowed to continue activities, many projects were delayed or entirely frozen as public agencies across the world closed their doors and suspended granting construction permits or providing on-site supervision to ongoing building projects for months at a time. In other countries permit approvals were still issued and construction work was considered “essential business”. Many firms still opted to suspend operations as safely resuming construction was considered impractical or unsafe. A group of countries, however, saw construction activity continue without interruptions, even during periods of enforced stay at home orders where many other business activities grounded to a halt. A recent case study has shown the extent to which digital solutions enable the continuity of construction work in those locations in spite of unprecedented challenges such as those resulting from social distancing protocols.

The construction industry responded to the COVID-19 pandemic by adopting digital tools that facilitate virtual interactions such as digital building plan reviews and remote inspections by video. | World Bank Photo Collection.  

Early in the pandemic, governments attempted to limit disruption by mandating social distancing and hygiene protocols to ensure the wellbeing and health of construction workers. In the United States, for example, the Los Angeles Department of Buildings adopted a series of safety construction guidelines based on recommendations from the Centers for Disease Control and Prevention, consisting of 16 rules including social distancing, frequent hand washing and wearing face masks while working on-site. It also mandated an inspection to ensure compliance to the guidelines onsite. Similarly, in China, where 58 million workers are employed in the construction sector, the National Health Commission introduced detailed guidelines for the management of construction sites. Staggered working shifts, use of protective equipment, disinfection of areas without proper ventilation, occupational safety and health trainings, and regular health checkups were all included.

The most significant changes to construction, however, went beyond hygiene and safety and focused on remote work and digital tools to facilitate the continuity of construction projects. A fully digitalized process has proved crucial for business continuity of services and permit processing in extraordinary times. Since 2007, 29 economies have set up web-based portals for coordinating building permitting processes. Singapore’s Construction Real Estate Network (CORENET) e-submission platform, first introduced in 2001, already had all the elements in place for an entirely digital building plan submission, checking and approval process, and made it possible for the country to continue all permitting services remotely even during their “circuit-breaker” period of strict social distancing between April and May of 2020. The process is entirely paperless as electronic formats and signatures had already made the submission of physical documents and in-person meetings redundant. Other countries did not have all the information technology infrastructure in place but swiftly responded to the pandemic by deploying or enhancing e-government platforms and solutions to allow for continuity in the construction sector.  Morocco’s Rokhas platform, for example, improved its capabilities to allow for videoconferencing and reviewing building plans digitally and remotely. During the course of 2020 the city of Yangon, Myanmar expanded the use of digital construction permits, which it had piloted for two years, and the government of Benin moved forward with also launching a digital application portal.

Building permitting authorities around the world also faced the challenge of ensuring building quality control of construction projects during the health emergency. Rather than continue with business as usual or suspend inspections altogether, authorities across the world have adopted inexpensive, readily available digital tools to perform inspections remotely. Kuwait was one of the first to replace in-person inspections with the submission of photos and videos for verification that qualified engineers have conducted quality control. In the US city of Miami virtual inspections of construction sites through either a Zoom or a Microsoft Teams video calls are now routine between engineers on site and building control officials. Authorities in the United Arab Emirates were already using CCTV and drones to inspect construction sites before the COVID emergency, and were able to retool their capabilities to move further into virtual and remote inspections starting in March of 2020.

Having an electronic submission system does not guarantee the continuation of service provision. The construction permitting process is often complicated and often includes multiple agencies that must review, approve the application and collect applicable fees before the permit is issued. Several preconditions must be in place however to ensure that the transition from paper to digital permitting and inspections are feasible: investments in software and cybersecurity are required to satisfy record-keeping and privacy requirements; existing software must be adapted to accommodate videoconferencing and real time interactions; standards on which 3D or 4D formats are to be used must be agreed upon with the private sector; electronic payments must be integrated into the platforms; multiple agencies involved in the building permitting process must be also be given access and included in the digital platforms. And above all, both the private sector as well as civil servants must be trained and convinced on the advantages of using these digital tools. Even in advanced economies this may be a daunting task. In the US, 40% of local building permitting departments have reported to not have the capability to conduct electronic plan reviews and 60% reported that they are not ready for remote virtual inspections. Launching electronic platforms or imposing virtual remote inspections on local governments or the private sector that are not prepared for the digital leap could create even greater backlogs in building permits and delay the construction industry’s recovery. A recent case study has shown that an increasing number of governments were already taking serious steps to accelerate the digitalization of construction permitting and promoting the use of collaborative software before the COVID pandemic. As countries prioritize kickstarting economies and reviving their construction industries, the imperative of moving toward more efficient and digital processes has taken an even greater urgency.