Industry Agenda Shaping the Future of Construction – A Landscape in Transformation: An Introduction

Prepared in collaboration with The Boston Consulting Group

January 2016 World Economic Forum 91-93 route de la Capite CH-1223 Cologny/Geneva Switzerland Tel.: +41 (0)22 869 1212 Fax: +41 (0)22 786 2744 Email: [email protected] www.weforum.org

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REF 110116 Contents Preface

3 Preface The first report of the World Economic Forum’s Future of Construction Series – The Future of Construction: A Healthy Outlook and How to Make It a Reality 4 Context and Objectives of – will be published in the first quarter of 2016. As input for discussion, this the Report document includes the Executive Summary of the report, as well as its first chapter, Introduction: The Construction Industry – Time for a Transformation. 5 Executive Summary The remaining chapters – on companies as the spearhead of transformation, 7 1. Introduction: The the industry’s need to collectively drive transformation, the government’s need to Construction Industry – encourage and enable this transformation, and the way forward – will be part of Time for a Transformation the full report.

7 1.1 The industry is crucial to the economy, society and environment

8 1.2 The industry’s future will be shaped by several megatrends

9 1.3 The industry must confront internal challenges as well

11 1.4 The industry is ripe for and capable of transformation

13 Abbreviations

14 Endnotes

15 Contributors

17 Bibliography

Shaping the Future of Construction – A Landscape in Transformation: An Introduction 3 Context and Objectives of the Report

Scope This report is the first publication of a multi-year project for guiding and supporting the Engineering & Construction (E&C) industry during its current transformation. The report describes the industry’s present state, assesses relevant global trends and their impact on the industry, and devises an industry-transformation framework with key areas for development and action. It also features many best practices and case studies of innovative approaches or solutions, and offers a view – at different points of action, such as at the company-, industry- and sector-level – of how the future of construction might look. The project’s subsequent phases and reports will deal with specific topics or will explore the subject in-depth by geography.

The project as a whole, and this report specifically, builds on the findings of an earlier World Economic Forum project – the four-year Strategic Infrastructure Initiative. That initiative identified and described the key government measures needed to close the infrastructure gap, by such means as improving the prioritization of projects, enhancing public- private partnership (PPP) models, improving the operations and maintenance (O&M) of existing assets, and better mitigating risks. During that research, it became evident that important contributions can also be made from the supply side – the Engineering & Construction industry – in the form of improvements to and innovations in project delivery.

Audience This report is aimed at all firms active along the construction value chain, including suppliers of building materials, chemicals and construction equipment; contractors; and engineering, architecture and planning firms; as well as project owners and developers. Governments are another target audience, as they not only have an impact on the industry via regulation but also act as the main procurer of most infrastructure projects. Finally, this report is also aimed at members of academia and civil society, in view of the socio-economic importance of the construction industry. The industry will rely on effective collaboration with all stakeholders for its future success.

4 Shaping the Future of Construction – A Landscape in Transformation: An Introduction Executive Summary

The Engineering & Construction (E&C) industry strongly Compared to many other industries, the construction industry affects society, the economy and the environment as a has traditionally been slow at technological development. It whole. It touches the daily lives of everyone, as quality of life has undergone no major disruptive changes; it has not widely is heavily influenced by the built milieu surrounding people. applied advances in processes such as “lean”.1 As a result, The construction industry serves almost all other industries, efficiency gains have been meagre. In the United States over as all economic value creation occurs within or by means the last 40 years, for example, the productivity of construction of buildings or other “constructed assets”. As an industry, labour has actually fallen. moreover, it accounts for 6% of global GDP. It is also the largest global consumer of raw materials, and constructed Given the sheer size of the Engineering & Construction objects account for 25-40% of the world’s total carbon industry, even a small improvement would provide substantial emissions. benefits for society. To capture such potential, this report presents an industry transformation framework (Figure 1), Multiple global megatrends are shaping the future of listing 30 measures, including many best practices and case construction – trends related to markets and customers, studies of innovative approaches. Some of the measures can sustainability and resilience, society and workforce, politics be adopted by private companies on their own, while others and regulation. Consider just two developments: first, the require collaboration with their peers or with other companies number of disasters reported last year amounted to three along the construction value chain. In addition, some of the times the number in 1980, such that certain major hazard- measures can be adopted by government alone, acting both mitigation endeavours are needed; second, the population as the regulator and as the major owner of infrastructure of the world’s urban areas is increasing by 200,000 people projects. per day, all of whom need affordable housing as well as social, transportation and utility infrastructure. Such trends pose challenges but also offer opportunities; either way, they require an adequate response from the industry as a whole.

Figure 1: Industry Transformation Framework

Source: World Economic Forum; BCG analysis

Shaping the Future of Construction – A Landscape in Transformation: An Introduction 5 Substantial improvements are already within reach and it should engage local communities by means of for companies participatory planning and ongoing community-involvement initiatives during operations. A good example in that regard It is companies themselves that should spearhead the is the Considerate Constructors Scheme, a non-profit, industry transformation. Tremendous opportunities are independent organization founded by the United Kingdom’s available through the application of new technologies, construction industry to improve its image. materials and tools. New technologies in the digital space, for example, will not only improve productivity and reduce The industry is also very much affected by politics and project delays, but can also enhance the quality of buildings regulation, and thus needs to optimize its interactions with and improve safety, working conditions and environmental the public sector. Again, companies should cooperate in compatibility.2 Building and Information Modelling (BIM) their efforts here, to ensure constructive communication plays a central role here, as it is the key enabler of and with public agencies, to monitor political developments facilitator for many other technologies: the building of a accurately and to implement an effective advocacy strategy. bridge, for example, can be greatly facilitated by combining In the German “national initiative on energy transition”, robotics and 3D printing via a parametrically designed 3D for instance, the construction industry coordinated well in model. Connecting these 3D models to all the dimensions developing a strategy on climate change with the German available with Enterprise Resource Planning systems government.5 allows further improvement in the accuracy of processes and operations. Although many innovative solutions are As both regulator and major client, the government too already being applied on a small scale or in a few countries, needs to take action the industry still needs a large-scale application or better adaption of current technological developments. In any given country, the public sector, in particular the national government, can enhance competition and To unlock the potential lying in new technologies, materials productivity by simplifying and harmonizing building codes and tools, the industry also needs to adopt the appropriate and standards. By setting and enforcing time limits for processes. For instance, the benefits of BIM are reinforced regulatory and environmental approvals, governments can if companies exploit the new opportunities it provides – greatly reduce project delays. Ideally, they should also notably, a new way of collaborating and sharing information minimize barriers to competition at an international level. between stakeholders. Large productivity improvements can And they should provide appropriate support to academia be achieved by optimizing existing processes: the broader and companies for developing technological innovations. use of lean principles and methods, for instance, could The British government, for example, recently put the reduce completion times by 30% and cut costs by 15%.3 construction industry on the national agenda to develop a long-term view of ways to put Britain at the forefront of Another core lever is early project planning. To improve global construction. such planning, companies should promptly draw on the knowledge of all stakeholders, and should explore new Governments can also shape the industry by their actions contracting models. A minimal increase in upfront costs of as key project owners. The Crossrail project in London, about 2% to support optimized design will lead on average for instance, involves systematically generating, capturing to life-cycle savings of 20% on total costs.4 and replicating innovative ideas and eventually translating them to practical innovations and industry standards. It Every change has to be driven and supported by the people also aims to raise the bar for other construction projects by involved, so companies must focus on attracting, retaining making those ideas, technologies and practices available to and developing talent, and establishing a company culture the industry as a whole. Finally, the issue of corruption on conducive to innovation and improved skills. This is all the construction projects can only be resolved if all participants more necessary as the industry is traditionally regarded as cooperate in developing and implementing effective anti- not particularly attractive by prospective employees. corruption actions – actions that address both the supply and demand sides of corruption. Cross-company collaboration is pivotal

Engineering & Construction companies cannot realize the full potential on their own. The industry is one of the most fragmented in the world and relies on a seamless interplay of all participants along the value chain and throughout a project’s life cycle. To reduce complexity and improve cooperation and exchange, companies need to enhance coordination across the value chain and jointly define standards and agree on them. Australia is duly pioneering the standardization of project alliance agreements to reduce initial costs.

To gain the support of society at large, the industry again needs to work collectively, along multiple dimensions. For example, it should promote itself as an attractive employer,

6 Shaping the Future of Construction – A Landscape in Transformation: An Introduction 1. Introduction: The Construction Industry – Time for a Transformation

1.1 The industry is crucial to the 1.1.3. Environmental relevance economy, society and environment The construction industry is the largest global consumer of resources and raw materials. It consumes about 50% of global steel production10 and, each year, 3 billion tonnes of 1.1.1. Societal relevance raw materials are used to manufacture building products worldwide. Construction is one of the first businesses that humankind developed, and it continues to shape our daily life in unique About 40% of solid waste in the United States derives from ways. Virtually all other businesses rely on the construction construction and demolition.11 Throughout the world, such industry to provide and maintain their accommodation, plants waste involves the significant loss of potential valuable and infrastructure, and almost everyone relies on construction minerals, metals and organic materials. to some extent for housing, work and play. For almost the entire population of the world, quality of life is heavily As for energy use, buildings are responsible for 25-40% of influenced by the built environment.6 the global total. In Europe, buildings account for 40-45% of energy consumption in society, and thereby contribute hugely Hence the value of improving the quality of construction, to the production of carbon dioxide.12 increasing its sustainability and reducing its cost. Any endeavour serving any of those causes is likely to generate welcome benefits – whether for families investing in their first private home, or governments embarking on a giant infrastructure project.

1.1.2. Economic relevance

With total annual revenues of almost $10 trillion and added value of $3.6 trillion, the construction industry accounts for about 6% of global GDP.7 More specifically, it accounts for about 5% of total GDP in developed countries, whereas in developing countries such as India, it tends to account for more than 8% of national GDP. The industry is expected to grow greatly in coming years, to estimated revenues of $15 trillion by 2025.8

Construction is a “horizontal” industry (like the Financial Services industry), catering to all industry verticals, – in other words, construction has considerable interaction with numerous other sectors. To mention a few, residential housing accounts for 38% of global construction volume; transport, energy and water infrastructure 32%; institutional buildings 6%; commercial buildings 12%; and industrial sites (from cement to automotive manufacturing) 13%. For all of these sectors, value creation almost always occurs within or by means of buildings or other constructed assets.

If countries are to enjoy inclusive and sustainable growth, they crucially need modern and efficient infrastructure. According to a 2014 estimate by the International Monetary Fund, if advanced economies invested an extra 1% of GDP into infrastructure construction, they would achieve a 1.5% increase in GDP four years later.9

Shaping the Future of Construction – A Landscape in Transformation: An Introduction 7 1.2 The industry’s future will be shaped by several megatrends

The construction industry is affected by megatrends in four categories: markets and customers, sustainability and resilience, society and workforce, and politics and regulation. The industry needs to identify and implement optimal responses to these megatrends – both to the opportunities they offer and to the challenges they pose.

Figure 2: Megatrends Shaping the Construction Industry’s Future

Source: World Economic Forum; BCG analysis

1.2.1. Market and customer trends upgrading or replacing – an immense opportunity, and responsibility, for the construction industry. The vast As demand in emerging countries rises, the industry must “infrastructure gap” cannot be bridged by public-sector identify how these new markets can benefit best from the money alone. Private capital is needed, so the trend in technological advances and increased safety standards infrastructure construction projects is for PPPs. One other being applied in developed countries, while taking into notable development is the increasing occurrence of account local market conditions. infrastructure megaprojects, even though such projects have a poor record historically in terms of on-time and on-budget An increase in global competition will certainly produce delivery, environmental footprint and public support.13 winners and losers as strengths and strategies differ between companies and countries. Many Asian construction 1.2.2. Sustainability and resilience trends firms, on the basis of their cost advantages, put great effort into securing construction contracts abroad. Most Western Increasingly, sustainability is becoming a requirement rather markets, such as the United Kingdom’s, are characterized than just a desirable characteristic, and its pursuit is bound to by a high degree of fragmentation, which impacts on their affect both the construction process and the built asset itself. level of innovation and their ability to access foreign markets. The construction industry produces an enormous amount Eventually, the firms with strong processes in place and the of waste, so the more efficient use and recycling of raw ability to adapt their business models to new markets will materials (i.e. establishing a circular economy), even a small prove to be the winners. Many of the others will disappear. improvement, offer huge potential benefits. New priorities One particularly challenging area is that of infrastructure. are emerging accordingly, including optimizing space, for Currently, fast-ageing infrastructure assets can jeopardize example, and ensuring more efficient methods of heating, economic growth, and demand proper maintenance, cooling and lighting. The industry is increasingly involved

8 Shaping the Future of Construction – A Landscape in Transformation: An Introduction with off-grid/distributed power sources, such as wind power, and labour legislation, and environmental standards. geothermal energy and solar panels on roofs. New regulations in any of these areas can affect profits adversely. If designed thoughtfully, however, regulation can The industry also has to address growing concerns actually prove advantageous to companies.20 For instance, over natural hazards (notably, flooding, hurricanes and retrofit investments prompted by Germany’s new Energy earthquakes), and to enhance resilience. So new emphasis is Conservation Ordinance were a major driver of innovation for being placed on risk-mitigating solutions, especially in urban the construction industry. areas with high population density. Next is the issue of bureaucracy. Construction permits are, Finally, the industry must be engaged against the growing quite rightly, more and more subject to environmental and threats to cybersecurity. No doubt many important benefits social-impact studies. If these are conducted inefficiently, will emerge from the convergence of web, cloud and mobile however, or if there is a backlog in permit decisions, projects platforms, as well as the Internet of Things, but vulnerability are needlessly delayed and their prospects suffer: cash will increase as well. So the imperative to protect the industry flows start later than anticipated, thereby compromising from threats without disrupting business innovation and profitability. An appropriate balance is required: on the one growth has never been greater.14 hand, offering speedy approval processes; on the other, giving all stakeholders their due say. Even once the permits 1.2.3. Societal and workforce trends are granted, infrastructure projects remain vulnerable to cancellation, owing to the vagaries of national politics. Very The world’s urban population is expected to exceed 6 billion often, a new government will set different priorities from those by 204515 – and about a quarter of that population would of the previous government.21 live in slums if the current share remains constant.16 Hence the need for a boost in affordable housing in urban areas Political instability is also an issue. The international – the very areas where the construction process is most community has arguably managed to reduce overall levels of complex, owing to the space constraints – and for increased violence in recent decades, but regional hotspots obviously infrastructure spending on water supply, sanitation, and so persist and new ones flare up, at enormous human and on.17 economic cost. Contractors are wary of getting involved in such locations, even in post-crisis states – especially in long- Another demographic trend, especially in developed term infrastructure programmes, where predictability is key – countries, is the shifting age profile: the increasing proportion and need to find ways of mitigating the risks. of elderly people in the population affects the construction industry in two main ways: first, it creates a need to construct Finally, the challenge of corruption must be addressed. In or adapt buildings to accommodate ageing and convalescent many countries, corruption remains one of the greatest citizens; second, it threatens to reduce the available supply barriers to economic and social development. Although of construction workers. That threat might seem less serious bribery and other forms of corruption afflict almost every than in the past, since new technologies are now taking over industry sector, they are a particular concern for companies many of the tasks that formerly required low-skilled workers.18 in the Engineering & Construction and Real Estate sectors, However, the new technologies themselves require a highly given the nature of their business. skilled workforce, and the construction industry – traditionally perceived as less glamorous than other sectors – will struggle to recruit the requisite “digital” talent.19 1.3 The industry must confront Among the other challenges faced by the construction internal challenges as well industry are those involving the rights or wishes of local communities, and health and safety issues. Neighbourhood In most countries, over the past 50 years, productivity lobby groups, for instance, might influence permit decisions improvements in construction have been almost negligible, and, failing that, protestors might force the withdrawal of especially when compared to those in other industries. Some permits already granted. Communities are also becoming new technologies have emerged, but the rate of innovation more organized and professional – partly thanks to new and innovation adoption has been very slow. forms of communication and social media. As for health and safety issues, regulations and expectations are intensifying: asbestos has been outlawed globally as a construction material, and builders are increasingly motivated to ensure Looking at construction projects today, I do that the living and work environments that they create are not see much difference in the execution of ergonomic and allergy-free. the work in comparison to 50 years ago. 1.2.4. Political and regulatory trends

The various political challenges relate to regulation, John M. Beck, Executive Chairman, Aecon Group, Canada bureaucracy, instability and corruption.

Regulation impacts on many dimensions of the Engineering & Construction industry: the industry is especially affected Weak industry performance is also reflected in stock prices: by changes in health and safety requirements, financial in Total Shareholder Return (TSR) comparisons, listed

Shaping the Future of Construction – A Landscape in Transformation: An Introduction 9 Figure 3: Industry Productivity and Performance, manufacturing industries, for instance, production processes 1964-201223 are planned in advance to a very high level of detail, and large quantities of data are continually collected. In that way, if something goes wrong, a car manufacturer, for instance, can quickly home in on the root causes and implement remedies immediately. Few construction companies are set up in this efficient way.

Little cross-functional cooperation. The conventional construction process is generally sequential, as it reflects the input of the project owner, designers, constructors and key suppliers. This set-up militates against sophisticated production planning. Ideally, the knowledge of all stakeholders along the value chain should be fully used early on in the design and planning process, but that is seldom easy or even possible under current arrangements.

Little collaboration with suppliers. For many large contractors, the purchasing strategy involves long-term relationships with key suppliers; nevertheless, the final decisions are often still made ad hoc, on a project-to-project basis. The problem is even more severe in smaller construction companies, where purchasing is almost exclusively project-based.

Conservative company culture. The construction industry operates in a somewhat traditional environment and generally 1 Peer set based on US companies with Engineering, Construction and retains a conservative corporate culture. The widespread Services-related Standard Industrial Classification codes. Financials are perception is, justifiably enough, that construction companies inflation-adjusted and indexed to 1964; output per working hours. are not quite progressive or forward-thinking. CAGR = compound annual growth rate Sources: Global Vantage; Compustat; Bloomberg; www.aecbytes.com/ Shortage of young talent and people development. The viewpoint/2013/issue_67.html; www.nber.org/papers/w1555.pdf; S&P image that people have of the construction industry is a Capital IQ; BCG ValueScience Center relatively poor one, with inadequate gender diversity and little job security (owing to the cyclical nature of the business). As a result, Engineering & Construction companies often Why does the industry have such an unimpressive record? struggle to attract talented recruits to their workforce. Relative The underlying issues are many and varied. to companies in other industries, construction companies engage less often and less effectively in internal people- Lack of innovation and delayed adoption. The lifeblood of any development initiatives. industry is research and development (R&D). The benefits of R&D, however, are long term, whereas the costs occur in In fairness, the construction industry does have some the present. That mismatch is ill-suited to the project-driven inherent characteristics that make it a structurally difficult business in which the construction industry operates, so R&D business and that hinder attempts at reform. It also has received less attention here than in other industries.24 represents just one step out of several in the value chain, and relies on many stakeholders. So the much-needed company Informal processes or insufficient rigour in process execution. and industry transformation is bound to be difficult. Figure 4 The processes typically adopted in construction companies lists these unconducive characteristics in two categories: on regularly lack maturity. Companies often seem to put greater the left, some of the industry’s main peculiarities; on the right, emphasis on defining the final product than on planning the the specific issues resulting from the special role of its clients. actual construction process.

Insufficient knowledge transfer from project to project. Although each construction project will have its own unique characteristics, the processes of construction itself are repeated in their essentials from project to project. Lessons learned from one project could therefore often be usefully Clients do not want to be guinea pigs. applied to subsequent projects, and each construction company would be expected to institutionalize this process. Yet few companies have done so. Past experience is therefore often lost, and projects continue to rely heavily on Roger Smith, Executive Director, Corporate Strategy, Fluor Corporation, the expertise of the individual project manager. USA

Weak project monitoring. A related issue is the weak monitoring of projects, relative to other industries. In many

10 Shaping the Future of Construction – A Landscape in Transformation: An Introduction Figure 4: Unique Construction Environment

Source: World Economic Forum; BCG analysis

1.4. The industry is ripe for and All of this significant potential is ready for release. New opportunities are emerging as transformative developments capable of transformation reshape the Engineering & Construction industry – from innovative technologies to revolutionary construction Given the construction industry’s societal, environmental techniques. Productivity and efficiency will surge. It is up and economic importance, even small improvements in to the industry to embrace these new opportunities more performance will make a strong impact in all three domains: vigorously and change the way it has traditionally operated.

– Societal. A mere 1% reduction in construction costs Other industries, such as the automotive industry, have would save society about $100 billion annually25 – a sum already undergone radical and disruptive changes, and their equal to the entire global cost of cancer drugs. In fact, digital transformation is now well under way. Construction the possibilities go far beyond that: the vision formulated companies need to act quickly and decisively: lucrative by the UK government for 2025 is of a 33% reduction in rewards await nimble companies, while the risks are serious the initial cost of construction and the whole-life costs of for hesitant companies. Witness the shake-up that digital built assets.26 photography brought about in the affected sector.

– Environmental. According to the United Nations Given all the megatrends and internal challenges, the Environment Programme, by harnessing the capacity construction industry should take action in several areas. of the building sector, many countries can cut emission A comprehensive approach is outlined in the industry rates cost-effectively and achieve energy savings of transformation framework shown in Figure 5. more than 30%. The target set by the United Kingdom’s construction industry for 2025 is a 50% reduction of The framework structures the various areas of action today’s level of greenhouse gas emissions in the overall according to responsibility. Initially, the transformation relies built environment.27 on the initiatives of individual companies – the adoption of new technologies and processes, business-model innovation, – Economic. The global shortfall in infrastructure capacity refinements to the corporate culture and organization, and is expected to reach $15-20 trillion by 2030. According so on. Individual action is not enough, however, in such to the B20 Infrastructure & Investment Taskforce, closing a highly fragmented and horizontal industry: many of the that worldwide infrastructure gap could create up to 100 challenges need to be tackled collectively – the industry as million additional jobs and generate $6 trillion in economic a whole has a responsibility also. It needs to establish new activity every year in the long run.28 Up to 30% of this forms of collaboration, or to improve existing forms. Finally, boost could come from improvements to construction governments have a large role to play as well, in their dual role projects and to asset operations. as regulators and clients.

Shaping the Future of Construction – A Landscape in Transformation: An Introduction 11 Figure 5: Industry Transformation Framework

Source: World Economic Forum; BCG analysis

The full report, including chapters 2-4 that discuss the steps all stakeholders must take, will be launched in the first quarter of 2016.

12 Shaping the Future of Construction – A Landscape in Transformation: An Introduction Abbreviations

B20 Business 20 BCG The Boston Consulting Group BIM Building and Information Modelling E&C Engineering and Construction GDP Gross Domestic Product HSE Health, Safety and Environment O&M Operations and Maintenance PPP Public-Private Partnership R&D Research and Development TCO Total Cost of Ownership TSR Total Shareholder Return UN United Nations UN DESA United Nations Department of Economic and Social Affairs UNEP United Nations Environment Programme

Shaping the Future of Construction – A Landscape in Transformation: An Introduction 13 Endnotes

1 Lean in the context of construction is described in The 21 For a detailed assessment of such risks in infrastructure Boston Consulting Group, 2015a. projects, see World Economic Forum, 2015b. 2 The Boston Consulting Group (in a forthcoming report 22 According to The Boston Consulting Group, 2015b, the 2016) has outlined the key technological developments and median TSR of the Engineering & Construction industry has the potential impact and implications for key stakeholders. trailed the S&P 500 in three of the past five years. 3 See The Boston Consulting Group, 2015a. 23 Based on The Boston Consulting Group 2015c. 4 Kats, 2003 explains how an initial upfront investment of 24 For instance, in a survey of almost 15,000 companies from $100,000 to incorporate green building features into a $5 enterprises in the United Kingdom, innovation activeness was million project could lead to savings of $1 million over the consistently ranked as one of the lowest priorities. See HM lifetime of the building. Government, 2014. 5 The German national initiative on energy transition, 25 See imshealth, 2015. Energiewende, included a module focused on buildings, 26 See HM Government, 2013 and United Nations Plattform Gebäude. The key recommendations were Environment Programme, 2009. developed jointly by the construction industry and the government, and were incorporated into a national action 27 See HM Government, 2010. plan, Nationaler Aktionsplan Energieeffizienz (NAPE). 28 See B20 Australia, 2014. 6 This is especially true, of course, for the more than 100 million people employed in construction worldwide. 7 This calculation is based on 2014 data from IHS, 2015, Oxford Economics, 2015 and World Bank, 2015. 8 See Global Construction Perspectives and Oxford Economics, 2013. 9 This estimate applies specifically to public-sector investment into infrastructure. The effect is lower in emerging markets, because of the generally lower efficiency there of public- sector investment. See International Monetary Fund, 2014. 10 See World Steel Association, 2015. 11 See Environmental and Energy Study Institute, 2014. 12 See United Nations Environment Programme, 2007. 13 See Flyvbjerg, Bruzelius and Rothengatter, 2003. 14 See World Economic Forum, 2015a. 15 See UN Department of Economic and Social Affairs Population Division, 2014. 16 See United Nations Human Settlements Programme, 2014. 17 Further infrastructure needs are, for instance, in transportation and social infrastructure. 18 Particularly in fast-ageing countries such as Japan, a heavy push towards these technologies is under way. 19 For a view on the potentially negative impact that a general workforce gap could have on national growth, see The Boston Consulting Group, 2014. The impact will be particularly severe where the cause is undereducation. 20 See Setar, 2013.

14 Shaping the Future of Construction – A Landscape in Transformation: An Introduction Contributors

Project Team ArcelorMittal Patrick Le Pense, Manager, Flat Products; Business Andreas Renz Development Construction - Infrastructure Project Manager, Future of Construction Lakshmi Mittal, Chairman and Chief Executive Officer

Manuel Zafra Solas Arup Practice Lead, Engineering and Construction Industries Gregory Hodkinson, Chairman Peter Chamley, Director; Chair, Global Infrastructure Practice Editors

World Economic Forum BASF Pedro Rodrigues de Almeida Kurt Bock, Chairman Head of Basic Industries, Member of the Executive Dirk Funhoff, Head, Construction Network Team Committee Consolidated Contractors Company The Boston Consulting Group (Adviser and Knowledge Samer S. Khoury, President, Engineering and Construction Partner) Jamal Akl, Group Vice-President, Sales, Proposals and Philipp Gerbert Support Senior Partner and Managing Director; Global Head of Digital Antoine Haddad, Vice-President, Sales, Estimation and in Construction and Industrial Goods Proposals (Civil)

Santiago Castagnino Danfoss Partner and Managing Director; Head of Construction and Niels Christiansen, President and Chief Executive Officer Infrastructure Europe Nis Jessen, Vice President, Business Development and Strategy Christoph Rothballer Principal, Infrastructure Expert Essar Group Prashant Ruia, Group Chief Executive Officer and Director Steering Committee of the Future of Shiba Panda, Managing Director, Essar Projects Construction Project

Acciona Fluor José Manuel Entrecanales Domecq, Chairman David T. Seaton, Chairman and Chief Executive Officer Luis Castilla, Chief Executive Officer, Acciona Infrastructure Mark Brown, Global Director, Fabrication

Aecon Lixil John M. Beck, Executive Chairman Yoshiaki Fujimori President and Chief Executive Officer Steve Nackan, President, Aecon Concessions Hanseul Kim, Director, Corporate Initiative Group

AkzoNobel Perot Group Ton Büchner, Chief Executive Officer and Chairman of the Henry Ross Perot Jr, Chairman of the Board Board of Management Todd Platt, Chief Executive Officer, Hillwood Investments

Amec Foster Wheeler Samir Brikho, Chief Executive Officer Charles Mouzannar, President, Construction and Specialty Consulting (CSC) Operating Unit Shaping the Future of Construction – A Landscape in Transformation: An Introduction 15 SAP Aristeidis Pantelias, Lecturer and Course Director, MSc Bill McDermott, Chief Executive Officer Infrastructure Investment and Finance, The Bartlett School of Construction & Project Management, University College Michael Shomberg, Global Vice-President, Engineering, London Construction and Operations Solutions Bob Prieto, Chairman and Chief Executive Officer, Strategic Program Management LLC Siemens Joe Kaeser, President and Chief Executive Officer Spiro Pollalis, Professor of Design, Technology and Management, Harvard Design School; Director, Zofnass Roland Busch, Member of the Managing Board Program for Infrastructure Sustainability Norbert Pralle, Vice-President, European Network of Skanska Construction Companies for Research and Development Johan Karlström, President and Chief Executive Officer (ENCORD) Nick Doherty, Executive Vice-President Aaron B. Schwarz, Principal, Plan A Architecture + Design Douglas Stollery, Stollery Charitable Foundation SNC-Lavalin Neil Alexander Bruce , President and Chief Executive Officer Jan Van Schoonhoven, Senior Advisor, PPP and International Relations to the Netherlands Government

Tarkett Enrico Vink, Managing Director, International Federation of Consulting Engineers (FIDIC) Michel Giannuzzi, Chief Executive Officer Remco Teulings, President, Europe, Middle East and Africa Edmundo Werna, Senior Specialist, Labour Administration, Labour Inspection and Occupational Safety and Health Branch, Sectoral Policies Department, International Labour WS Atkins Organization (ILO) Uwe Krüger, Chief Executive Officer James X. Zhan, Director, Investment and Enterprise, United Jeff Herriman, Group Director, Corporate Development Nations Conference on Trade and Development (UNCTAD)

Advisory Committee of the Future of Construction Project

Victor Chen Chuan, Professor of Engineering Management, Business School, Sichuan University James Dalton, Chief, Engineering and Construction, U.S. Army Corps of Engineers Juan Elizaga, President, European Network of Construction Companies for Research and Development (ENCORD) Bent Flyvbjerg, First BT Professor and Inaugural Chair of Major Programme Managemant, Saïd Business School, University of Oxford Timothy Geer, Director, Public Sector Partnerships, WWF International Tiago Guerra, Founder and Managing Partner, TG International Manager Shervin Haghsheno, Professor, Department of Civil Engineering, Geo- and Environmental Sciences, Karlsruhe Institute of Technology Geoffrey Hamilton, Senior Officer, Economic Affairs, United Nations Economic Commission for Europe (UNECE) Franziska Hasselmann, Director, Studies CAS MIA, Institute of Accounting, Control and Auditing, University of St Gallen Fiona Murie, Global Director, Health and Safety and Construction, Building and Wood Workers’ International (BWI) Ibrahim Odeh, Director, Global Leaders in Construction Management - Research Group, Department of Civil Engineering and Engineering Mechanics, Columbia University

16 Shaping the Future of Construction – A Landscape in Transformation: An Introduction Bibliography

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18 Shaping the Future of Construction – A Landscape in Transformation: An Introduction

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