Internet of Things in Capital Projects

Eoin Ó Murchú Manager | C.Eng MICE

Connectivity in the modern world – be it telecommunications, internet or even the media – has become a fundamental dependant of society. Since the development and launch of the first truly functional smart devices less than a decade ago, we have gone on to expand our interactions with each other in a variety of formats; living our lives in a digital cloud of information and connected networks that are available at our fingertips.

Yet, in the professional realm of major capital projects we are not as advanced or as connected as we could and should be. In many parts of the project lifecycle there still exists choking inefficiencies that have not been fully addressed. The capturing of lessons, project trends and optimising data use are still treated as an art rather than a science – leading to delays and cost overruns being identified too late to address effectively. However, as an industry we are taking note. Through the Internet of Things (IoT) and initiatives such as Industry 4.0, we are moving away from the reactive response; taking on the challenge of successfully proactively managing project delivery and management. The use of sensor technology and connected networks of information will play an important role in capturing key data.

What is IoT?

IoT is the capturing and harnessing of information, typically through sensors and actuators, and sharing it with a wider computing network. In essence, its purpose is to do more with less effort – to optimise and improve operations, reducing delivery time and costs. Access to real time information is limited on most capital programmes, but utilised correctly it could have very positive benefits for the delivery and management of projects/assets.

“The internet of things...and other disruptive technologies will change how our existing infrastructure is used and the demands placed upon it, as well as the skills required to design, build and maintain it”

ICE State of the Nation 2017: Digital Transformation


The IoT Business Case

1) Real time project benefits

The construction industry is prime for disruption. In the UK, for example, profit margins among the largest contractors declined markedly in 2015, with the overall margin for the top 25 firms dipping below 1.5 percent[1]. According to the Office for National Statistic[2] the UK’s productivity is 18% on average behind other G7 nations. Indeed, PwC studies have shown that 75% of capital projects run over budget and 20% of cost overruns are due to errors.

On many current projects stakeholders operate from their own differing version of reality. Through a connected IoT network, real time insights from programme and cost models can be achieved– ensuring live performance measurement across the project. By enabling construction machinery, equipment and structures to communicate with a central data platform critical performance parameters will be highlighted, allowing accurate and proactive adjustments to be made in real time. Up-front management like this will significantly reduce programme risk and project inefficiencies, improving forecasting for future projects.

A great example of where this will be of benefit is in the optimisation of crane hook time - where real time weather conditions have a huge impact on a cranes operations. PwC are currently exploring solutions for this, with industry partners, that will relay sensor information directly to a smart device. Prevailing site weather reports can be reflected to the wider supply chain, allowing for more efficient planning of deliveries and resources. The capturing of live information of as-built locations, site delays and deliveries via IoT sensors - automatically updating the BIM model, programme and procurement schedule - will also lead to clear record keeping and a proactive approach to asset management.

75% Average number of capital projects that run over budget, 18% Amount UK productivety is lagging behind G7 nations, 1.5% Average construction industry margin
Insert Critical Site Logistics

PwC are currently developing a Critical Site Logistics application with our partners in industry, providing real time identification of project issues and inefficiencies and offering effective solutions.

2) Future benefits and opportunities

One of the main benefits of IoT on major capital projects is that it opens up many new and exciting possibilities. As a colleague of mine recently discussed, identifying project trends in a proactive way can lead to savings in programme and cost if acted upon in a timely manner.

Capital projects should also take inspiration from some of the use cases identified in comparable industries. John Deer, which provide a broad range of agricultural machinery, is now applying software to its array of tractors and other offerings to help farmers do more with less effort[3]. The company is pioneering IoT farming through driverless technology and capturing future crop yield estimates through strategically placed sensors on machinery. The insights gained can then be sold on, creating a new and exciting opportunity out of an existing way of working.

A similar approach to technology and IoT can be taken within the capital projects market. The capturing of regular relevant live data via a connected network, such as daily resourcing on site or efficiencies of the supply chain, can be harnessed for insights. Trend analysis of project performance can be carried out in real time, leading to more accurate information on forecasting and estimating of current and future projects. Spare capacity of resources can then be readily identified and optimised within projects as needed, leading to leaner construction delivery. With this in mind, PwC are currently developing a Critical Site Logistics application that will support these functions on site in real time - assisting in the early identification of project issues and inefficiencies, offering effective solutions.

3) Benefits to the asset lifecycle

An accurate understanding of the whole life cost of an asset is one of the challenges on capital programmes. The use of building information modelling (BIM) has dramatically improved our understanding of construction logistic planning and asset management – but it is still in its infancy in terms of whole life cost potential. The development of 5-D BIM, which considers cost and schedule alongside the geometric 3-D layout, will further transform the management of assets. Contractors and asset managers will have a better chance to identify risks earlier and thus make better decisions as a result. Combining BIM with wearable IoT enabled augmented reality smart devices will also allow operatives (onsite and remotely) to view asset sensor information in a more interactive manner.

Borrowing from the logistics and manufacturing industries, radio-frequency identification (RFID) technology is now being trialled on large construction projects to capture key element information on specifications, date of installation, original vendor and GPS location. Linking this information to BIM enables live capturing of information and a true as-built representation of the delivered asset. Indeed a digital redline[4] review process has been found to translate into cost savings upward of 60%, compared to a paper based approach[5]. This, combined with increased off-site construction and pre-assembly, will reduce waste and promote a leaner construction environment.

Through the IoT network, asset performance is continuously monitored allowing for predictive maintenance measures to be undertaken, if necessary. The application of this technology will not only reduce maintenance costs significantly but it will also cut unplanned outages and extend the asset’s life beyond their current estimates. This can be further enhanced by connecting the asset indirectly to the wider supply chain via sensors, enabling parts to be procured automatically and potentially 3-D printed on site. All building performance management information collected will also optimise estate management and capture true real time operational costs. By using circular economy principles the true current market value of an asset’s materials can be monitored and assessed, enabling the asset owner to make strategic decisions on operations going forward.

Digital built environment: Digitising project delivery, Data analytics: Creating new insight from new data


Recommendations

The slow adoption of technological advancements is the biggest challenge capital projects face. There are numerous examples of neither the client or project team taking responsibility for delivering innovative solutions, overlooking significant opportunity value as a result. The following are key drivers to ensure the successful adoption of innovative technology on capital programmes:

  • Innovation challenge – fresh perspectives and solutions should be welcomed. Clients should be prepared to make investments in technology for the betterment of the project delivery, taking a whole lifecycle benefit view in terms of cost.
  • Shared risk – Contracts should also be seen as opportunities to share the innovation risk between parties – awarding all parties involved for their successful outcomes.
  • User experience design – the usability and accessibility of the technology should be considered from all perspectives. Investment in staff training and development alongside the technology is vital to gain the true innovation benefits.
  • Security awareness – security-mindedness, just like health and safety, should be an important industry consideration in order to repel evolving security threats and vulnerabilities.

The use of IoT is a large opportunity for projects and organisations to exploit the data explosion across the industry. Used effectively it will enable transparency in project delivery, provide real project insights and deliver earlier and better interventions - setting a new expectation for capital projects in the future.

Eoin Ó Murchú is a chartered engineer and Manager within PwC’s Capital Service technology team.


[1] https://www.racplus.com/news/top-25-construction-contractors-see-profit-margins-halve/8688368.article
[2] ONS (2016) International comparisons of UK productivity (ICP), first estimates: 2015. Available at: https://www.ons.gov.uk/economy/economicoutputandproductivity/productivitymeasures/bulletins/internationalcomparisonsofproductivityfirstestimates/2015
[3] http://www.eweek.com/innovation/john-deere-adds-ai-iot-to-farm-equipment
[4] The process where drawings are annotated with new information about the ‘as-built’ structure
[5] The Institution of Civil Engineers State of the Nation 2017: Digital Transformation Report

Key innovation drivers on capital projects

Innovation challenge, Shared risk, User experience, Seurity awareness

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Eoin Ó Murchú
Manager | C.Eng MICE
Tel: +44 (0)77 1897 9676
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