Entry Level - Learning Content

1. The Built Asset Industry

1.1 The Built Asset Industry - Overview

The built asset sector (encompassing facility engineering, construction, operation, property management, as well as demolition and disposal activities) is one of the most significant contributors to the global economy, contributing to around 10% of the global GDP and 8% of global employment.

The industry is divided into various subsectors. Around 38% of the volume (from a construction perspective) can be attributed to residential housing. Transport, energy and water Infrastructure account for around 32% of the entire construction volume. Institutional and commercial buildings account for 18% of the total industry volume, and industrial sites and manufacturing facilities account for the remaining 12%.^[1]

[1] World Economic Forum « Shaping the Future of Construction: A Breakthrough in Mindset and Technology» 2016

OPT: Vertical and Horizontal Construction

The industry is sometimes divided into “vertical” and “horizontal” domains. Vertical assets refer to typical buildings in which humans operate, such as houses, offices, schools shopping centers, hospitals etc. Horizontal assets, also called infrastructure works, refer to facilities that support the movement of people or goods. This can include things like road, rail, bridges or pipelines.

OPT: Focus on Engineering and Construction, within the Built Asset Industry (World Economic Forum)

The Engineering and Construction (E7C) industry strongly affects the economy, the environment and society as a whole. It touches the daily lives of everyone, as the quality of life is heavily influenced by the built environment surrounding people. The construction industry serves almost all other industries, as all economic value creation occurs within or by means of buildings, or other “constructed assets”. As an industry, moreover, it accounts for 6% of global GDP. It is also the largest global consumer of raw materials, and constructed objects account for 25 to 40% of the world’s total carbon emissions.

Economic relevance

With total annual revenues of almost $10 trillion and an added value of $3.6 trillion, the construction industry accounts for about 6% of global GDP. More specifically it accounts for about 5% of total GDP in developed countries, while in developing countries, it tends to account for more than 8% of GDP. The industry is expected to grow greatly in the coming years, to estimated revenues of $15 trillion by 2025.

Environmental relevance

The construction industry is the single largest global consumer of resources and raw materials. It consumes about 50% of global steel production and, each year 3 billion tons of raw materials are used to manufacture building products worldwide. About 40% of solid waste in the United States derives from construction and demolition. Throughout the world, such waste involves a significant loss of valuable minerals, metals and organic materials - so there is a great opportunity to create closed material loops in a circular economy. As for energy use, buildings are responsible for 25 to 40% of the global total, thereby contributing hugely to the release of carbon dioxide.

Source: World Economic Forum <<Shaping, the Future of Construction: A Breakthrough in Mindset and Technology>> 2016.

1.2 The Built Asset Life Cycle

The term “lifecycle” refers to all the different phases that a built asset undergoes, from initial conception through to the eventual end of life phase of those assets, whether they are repurposed or completely deconstructed. How these phases are defined and the transition where one phase ends and another phase begins may vary from region to region and especially from country to country, particularly the phases where a built asset is designed, constructed, and used for its intended purpose. Different regions may also have different names for the phases. Key phases according to a common international breakdown include Planning, Design, Construction, Operation, and End-of-life.^[1]

While these phases are generally sequential, it is not uncommon for one phase to begin while another is still in progress, or for there to be interaction between phases. Figure 1 demonstrates a typical division of phases, although this breakdown is not universal.

^[1] ISO 19650-1:2018

OPT: Built Asset Lifecycle

Planning

Planning is the conceptualization of the building. It includes defining the intended purpose, budget, timeline, and rough location. It may involve a gathering of stakeholder feedback, and will likely have some level of financial exploration.

Design

Design is the process where concepts are created and refined to meet the needs identified during planning. Typically, the designer will create a selection of concepts that broadly meet the functional aesthetic and financial requirements. Details are added and attention is paid to constructability and performance.
Teams analyze, modify, and approve the design to ensure it meets regulatory requirements. Overall, much of the work in this phase is performed by teams that have professional licenses from their appropriate governing bodies.

Construction

During construction, professionals will perform all the site, preparatory work, and correct, the built asset based on the plans created during the design phase. Many separate teams will often work together during construction, each performing their specialised discipline and interfacing with services, and components built by other providers.

They will also document all work performed, both for contractual and financial reasons, as well as to have an accurate record of as-built conditions. These as-built conditions will be used for the ongoing operation of the building, as well as to help with any disputes that may arise in the future related to the construction phase.

Operation

Operation is the longest phase of a buildings life-cycle, and is where a built asset is used for its intended purpose, such as occupation by people or to carry freight. Approximately 90% of the total expenditure for a building will happen during the day-to-day operations phase. This phase includes activities to maintain and repair the built asset.

End of Life

Nearly all built assets will eventually reach an end-of-life, where they are no longer capable of being refurbished to meet the needs of stakeholders (or where the cost of refurbishment are not justifiable). In this situation, the building has reached the end-of-life phase where demolition, deconstruction, and or repurposing, happens to allow the space to be used for a different purpose.

Figure 1: Typical example of the phases of the built asset lifecycle. Depending on jurisdiction and region, specific names and breakdowns of the phases may be different.

OPT: An Alternative View of the Building Lifecycle

ISO 22263 Organisation of information about construction works

ISO 22268:2008 specialises a framework for the organisation of project information (process related as well as product related) in construction projects. Its purpose is to facilitate control, exchange, retrieval, and use of relevant information about the project and the construction entity. Under this standard, the life-cycle is broken down into 10 activities that are grouped into six stages. These stages are:

Inception
Brief
Design
Production
Maintenance
Demolition

buildingSMART International has produced a guide to map the various life-cycle stage definitions from one jurisdiction to another as part of the use case management project. https://ucm.buildingsmart.org/training/list/life-cycle-stages

1.3 Stakeholders

Introduction

The building sector contains a wide array of stakeholders. While nearly every person could be considered a stakeholder in the sense that they use and are affected by built infrastructure, the primary stakeholders are those who own, design, construct, regulate, and support the building process.

Two special groups of stakeholders are the ones who initiate and authorize a built asset project (referred to as Appointing Parties) and those who perform the design and construction work (referred to as Appointed Parties).

OPT: Typical Project Stakeholders

Owners/Operators

Owners and operators are technically two distinct groups with different interests, however, because there is often considerable overlap between these two groups, they are often treated together. Owners are the stakeholders (individual, organisation, or government) that own the physical asset. They commonly have the primary responsibility for financing decisions, and for setting specifications for what the built asset will be used for. Operators are responsible for ensuring the building is used for its intended purpose. They are usually responsible for routine maintenance and maybe wholly or partially responsible for repairs. They will usually have at least some input into the design process.

Governments are a special category of owner/operator. Government assets are often intended for the public good such as roads, airports, or schools where there isn’t necessarily a commercial benefit, but rather a societal one. Governments also often have a large supply of traditional real estate, such as offices, or campuses, which they use to fulfil their other mandates to the public.

Designers

Designers are the professionals that take requirements (usually from an owner/operator) and create a set of plans for construction that will meet local requirements. For liability reasons, many design professionals are governed by licensing bodies, that mandate, training and certification for an individual to be a member of their profession. These certifications are often geographically limited, where a professional may only be able to practice in a specific region.

Architects are responsible for conceptualising, the design of most buildings, and for finalising and producing most design documents. Architects may be generally involved in the overall design, or many specialise in a particular niche. While architects are in general not involved in road design, they may be involved in related adjoining infrastructure, such as paved locks and adjoining paths.

Engineers are a family of professions that focus on specific design elements from a technical point of view. The following describes general responsibilities, though there is some overlap and engineers are responsible for many other types of design: Structural engineers are responsible for ensuring a built asset can withstand the various forces it is exposed to (self-load, wind, earth, etc). Civil engineers primarily design roads, bridges, and other large infrastructure elements, and ensure they can withstand the routine forces of operation; Mechanical engineers are responsible for designing the thermodynamic control of the building, primarily heating and ventilation. They will also generally be responsible for the integration of systems in the building

Depending on complexity, other design professionals may also be involved, including but not limited to electrical, plumbing, and fire suppression experts.

Constructors

Constructors are the groups of people responsible for the actual building process of the built asset. They are involved in some or all of the procurement of materials and components, and have a general responsibility for their transport and storage on site during construction.

General contractors and construction management firms are responsible for the overall manufacturing and assembly process. They will most closely interact with the owners/operators and are responsible for documenting conditions and progress. Specialised contractors (often referred to as “trades”) will perform specific tasks related to the area of expertise (such as plumbing, electrics, or masonry).

Product Manufacturers

Product manufacturers produce components that are used both during the design process, but also as part of the building itself. Some of these products may be mass produced on large or small scale (such as fixtures or panels), while others may be custom-built for the building in question (such as elevators or HVAC ducting).

Regulators and standardisation bodies.

Regulators are responsible for setting and enforcing minimum performance standards for build assets. Generally, regulations are set by governments under consultation with building professionals and researchers. Regulations (often called “building codes”) are written such that if they are properly followed, the building will be expected to continue to be operable for the intended duration. In addition to safety concerns, codes often have usability requirements, such as disability access and type and number of washroom facilities.

Regulators also have an enforcement component, where trained enforcers will inspect buildings before and during construction to ensure that construction is performed according to standards.

Educators

Most built asset educators have experience inside the sector, and train new workers in the area of expertise. Some professions also have a continuing education component, where they are expected to be both constantly learning, as well as providing on-the-job training for more junior members of the profession. This can happen through formal education, institutes such as colleges and universities or through certified training providers. Some professions also have formal apprenticeship structures, whereby an experienced member of the profession mentors junior members.

Industry and Professional Associations

Many professions within the built asset sector have associations where members of the profession can network and share experiences and best practice. These organisations can serve as an important forum for advocacy as well.

OPT: Managing Built Assets

1.4 Life Cycle Costs

Built assets can cost phenomenal amounts of money to design, construct, operate, and dispose of during their life cycle. Many assets will cost tens of millions to billions of dollars in initial cost, and a significant percentage of that each year to operate. While most decisions are made based on design and initial cost, the operations phase is nearly always the most expensive phase of a built asset’s life cycle. Even for horizontal infrastructure, the cost to inspect and maintain an asset can accumulate to more than the initial construction cost.

Decisions made in one phase almost universally constrain the work that can be performed in subsequent phases, meaning a decision made early can have significant subsequent effects.

This slow pace of innovation matters, because of the great scope and scale of built asset sector. Design and construction are the largest consumers of raw materials and other resources, using around 50% of global steel production and more than 3 billion tonnes of raw materials. Any improvement in productivity and successful adoption of modern innovative processes will have a major impact. For example, a 1% rise in productivity worldwide could save $100 billion a year[1].

[1] World Economic Forum « Shaping the Future of Construction: A Breakthrough in Mindset and Technology» 2016

OPT: Life Cycle Costs

1.5 Sustainability

The entire built asset industry (comprising not just engineering and construction but also operations, demolition, and property management) is the highest single consumer of energy (around 35%) and the primary contributor to greenhouse gas emissions (38%). Many in the built asset sector recognize that this is not sustainable going forward.

Figure 2 UN Global Status Report for Buildings and Construction 2020

Estimates suggest that the built asset sector is responsible for 37% of global CO2 emissions. To reach 2030 targets, the sector would need to reduce emissions by 8.3 percent per year.

OPT: Construction Industry & Circular Economy

Not all indications are bleak, however. Many initiatives are leading the development and adoption of more sustainable practices, such as the LEED (Leadership in Energy and Environmental Design) Certification program, which is the most widely adopted mechanism for green building rating. Many governmental and private sector initiatives encourage the adoption of more sustainable practices. This has led to a demand for more effective and efficient approaches to built asset design and development

1.6 Other Drivers for Change

In most countries, over the past 50 years, productivity improvements in construction have been meagre, especially when compared to those in other industries (see the chart below for the respective historical trends in labour productivity in the United States). Some new technologies and tools have emerged, but the rate of innovation and adoption of new innovations has been very slow.

Why does the industry have such an unimpressive record? The underlying causes are many and varied, but several global trends are widely accepted to be contributing factors:

Lack of innovation and delayed adoption. The lifeblood of any industry is research and development (R&D). The benefits of R&D, however, are long term, whereas the costs arise in the present. This mismatch is ill-suited to the project-driven business in which the construction industry operates, so R&D has received less attention here than in other industries.

Informal processes or insufficient rigour and consistency in process execution. The processes typically adopted by construction companies regularly lack maturity. Companies often seem to put greater emphasis on defining the final product than on planning the 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 applied to subsequent projects. Yet few companies have institutionalized such a process. Past experience is therefore often lost, and projects continue to rely heavily on the expertise of the individual project manager.

Weak project monitoring. A related issue is the weak monitoring of projects, relative to other industries. In many manufacturing industries, for example, operations are continuously tracked and large quantities of data are collected. In that way, if something goes wrong, a car manufacturer, for instance, can quickly identify the root causes and implement remedies immediately and efficiently. Few construction companies are set up in this way.

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

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 retains a conservative corporate culture. The widespread perception is, justifiably enough, that construction companies are not sufficiently progressive or forward-thinking.

Shortage of young talent and people development. The image that people have of the construction industry as an employer is a relatively poor one, with inadequate gender diversity and little job security (owing to the cyclical nature of the business). As a result, E&C companies often struggle to attract talented recruits to their workforce. Relative to companies in other industries, construction companies engage less often and less thoroughly.

OPT: Construction Productivities Around the World

The construction industry has a poor track record when it comes to sustainability metrics. Standard processes are largely wasteful and inefficient and have a large carbon footprint. New policies, processes, and technologies are slowly, bringing improvements and transforming the built assets sector.

Construction sector productivity compared to the entire US economy