Tipping Point?

Quality, Consequences and the Construction Industrial Complex (part 133).

Happy New Year.

New year is when I like to reflect on macro issues, review current market state of play and how I think it will develop. I believe the property market is at a tipping point and great change will unfold over the next 10 years due to the forces of scale, technology, environmental issues and demographics.

We humans have scaled up, we are currently 7.6 billion and are estimated to increase to 11.8 billion by 2100 (https://en.wikipedia.org/wiki/World_population). We have managed this growth differently as our numbers increased over time:

• Initially we where tribal and village based communities then we exceeded the “Dunbar number” i.e. 150 stable relationships (https://en.wikipedia.org/wiki/Dunbar%27s_number) with the move to cites during industrialization.
• Industrialization lead to prominence of national institutions such as government, city councils the civil service. These institutions are IHMO, starting to brake down due to their now limited ability to control information and large numbers of humans trans nationally.
• The internet, social media and distributed ledgers are emerging as organizational, management forces for humans at vast scale. This can be very uncomfortable for older generations and of course, governments will resist, but I believe, the “genie is out of the bottle”.

Bad ideas require force. Good ideas don’t require force but they meet resistance due to path dependancy and vested interests. This describes the Internet, social media and cryptocurrencies. IMHO, cryptocurrencies are a proxy for the lack of confidence in current governing institutions, to quote Prof Scott Galloway, cryptocurrency is a “chaos index”.

The continuing emergence of the aggregated and disruptive power of the internet, social media and distributed ledgers will impact:

• Awareness via trans-national distribution of news and information, Moore’s law+Metcalfe’s Law+the Power Law is ultimately an irresistible force.
• Geopolitics & national institutions ability to govern.
• Local and national culture.

Buildings are an expression of art, technology and culture. They have scaled with the growth and needs of humans but I believe, current building design and construction outcomes lag current and future human needs.

I would summarize the current state of play in the property design and construction industry as follows:

• Slow to change and environmentally damaging.
• Driven by lobbying and vested interests, particularly in North America.
• Loaded with “path dependencies” particularly in the supply chain.
• Full of cronyism, corruption and mischief.
• No shortage of people but a massive shortage of talent and innovation.
• Growing skills shortage (in Western countries) due to demographic forces.
• Commoditizes vital professional services including architecture and engineering design.
• Major commercial projects are delivered late with large defect and snag lists. Really, if you know of a major building project delivered on time with no defects please contact me.
• Macho and incompetent to the point of comedy. Really, there is a comedy show like “The Office” in many large projects I have experienced.

Change is needed and IMHO, we are at an irresistible tipping point due to Moore’s law+Metcalfe’s Law+the Power Law. The irresistible triggers for change over the next ten years will be:

• Skills / talent shortages.
• Baby-boomers leaving the industry in large numbers.
• Falling cost of technology and the IOT.
• Pollution and environmental pressures.
• “Woke” clients, they will realize they always own the risk and it cannot be “laid off”.
• Software and AI automation of building design.
• 3D printing technology.
• Block chain technology.

Having thought about all this and just climbed out of my sensory deprivation tank, consulted my astrologer and had a crystal healing, I think the next ten years look this:

• Growing off site prefabrication.
• Introduction of on site 3D printing.
• AI software completes 80% of design on a rules basis and humans provide the 20% creative input.
• Way less people involved.
• Bifurcation of talent. Like the legal profession the middle will be striped out. There will be high paid talent at the top and low paid, semi-skilled workers at the bottom and no middle. This phenomenon already has a name, it is called “juniorization”.
• Wireless IOT technology to commission and manage buildings using data analytics and algorithms.
• Risk of poor client and project management is mitigated by technology.
• Lobbying has less influence to disrupt progress.
• Smart contracts utilizing block chain will be used to reduce mischief and corruption.

Get ready, the future is coming and it does not care about your feelings. The best way to prepare IMHO, is to:

• Look forwards and continually learn, relearn and embrace technology.
• Stop complaining and become undeniably awesome at what you do.
• Avoid negative, backward looking people and companies, move towards excellence always.

Bring it!

Twitter: @BLDWhisperer

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