BUDGET WISH LIST:TIME FOR GOVT TO SUPPORT CIDB IN ITS EFFORTS TO ENCOURAGE ADOPTION OF CONSTRUCTION TECHNOLOGIES
BY Zoe Phoon
Incentivise first movers and adopters
According to Dato’ Faris Yahaya, group CEO of construction and development company ORANGEBEAM Bhd, McKinsey research cited risk aversion as one of the areas of struggle for business leaders regarding tech adoption.
This stands as the bane of innovation and business growth. Which is why, Faris said, the industry is calling for the government to support Construction Industry Development Board Malaysia (CIDB) in its efforts to encourage adoption even more.
He said what forward-looking companies need is a push in the right direction. First mover and adopters in the industry must be empowered and set as examples for the rest.
While industry players appreciate the existing incentives by the government to encourage tech adoption, these incentives are currently limited to certain sectors.
They would like the government to consider extending such incentives to other industries including construction, targeting players who are looking beyond existing technologies like robotics and artificial intelligence (AI).
Faris suggested the government also consider allocations to relevant agencies to develop low-risk test bed opportunities for local players – to enable exploration of technologies and innovative solutions for building and construction.
He noted the industry needs technology research with long-term horizons and applied research that helps deploy existing and emerging technologies effectively and imaginatively, all towards improving profitability for the industry.
Speed up IoT adoption for effective smart cities devt
Faris also said the industry is supportive of the Malaysia Smart City Framework launched recently as it shows government commitment to developing and transforming existing cities to become smarter, safer and more sustainable.
The industry is confident, too, of the positive impact of smart cities on the economy in driving efficiencies through automation and improving connectivity with Internet of Things (IoT).
However, Faris said, it is imperative that smart cities development is centred on creating values.
Buildings constructed or retrofitted must be resilient and long lasting not only to sustain and protect national assets but also manage the impact on the environment.
“While we are designing smart cities that would appeal to the changing demands of our communities, we also need to be mindful of the changing economics of infrastructure that requires the right combination of traditional construction and smart solutions,” Faris noted.
“Which is why for efficient development, more sectors should be included within the framework and not limiting or prioritising only technology or service providers and city managers or state governments.”
He stressed that strategic level of planning will require all parties within a city ecosystem to work together, especially the involvement of construction players as early as possible at the planning stage.
According to him, with construction technology coupled with connectivity, this mega city-level collaboration can be made possible.
Today, large construction projects can be digitised simply by harnessing the power of IoT and combining it with other collaboration tools.
However, with the slow tech adoption across the construction supply chain, progress is sluggish.
“For the smart cities vision to take off, we call upon the government to consider allocations to enable not just tech adoption, but specifically IoT adoption,” he added.
“When used in the development ecosystem, it can also potentially lower construction costs and create safer building practices.”
Enabling alternative financing models
Faris also said core infrastructure projects are important because they benefit the people in the future directly and indirectly, as well as help reduce transportation cost of goods which will result in closing the gaps in prices of goods.
However, local construction players are not having it easy with major infrastructure projects given the slow global economy outlook, tighter budgets and increasingly competitive bidding that lowers the sector’s margin further.
To top this, current financing models present risks for both construction players and clients.
For example, Faris said, with the Project Delivery Partner (PDP) model, clients ultimately bear risks that come with overruns.
On the other hand, with the traditional turnkey model, contractors stand to lose out in similar situations.
He continued: “Today, there are alternative models that may present a win-win situation for both sides, from peer-to-peer platforms to non-bank financing trends.
“We urge the government and regulators to render more support and funding to CIDB so that it can form an alternative financing task force, including research/studies, in developing a friendlier model to support construction companies struggling to keep afloat during global economic downturns.
“This is also an invitation to my fellow industry peers to rise to the occasion, connect with our partners across the value chain and together work on a holistic digitisation framework for the construction sector that we can present to the government.”
Faris said with Malaysia solidifying its position as one of the leading emerging markets today, it’s time for the sector to step up and create greater economic impact.
Citing various reports, Faris said it’s a sobering reality that construction is one of the least digitised industries today, especially when it is known for its notoriety in cost and time overruns.
Every day, stakeholders are exposed to newer technologies and their limitless impact on the industry.
He said adopting new technologies can capture tremendous efficiencies.
Meanwhile, he noted a World Economic Forum report shows the industry stand to save up to US$1.7 trillion (RM7.1 trillion) in construction, engineering and design costs globally within the next decade with full-scale digitisation.
He added: “We are learning that new technologies are fast maturing. About US$18 billion (RM75.4 billion) was invested in construction technology between 2013 and early 2018, and that tells us there is plenty to leverage and a lot to go around.
“However, acceptance within the industry is still low. Only a few large companies are using Building Information Modelling (BIM) despite CIDB’s push for adoption of construction technologies and provision of testing, certifications and training for construction companies.
“Not to mention, CIDB’s recent plans to develop a sector-specific Industrial Revolution 4.0 (IR4.0) roadmap.”