The construction industry is changing. New technologies are transforming the industry for the better by making sites safer and more profitable. This new technology brings new risk and contractors will need to adapt in fear of being left behind. In this article Gallagher discusses the impact of new technologies on the construction industry and how insurance can help to respond to these risks.
The construction revolution

Risk and reward

The introduction of new technologies to the construction industry has not occurred in a single revolution, instead over time various new materials and machines have begun to enter the industry. With so much change happening, new risks can occur from unexpected places and these require an experienced broker, specialising in the construction sector to help mitigate them.

One example of this is the increase in drone technology, with on-site drones helping to survey sites and generate maps faster than on-the-ground technology can. According to a survey by ProDroneWorx1, the use of digital/reality capture information from drone technology continues to increase in UK and Irish construction industries, with 52% of respondents now using the technology compared with only 33% in 2017.1 Be aware however, that you must notify your broker when using drones as they are unlikely to be automatically included in your business description and may be detailed as an exclusion in your Public Liability policy terms. This means that if they cause injury to the public or property then your insurer may decline your claim. Furthermore, companies should be aware that employees using their own drones on site, with or without formal permission of the company, could give rise to a liability on them which is potentially uninsured.

The challenges around Building Information Modelling (BIM)

BIM is the technological star player in the construction industry. The technology has been around for over a decade; however, a lot of buzz has been created about Building Information Modelling (BIM) in the field in more recent years.

Government mandating has been a major contributor to its popularity. It is a process for creating and managing information on construction projects, across the entire project lifecycle. It can assist with sequencing and ordering, with onsite engineers able to upload job status notes so that the system can order materials for the next stage of the project, so in theory may speed up the process.

As it relies on web stored information, it could however be an open invitation for cyber criminals and you need to ensure that each party accessing the system maintains the same security standards that you do to help avoid this. The future of BIM is likely to result in models which can control machines and people on-site, so having the correct cyber procedure before this happens is essential to help protect your business against a data breach. Not all cyber policies are created equal, so it is important to notify your broker to the extent of any BIM-related work you do so that the correct cover limits can be placed.

This automation of machines is becoming increasingly more prominent in the transportation, agricultural and mining sectors. These industries are using telemetry, mapping and visual processing to assist heavy earthmoving equipment in construction. This automation has had a significant boost in productivity that the construction industry should take note of. McKinsey estimate that if the construction industry took up this automated technology then they could improve productivity by up to 60%2.

Off-site is the new on-site

More and more contractors and construction firms are opting to prefabricate in a factory site. This helps to reduce wastage as well as protecting materials and equipment from theft and damage. According to a study by the McKinsey & Company Global Institute1, construction firms can expect to boost productivity by five or even ten times by doing so.

The side-effect of this is longer lead times, the increased cost of transporting the materials and space constraints. Large models will also need specialist lifting equipment.

A shift in liability?

These changing methods of operation could also lead to a shift in liability. No longer are construction firms solely in control of all that happens on site. Frequently, responsibility also lies with manufacturers and logistics firms and any failure on their part can have a huge impact on the success of a project. For example, if a firm does choose to prefabricate parts of the build, then a fire in the manufacturing facility could stall the project, leading to delays and potential liquidated and ascertained damages (LADs) and significant reputational harm for the contractor. It is also important to consider that the contract includes offsite manufacturers and logistics companies. Under Joint Contracts Tribunal (JCT) and New Engineering Contract (NEC), the Principal Contractor would still be liable for these risks. Would the manufacturer’s commercial combined policy extend to include liability assumed under contract? It is therefore extremely important that you take advice from both your broker and legal advisor to ensure that all parties are taken into account when drawing up new contracts.

Augmented reality and worker safety

The Augmented Reality (AR) technology no longer solely belongs to video games; it is helping to make sites safer. AR technology when integrated with personal protective equipment (PPE) can report on sleep and fatigue data in real-time and help to reduce the risk of tiredness induced accidents and injuries. According to the HSE, fatigue is said to cost the UK GBP115 - GBP240m per year in terms of work accidents alone. 1

Another use of AR is the use of holographic data to allow workers mobile access to information which could previously only be viewed on a laptop or in an office at a desktop. This is especially useful when working in tunnel construction as support can be provided through AR glasses. Crossrail have also utilised this technology by overlaying 3D plans over the actual site using a camera.

Aggregate industries have also announced the introduction of two-way radio headsets into safety helmets so that workers can remain in contact with each other while carrying out dangerous mobile plant or demolition works.

The future of employment

With technology allowing remote access and offering the ability to fabricate materials off-site, what does this mean to employment numbers in the sector? While there are substantial automation opportunities across industries, employment in construction will probably suffer less than in industries where activities are more repetitive, such as manufacturing. According to McKinsey & Co the overall number of jobs in construction may actually grow rather than shrink, with up to 200 million additional jobs by 2030 if countries fill global infrastructure gaps and boost affordable housing.2

So while it is likely that the death knell may be sounded for some basic manual labour jobs, it is more likely that training will need to take place, and tools like AR wearables and the use of drones could complement existing skill sets allowing workers to assist with different aspects of the construction process.

No matter how you look at it, new technology can mean that construction workers may need re-training over the coming decade. High risk jobs are likely to be replaced by machines, improving site safety, while basic, monotonous roles can also be completed by robots. Instead, specialist technicians, software engineers and machine controllers would therefore be the roles that form the lifeblood of the industry, to result in a safer, more productive construction for all.