At a time when the construction sector is facing a double whammy of rising costs and falling productivity, property developers are struggling to compete and keep pace with rapid urbanisation.
Industrial automation and technologies such as digital twins are often hailed as the panacea for developers to break out of that gridlock, enabling them to identify inefficient processes, lower costs and speed up development.
Against this backdrop, the likes of Lendlease, a Sydney-based property development and investment firm with a global footprint, have started forming dedicated business units to hone their digital skills.
In January 2019, Lendlease hired Bill Ruh, the former CEO of GE Digital, to head up its digital unit which has been driving the use of digital twins and other technologies to transform the business.
In an exclusive interview with Computer Weekly, Ruh talks about the challenges facing the building and construction industry and the role that technology can play to build better buildings at a lower cost while creating new jobs.
Can you tell us more about Lendlease and how it is tapping technology to improve productivity and build more liveable and sustainable buildings?
Ruh: Lendlease is one of the few companies that has an investment fund, as well as development, construction and operational capabilities. Most players in our industry have one or two of those but there are very few companies that do it all.
Over the last decade, we have grown dramatically, with nearly A$100bn of development backlog and A$35bn of funds under management. Our focus, however, is not just to build a building, but to develop something that is multi-use, like what we did for Paya Lebar Quarter in Singapore.
Now, there are two things about the construction industry that we should note. First, the productivity of our industry has declined 20% over the past 50 years, while overall industrial productivity has grown almost 175%. The cost of production has also gone down – except in construction and property. In order to compete, we need to be more productive in what we build, because we can’t have a world where costs keep rising.
Second, what people want out of buildings has changed. They want experiences, so retail becomes experience-driven, more than just brick-and-mortar stores. Residential spaces are also turning into multi-use living environments, with our personal and work lives becoming more intertwined.
We should take a leaf out of the manufacturing industry, which has been embracing software and automation. At the same time, we need to put more digital technology into buildings, because people want both digital and physical experiences. That’s what we’re trying to do through our digital unit.
Bill Ruh, Lendlease
How are digital twins being used by Lendlease?
Ruh: The digital twin is at the centre of what we do. We’ve decided that for all the buildings we build now and in future, we will have a digital twin in the design phase. And we’ve been doing this for buildings around the globe, primarily in North America and Europe.
Interestingly, what we’re finding with digital twins is that we can identify 5-15% of the problems in the design phase before we get to construction. That means we’re solving problems earlier in the cycle while saving money and building better and safer buildings.
We’re also creating a property data platform. In Barangaroo in Sydney, we have a million sensors in buildings that are generating data. The data platform will bring all the data together to give us insights on how we can automate a building to improve efficiency and create a better experience. For example, if we couldn’t ascertain if putting a playground in a mall would increase retail spending, we can now make that correlation based on data on dwell time, because more dwell time always means extra sales.
Steve McCann, the group CEO of Lendlease, is a big proponent of data. How is the company using data analytics, say, when making investment decisions or deciding where to build a new property?
Ruh: We’ve been using analytics for years and we have a lot of models that have driven our decisions. But I think as much as we’ve stayed ahead of the curve, the world keeps catching up. The difference is, we’re now beginning to use artificial intelligence (AI) and machine learning in those analytics, which we didn’t do before.
Also, when you say he’s become a proponent of data, that’s right, because most analytics use a little bit of data. What we’re now doing is using a lot of data and machine learning to enhance how we’re making decisions – and that’s the big shift that digital is bringing.
How is Lendlease ensuring that the machine learning models in digital twins account for the laws of physics to avoid the catastrophic impact of simulating something wrongly?
Ruh: Unlike a lot of what Google and Amazon do with machine learning, we’re adding domain knowledge to our models. That’s why it’s important to be at a company that has a lot of domain knowledge, because while generic machine learning tools from those companies is fantastic, you get much better results when you combine them with civil and mechanical engineering in our case. Through our digital twins, we’re automating the design, cost scheduling and supply chain. We’re also using them in operations to create autonomous buildings where problems can be fixed before they occur.
You’ve joined Lendlease earlier this year. What have been the key highlights so far?
Ruh: We’ve put together our overall digital strategy and we’ve got buy-in from our board. We’re in the process of implementing that strategy and we now have a set of tools to create digital twins.
And as I mentioned before, every one of our buildings in development will have a digital twin to help with the development process. We’re in the process of building a digital twin platform that will automate the design of buildings, starting with timber buildings.
We’re also working closely with cloud vendors and moving from traditional to agile software development. All of this, including our property data platform, has been done in a 10-month period.
How are you overcoming the barriers that stand in your way, especially from those who might not be so ready to embrace new technology?
Ruh: I’ve been fortunate that Lendlease has been an innovator in the physical world. We have a culture of embracing innovation and I’ve been pleasantly surprised by the people in the field. I met with a project manager in Malaysia who wanted to create new experiences in his retail projects – and the company is ready for him to adopt innovation.
The challenge is, how can we scale things up? Because we’re a global organisation, the real issue for me is working with every region and having very specific plans that are tailored to what we can deliver today, over the next 12 to 18 months and in five years.
Using the example of our digital twin initiative, we are building digital twins as a service today. In 12 to 18 months, we will have our first platform to do that automatically. And in five years, we expect to automate the design of our buildings. We’re not there yet, but we’re very careful about making sure we only release things that are possible today.
How are you building the talent you need to support your digital initiatives?
Ruh: That’s the hard thing, right? There’s only so much talent in the world. And of course, the key technologies today are cloud, mobile, machine learning and blockchain – areas where talent is hard to come by.
We’ve been very lucky in that Lendlease has a great brand. In Australia, we’ve been lucky that it’s a place where people want to come to work. And there’s fantastic talent coming out of the universities. They have helped us to build our first development team in Sydney which has grown to 50 people in over 10 months. But that’s only the beginning. Because it’s an international game in software development, we have to pick the right places to be. One of the reasons why I’m here in Singapore is to see if this is a place for us to build products.
Can you talk about some of the metrics that you’re using to measure the success of Lendlease’s digital twin initiative?
Ruh: As I’ve mentioned, we can identify 5-15% of cost inefficiencies very early. We can also design a timber structure for buildings in 15 minutes, which could take as long as six months using traditional methods. Overall, in the design and construction of buildings, we think there are 20-40% in inefficiencies that we can take out. But again, there’s a lot of work to be done to get there.
At the end of the day, our digital twin initiative positions us in several ways. For one, these tools are going to give us buildings that are safer to build, more sustainable and deliver better experiences.
Second, the price of land is not going to come down, so this technology will let us create more pleasing urban environments at a much lower cost. That said, doing so would require us to grapple with the same amount of complexity as building autonomous vehicles. But if we can do it, it’s going to have a bigger impact on the world than autonomous vehicles.
I’ll end by saying that whoever is the best digital property and construction company in the world will help governments achieve the goals they want for citizens – and drive jobs. And I’d make one point on jobs. If you listen to what I’m saying, we’re not getting rid of manufacturing jobs. In fact, we’re going to create more of those jobs.
What we are doing is to take out the cost and the inefficient things which everyone is working harder to fix. Maybe 20 or 30 years from now, robots will be on the 34th floor of a high-rise building, but not in my lifetime. This is where the action is. We’re going to create jobs. And we’re going to make them more efficient.