Embracing Change: The Digital Transformation of Canada’s Construction Industry
By Jordan Thomson
In recent years, the Canadian construction industry has been undergoing a digital transformation, driven by new technologies and shifting market demands. KPMG in Canada, in partnership with the Canadian Construction Association (CCA), aimed to assess this transformation through comprehensive surveys conducted in 2020 and 2023. Their findings highlight both progress and the challenges that lie ahead in modernizing construction practices.
A Snapshot of Progress: 2020 vs. 2023
In 2020, KPMG’s survey revealed a concerningly low level of digital and technological maturity within the construction sector. Flash forward to 2023, and the updated survey, which included insights from 275 companies across various facets of the industry—from owners and general contractors to suppliers and architects—indicates notable strides in technology adoption. A striking 67 percent of respondents credited the COVID-19 pandemic as a catalyst for investing in new digital technologies, marking a critical inflection point for the industry.
Industry Outlook: Mixed Signals
While the construction sector has significant growth potential, the industry’s outlook remains polarized. Factors such as heightened housing demand, government investments in infrastructure, and a shift toward a greener economy are propelling optimism. Approximately 42 percent of respondents anticipate an improved outlook over the next five years, while a third express pessimism. Notably, owners and suppliers tend to hold a more positive view compared to general contractors and consultants, suggesting a trickle-down effect where investor optimism could benefit the entire construction ecosystem.
However, looming economic uncertainties foster caution. Over two-thirds of respondents predict a recession within the next year. A pragmatic approach emerged, with many companies choosing to accelerate their digital transformation initiatives rather than delay them, even in the face of potential economic setbacks.
Navigating the Labor Crunch
The construction industry faces a pressing labor shortage—a challenge exacerbated by the premature retirement of older workers during the pandemic. Astonishingly, 90 percent of contractors report labor shortages. In this context, technology becomes a pivotal asset in enhancing labor effectiveness; 86 percent of surveyed companies believe project management tools and digital solutions can bridge the gap. Moreover, 89 percent express interest in alternative construction methods such as prefabrication and modularization to bolster efficiency.
Priorities in Technology Investment
The pressing question remains: where are construction firms allocating their digital investment dollars? The survey findings disambiguate this inquiry—key focuses include:
Big Data and Analytics
Big data analytics has profound implications for project performance evaluation, safety enhancement, and cost reduction. Currently, 40 percent of companies utilizing big data report significant positive impacts, leaving room for improvement among the remaining 60 percent. This gap raises concerns about data quality and the implementation of comprehensive big data strategies.
Demand-Driven Supply Chain Management
The pandemic spotlighted the necessity for active supply chain management in construction. Demand-driven supply chain practices enhance material and service delivery, creating more resilient operational frameworks.
Building Information Modelling (BIM) and Digital Twins
BIM technology and digital twin methodologies are gaining traction, with 62 percent of respondents indicating moderate to extensive familiarity. These tools enable teams to visualize construction processes and logistics comprehensively, enhancing efficiency.
Robotics and Automation
The integration of robotics—such as drones for site monitoring and collaborative robots—has become increasingly prevalent, with 52 percent of companies reporting moderate to extensive usage. The underlying goal remains improving worker safety, increasing productivity, and optimizing schedules.
Blockchain and Smart Contracts
Approximately 60 percent of firms are discussing or have plans to implement blockchain technology to enhance transparency and accountability within projects. This adoption seeks to mitigate fraud risks and bolster data integrity throughout construction workflows.
Internet of Things (IoT) Sensors
IoT applications promise enhanced productivity and safety, yet only 56 percent of companies have invested in these technologies to a moderate or extensive degree. IoT sensors offer invaluable data, monitoring everything from air quality to structural integrity, showcasing their potential to improve overall site safety.
Cybersecurity Preparedness: An Underestimated Risk
As digital transformation accelerates, cybersecurity risks loom large. Alarmingly, only 38 percent of firms have implemented cybersecurity tools, and over half express doubts regarding their IT security measures. Given the sensitivity of construction data, prioritizing cybersecurity will be essential for protecting against emerging threats.
The Road Ahead: Managing Change
The KPMG survey indicates that only 44 percent of companies recognize the significance of digital transformation at an executive level. Active participation from leadership is crucial for successful technology adoption. Additionally, firms must prioritize talent acquisition and development; 77 percent convey that digital transformation will necessitate hiring new skill sets.
In conclusion, the digital transformation of Canada’s construction industry stands at a crossroads. Companies that seize digital innovations now will not only navigate current challenges related to labor and economic uncertainty but also position themselves for long-term success. The call to action is clear: modernize or risk being left behind. As expressed by Tom Rothfischer, partner and national industry leader at KPMG, “Digital tools, if used smartly, save time and money, reduce waste, and improve worker safety and productivity.” In the next three to five years, the decisions made today could shape the very future of construction in Canada.
This article originally appeared in the September/October 2023 edition of ReNew Canada.
