Looking to bring disruption to industrial construction
Baton Rouge will likely play a critical role in the current development of a disruptive technology platform that takes aim at productivity woes in the industrial construction space. The goals of the endeavor are bold and specific—a potential 35% reduction in project cost, 50% reduction in schedule duration, and 60% improvement in ROI.
In July, the Construction Industry Institute launched the research phase for the new platform, dubbed Operating System 2.0, near its headquarters at the University of Texas in Austin. ExxonMobil, Shell, Canada-based Suncor Energy, Australia’s BHP and Saudi Arabia-based Sabic have contributed $2 million in support of the research.
UT’s Dr. Stephen Mulva and Carlos Caldas, co-principal investigators in the research, hope to replace traditional industry procedures and standards with a standardized, technology-enabled platform that better accommodates for change and makes projects more financially viable and sustainable. In the process, they’re incorporating technology and big data, supplier interactions and the use of digital contracts and “blockchain.”
Peter Dumont, executive adviser at Premier Resources Group in Houston and one of the principal investors in the platform, says he’s currently in negotiations with a Baton Rouge-area technology company that could play an integral role in the platform’s deployment. Dumont spends much of his time in Louisiana and the Gulf Coast promoting the OS 2.0 platform.
Still, he admits the concept is currently only a “well-informed hypotheses” and needs the research and development to make it a reality. “We’re pushing forward with the research and development to figure out how this new business ecosystem needs to operate, including what it should look like, how companies should come together to deliver an asset, how the supply chain structure will be different, how project funding might be different, etc.,” Dumont says.
John R. Fish, director of project support services at design firm Ford, Bacon & Davis in Baton Rouge, was an early proponent of the effort. Fish serves on CII’s board of advisers and assists with research and technology, and says the OS 2.0 concept has been a longtime coming. The very name of the platform, he adds, denotes a desire to take the construction industry to the next level.
“Over the last 50 years, the construction industry has not had any significant productivity gains at all, while manufacturing has improved by some 200 percent,” Fish says. “We’re just coasting along, doing business like we always have. Some argue that we have even become less productive.”
A consortium of investment partners launched a private entity, PrairieDog Venture Partners, to actualize and deploy OS 2.0, even as research is just getting under way at UT’s Cockrell School of Engineering. The standalone company is financed by the Construction Users Roundtable (CURT), along with other private shareholders.
PrairieDog’s mission is two-fold—to support the work at UT and deploy the research in a real-world setting. “The idea is to grow that investment through other industry organizations that believe in our cause, that want to support and develop this platform for industry,” says Dumont, who also serves as a principal partner at PrairieDog.
In 2020, PrairieDog hopes to deploy a “minimally viable product” to be used in various pilot projects. The product can then be augmented as new research is completed. “The research and development go hand in hand,” Dumont adds. “We’ve got the research at UT and the PrairieDog business to test these research concepts as they come out of the laboratory.”
He is currently scouting for contractors and industrial owners interested in supporting the pilots, and says a large Baton Rouge-area contractor such as Turner Industries could reap huge benefits. “Turner is a very active construction company, they’re creative, they’re doing some innovative things, and they are very well positioned with ExxonMobil and Shell,” Dumont adds. “Once we get that first functionality ready to go, they and/or other contractors could jump in and help us and we could learn together.”
The nuts and bolts of it
Meanwhile at UT, a unique heterogeneous group of academics and industry professionals are in the beginning stages of the OS 2.0 research. “This is unlike previous research endeavors, which involved only engineering and construction professionals,” Dumont says. “For this, we need folks with legal, finance, accounting, behavioral science, data systems and logistics expertise … all those things that we typically haven’t explored.”
Industrial contractors and owners are funding and assisting with the “heavy lifting,” as researchers address four primary areas aimed at improving site productivity—connecting the entire supply network in order to more effectively deliver assets, facilitating a faster response to changing project conditions, aligning project participants toward a common business objective, and enabling the use of modern technologies such as blockchain and “smart contracts.” Once released, OS 2.0 will leverage multiple existing technologies.
FB&D’s Fish says the new platform will ultimately address one of the biggest issues facing job site productivity today—transactional waste. “As much as 40 percent of everything we do in our work processes is waste,” Fish adds. “Procurement in the field is a prime example. One job might have more than 2,000 purchase orders averaging less than $200 apiece, but if you look at how many people touch a requisition, administrative costs could be in the $300 to $400 range.”
The OS 2.0 platform will also promote standardization, digitization and automation, and support a greater reliance upon off-site modular construction in a manufacturing setting—all of which will reduce drags on productivity.
Fish says that although industrial owners are already strong proponents of off-site modular construction for their larger units, they should also consider similar measures at a much smaller scale. That way, modules could be shipped by rail, truck or barge, and create greater flexibility in a company’s work processes. “You wouldn’t have to shut a whole unit down during a turnaround,” Fish says. “You could do the work module by module, depending upon market demand. It also creates a safer and more cost-effective environment.”
Also addressed by OS 2.0 are blockchain and smart contract technologies that could more efficiently manage transactions, encourage a more timely payment process, and rapidly “improve the velocity of money as it flows through the supply chain.”
Dumont acknowledges that some of these newer concepts can be confusing, but stresses that the implementation of leading-edge technologies is necessary for change to occur. “We are going to have to educate and explain, and have a discussion around it.”
In the end, OS 2.0 could tackle one of the biggest challenges facing industry—finding a way to improve the productivity of the dollar, i.e., get more construction for the money. “That’s a huge task, but we aim to make it happen,” Dumont says.