There are many trends and changes that are impacting the construction industry. From innovations in technology to sustainable construction, from a labor shortage to increased prefab projects, from increased material costs to green technology, companies must stay up to date in order to compete in the future. DesignIntelligence talked with Susan Heinking and Jake Pepper of Pepper Construction about new technologies, new ways of thinking, “coopetition” and how the construction industry can change the way it operates.
DesignIntelligence (DI): What are the top drivers of change in the business and practice of construction and A/E/C?
Susan Heinking (SH): Technology will be the biggest driver of change within the construction industry, but in addition to that, the increase of renewable energy sources in the market is going to be another big driver of change. Climate change, extreme weather events, and our focus on health and wellness with people spending 90% of their time indoors will also impact the industry’s future. All of these things are interconnected one way or another, which will force our hand to design and construct buildings differently. We will have to build differently because buildings will have to be operated differently, and the common denominator will be technology that instantly gives us information. Robotics are coming online more frequently in the construction industry, which will also change how we build.
DI: What are some challenges and opportunities that you see for construction firms in the future?
Jake Pepper (JP): Higher-performing buildings create huge challenges and incredible opportunities at the same time. We spend as much time in our work environment as we do in our homes. Because of this, building occupants are beginning to demand healthy working environments. This is only possible if buildings are designed and built to be smart, connected and to generate as much, if not more energy than they are consuming. Right now, a high-performing building costs a premium, and that premium is justified by energy savings or increased productivity of workers. At some point, high performing buildings will be standard, which is our big opportunity. Our challenge is figuring out how to build those high-performing buildings as fast and cost-efficiently as a typical building.
SH: Our buildings are going be a little leaner—higher performing and more efficient. But they’re also going to have to be stronger and more resilient. If an extreme weather event happens, it’s important that everybody stays safe, but how do we also bounce back quickly? How are we not only making our buildings more resilient, but also making our job sites more resilient as we’re building?
DI: How is technology both a challenge and an opportunity for construction firms?
JP: There are a couple of indexes that look at different industries’ adoption of technology relative to other industries. The financial world is at the top of that list because they’ve embraced technology. Construction and the built environment is second from the bottom only above hunting and agriculture—and if you’re looking at Big Ag, you can argue they’re much more advanced technologically than we are. Our biggest challenge is trying to find solutions that work across the four to five generations that exist in the workforce right now. Once you find that technological solution, you have to get all the different users to believe it’s going to make their job easier and better rather than harder because they have to learn something new. Every new piece of technology and software, no matter how great, is in itself a challenge to implement in an organization.
DI: What do you think are the most effective ways to get a very traditional industry to embrace change in the way you’re describing?
JP: Whether it’s grassroots or not, you have to come up with solutions that are perceived as grassroots and organic. You have to prove out technology by building a case study around it and getting a team on board. Hopefully that team involves someone who is cynical at first, but who can then testify to the technology’s benefits in the end. We’ve done that by going from paper drawings to electronic and using an iPad in the field. Once we sit down with those who are resistant and work through it with them, they are able to see how easily connected and accessible their data and information is. They then embrace it and tell their peers they need to start doing it. If you just command and control from the top, it’s never going to work.
DI: How do you see the construction firms’ fundamental business model evolving to meet these changes to thrive in this new kind of environment?
JP: We’re going to have to get comfortable cooperating with our competition, and so a lot of people in the industry have started talking about this term “coopetition.” Who are you competing with that you are willing to cooperate with in order to progress the industry and really push it in the direction it needs to go? If we’re comfortable doing that, we can start to pull away from that broader pack and be the leaders of this new business model.
DI: How can construction firms help promote more sustainable strategies for their clients, and how do you promote that?
JP: We developed a software program called the Pepper Building Performance Tool that can take basic inputs on projects and run quick energy models for various design options. We couple these energy models with the upfront construction cost of the different options and the owner starts very quickly understanding their payback scenarios associated with the different designs. Before we built that tool, it would have taken us two weeks to project that data, where now it only takes us 15 to 20 minutes. To put that in the context of “coopetition,” we’ve had good feedback on that product, so we’re looking at bringing on a partner to help us turn it into a more robust program that potentially gives licenses to architects, engineers, property managers and even our competition. If we turn it into a product that people pay a monthly fee to use, it really shouldn’t have any contingencies on who is or isn’t allowed to use it. It will make for better projects through-out the industry, and that’s a new mindset relative to the traditional business model.
DI: What is the bigger picture for building the business case for sustainable design and construction?
SH: We’re trying to raise awareness and bring attention to certain environmental topics. Solar photovoltaic is a great example. For every new project that comes in with a site or roof that lends itself to solar photovoltaic arrays, we will soon have a standard in place that will provide a calculation for that feature, whether it’s asked for or not. Just because they didn’t ask for it doesn’t mean that they don’t want it. It kick-starts a conversation, and if they say they’re interested, then we’re one step closer to a higher-performing building.
In the beginning we had very lofty goals with our Building Performance Tool, and we wanted to tackle all of the strategies that make a high-performing building high-performing. We wanted to look at energy, water saving, indoor air quality, overall environmental quality, and the health of the materials we were installing in the building. We wanted this tool to show construction cost and the return on investment calculation—not as straightforward as ROI for energy, but to do it with water and environmental quality for increased productivity or rental value. When we started to get into it, however, it was a lot, so we decided to tackle one topic at a time and since energy is something everyone can understand, we started with that. But we plan to grow it.
DI: Are there barriers we can identify and try to work around that could really open things up and have them scale quickly in sustainable design and construction?
JP: I think a lot of the barriers are economic, and breaking those down comes from the end user. When sustainability becomes important to the occupants of the building, which are really the employees of the companies that are leasing space in the buildings, that will cause change. Those companies are going to be dedicated to providing their employees healthy working environments within high-performing buildings, and they will be willing to pay a premium to do that. That in turn will push the real estate industry to create those buildings, and that’s all happening right now with the big guys like Facebook, Apple and Google. The mom-and-pop shop down the street that might be renting 10 desks isn’t there yet. At the same time, hopefully these high-performing options and materials become more cost-competitive.
DI: Assuming construction firms are going to continually improve at building high-performing buildings more sustainably, how do you see Pepper remaining at the front of that competitive wave?
JP: Our perfect example is the creation of the Building Performance Tool. It’s a proprietary software that helps us stay in front of our competition and be forward-thinking. We’ve also created a net zero construction trailer to provide a better working environment for our field teams, because they might occupy that trailer for up to four years depending on the length of a project. We wanted to create an environment that will enhance productivity, and in that way, we’re being a better steward for our employees. Our clients might pay a premium to have a high-performing trailer on their job site, but they will get a better product and service at the end of the day because of it. We are going to continue to innovate and try to capture first-mover advantage.
DI: How does staying highly attuned to changes in the market-place and having strong foresight play into your overall business strategy?
JP: I think we as an industry are being naïve if we don’t believe there are massive changes coming to our industry. The best way for us to remain relevant is to be ready for those changes when they’re actually here, and help shape them as they develop. There are many ways to try to figure out what those changes are going be. We’re associated with a venture capital building fund called Building Ventures, and that team gives us a foot on the ground on the tech scene. They know every software company out there focused on our industry, so we can use them as a sounding board. We know how to be a general contractor, we know how to build buildings, and as that process evolves, we will make sure we’re the most educated on those new processes.
Susan Heinking, AIA, LEED Fellow, is vice president of high performance and sustainable construction at Pepper Construction.
Jake Pepper, LEED AP, is vice president of Pepper Construction, leading strategic IT initiatives.