Transforming Industries through Technology, Innovation ... · Strategic workforce planning, smart hiring and enhanced retention High-performance organization, culture and incentive

Transforming Industries through Technology, Innovation & People

© 2016 Willis Towers Watson. All rights reserved.

22nd Annual Willis Towers Watson Construction Risk Management Conference

September 13, 2016

Karen O’Leonard Willis Towers Watson

Michael Buehler World Economic Forum

Agenda

Introduction

Trends shaping the industry

Transforming the industry

Moving Forward

Q&A

Agenda

Introduction



Moving Forward

Q&A

Construction has changed very little in the past... C

ar m

anuf

actu

ring

Con

stru

ctio

n

Today 1920 1960

Source: BCG analysis

...or barely in some developing countries

Source: BCG analysis

0

100

200

300

1985 1995 1965 1975 2005 1990 1980 1970 2010 2000

Index of labor productivity

+1.95%

-19%

+153%

As a result, productivity takes a hit

Source: WEF, OECD, IHF, Global Vantage; Compustat; Bloomberg; BCG analysis; http://www.aecbytes.com/viewpoint/2013/issue_67.html; http://www.nber.org/papers/w1555.pdf

Non-farm business labor productivity

Construction labor productivity -0.43%

Construction labor productivity in the U.S.

Productivity delta is substantial in all countries

Low adoption of new technologies is a key issue recognized by industry leaders

“The E&C industry is not even in the Third Industrial Revolution, let alone in the Fourth; a step change is required. Thanks to new (digital) technologies a new industrial revolution is feasible.”

Future of Construction session, Davos 2016

“Looking at construction projects today, I do not see much difference in the execution of the work in comparison to 50 years ago.”

John M. Beck, Executive Chairman, Aecon Group, Canada

At the same time, megatrends affecting the industry create need for action

Sustainability and resilience

Market and customers

Society and workforce

Politics and regulation

Demand in developing countries Resource scarcity Urbanization and housing crisis Complex regulatory requirements of next decade’s growth in construction will happen in

emerging countries

consumer of global raw materials is the

construction industry No. 1 people are added daily to

urban areas and need affordable and healthy housing 200k different procedures are

required for a warehouse construction permit in India 25

Globalized markets Sustainability requirements Health & comfort needs of inhabitants Stricter HSE and labour laws engineering and construction companies plan to move into new

geographies

of the solid waste in the United States is produced

by the construction industry 50% higher than outside levels

are the levels of volatile organic compounds

found inside US homes

2–5× of the workforce in a public project in California had to

come from the “otherwise unemployable”

10% 1 in 2

Bigger and more complex projects Energy and climate change Talent and aging workforce Slow permit and approval process is the length of the undersea tunnel

that will connect Dalian and Yantai

of global greenhouse gas emissions are

attributable to buildings 30% of general contractors are

concerned about finding experienced crafts workers for their workforce

50% of infrastructure could be added by 2030 if all

countries committed to specific time limits for approvals

$1.2tn 123km

Aging infrastructure Resilience challenges Stakeholder pressure and organization Geopolitical uncertainty German railway bridges are more than

100 years old

as many disasters were reported last year as the number in 1980

3× signatures were collected opposing the construction of

the Stuttgart train station 67k Turkish construction workers

were kidnapped by militants in Baghdad in September 2015

18 1 in 3

Massive need for financing Cyber threats Politicization of construction decisions Corruption annual investments are needed to close the global

infrastructure gap

of firms agree that information controls have an impact on front-line employees

90% the Portuguese government

cancelled a 165km high-speed line project as part of austerity measures

In 2011, of survey respondents believe corruption is

common in a Western European construction market

49% $1tn

65%

Source: World Economic Forum; BCG analysis

Agenda

Introduction



Moving Forward

Q&A

Achieving better business results: An integrated approach

10

Targeting the drivers of productivity to achieve better business outcomes

Man

agin

g H

uman

C

apita

l Ris

k

Best Talent Hiring, onboarding and

development

Winning Culture Aligned workforce, engaged

employees

Right Rewards Effective managers, aligned

rewards, line of sight

Well-being Physical, emotional, financial

Tale

nt S

trat

egy

Enabled by tools, technology, processes

Business Outcomes

Customer, financial and operational

performance

Productivity Measures

Output per

worker Rework rate On-schedule

delivery On-budget

delivery

© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential.

Assessments provide an analytical approach to hiring, development and promotions

11

Best Talent


Individual Strengths Overview

Signature Strengths

Supporting Strengths

Lessor Strengths

Development Areas

Engagement leads to better performance

9

Source: Willis Towers Watson 2014 Global Workforce Study

Engaged employees change the bottom line

operating margin

fewer days absent

lower turnover risk

3x 6.5

% 41

Winning Culture


Leaders and managers are critical to engagement

1

Senior Leadership

2

Clear Goals & Objectives

3

Supervisor

4

Image & Integrity

5

Workload & Flexibility

What drives employment engagement?



Winning Culture

Leaders and managers establish organizational culture

13 © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential.

Bias for Action

Anticipate Needs

Clarify Priorities

§ Safe to voice opinion

§ Differing opin-ions discussed openly

§ Support for workplace diversity

§ Openness to trying new solutions

§  Leaders provide clear direction

§  Leaders estab-lish priorities

§  Leaders behave consistent with core values

§ Right balance of analysis & action

§ Entrepreneur-ial leadership

§ Effective pace of change

§ Understands customer needs

§ Anticipates new solutions

§ Responsive to market changes

Diversity of Thought

Support for Risk

KEY DIFFERENTIATORS OF AN INNOVATION CULTURE

§ Trial & error encouraged

§ Ability to fail § Collaboration

on new ideas & solutions

§ Willing to take prudent risks

Winning Culture


Differentiate rewards by workforce segment

Employee Performance

Valu

e

Proficiency Roles


Valu

e

Efficiency Roles Pivotal Roles

© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential..

Highly-leveraged rewards with emphasis on

performance over the appropriate horizon

Emphasis on wealth accumulation over time with reduced

leverage

Focus on a market-based reward structure

Right Rewards

RE

WA

RD

S


Valu

e

Rewards should be differentiated by performance

16

1 2 3 4 5 Performance rating

25%

50%

75%

100%

125%

150%

175%

Bon

us

At this construction firm, more than half of employees not meeting expectations received more than their average target bonus payout…

Right Rewards


Rewards should be differentiated by performance

17

25%

50%

75%

100%

125%

150%

175%

Bon

us

…and there was not enough differentiation in rewards across performance levels.

1 2 3 4 5 Performance rating

Right Rewards


Effective well-being programs make a difference

© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 8

Source: 2015/16 Global Staying@Work survey, United States * Global finding

Improved productivity

2x more likely to “significantly”

outperform peers

1.0 fewer days of

unplanned absence per year

Lower annual medical plan costs

PEPY $1,000

50% higher revenue per employee*

Healthier workforce

24% fewer cases with hypertension

23% fewer high Glucose

Risk

29% fewer users of

Tobacco

67% More likely to

have employees

participate in at least one wellbeing

activity

Well-being

PREVENTION §  Safety §  Health promotion §  Prevention/screenings

§  Lifestyle

PERSONAL SUPPORT §  Return to work §  Financial literacy

§  Health advocacy §  Care delivery § Worksite health

ORGANIZATIONAL SUPPORT §  Leadership support §  Flexibility

§  Resource allocation

DESIGN AND DELIVERY §  Communication and

change management §  Program management

Four pillars of an effective well-being strategy

19 © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. .

Well-being

Source: Willis Towers Watson 2015/16 Global Staying@Work survey

Source: World Economic Forum; BCG analysis

Industry transformation is possible, but requires action in many areas C

ompa

ny le

vel

Advanced building and finishing materials

Act

ors

Sec

tor l

evel

Processes and operations Technology, materials, and tools 2.1 2.2 (Semi-) autonomous construction equipment

Frontloaded and cost-conscious design and planning

A common framework for project management

New construction technologies, e.g. 3D printing

Digital technologies and Big Data along the value chain

Enhanced manage-ment of subcontrac-tors and suppliers

Rigorous project monitoring (scope, time, cost)

Stand., modularized and prefabricated components

Smart and life-cycle-optimizing monitoring equipment

Innovative contracting models with balanced risk-sharing Lean and safe construction mgmt. and operations

Strategy and business model innov. 2.3 2.4 People, organization and culture Differentiated business model and targeted consolidat./ partnerships

Internationalization strategy to increase scale

Strategic workforce planning, smart hiring and enhanced retention

High-performance organization, culture and incentive schemes

Sustainable products with optimal life-cycle value

Continuous training and knowledge management

Industry collaboration 3.1 3.2 Joint industry marketing Mutual consent on standards across the industry

Cross-industry collaboration along the value chain

Industry-wide collaboration on employer marketing

Effective interaction with public sector

More data ex-change, and best-practice sharing

Coordinated communication with civil society

Gov

ernm

ent

Regulation and policies 4.1 4.2 Public procurement Harmonized building codes/standards and efficient permit processes

Promotion and fun-ding of R&D, techno-logical adoption and education

Actively managed and staged project pipeline with reliable funding

Innovation-friendly and whole-life-cycle-oriented procurement

Market openness to international firms and SMES

Strict implementation of transparency and anti-corruption standards

(Future) Best practices

In particular, innovations and new technologies will have a tremendous impact on infrastructure & urban development industry

Impact-likelihood matrix of new technologies

Source: Survey among 26 SteCo and AdvCo members and selected industry experts as of Sept 2015 ; World Economic Forum; BCG analysis

Augmented Reality

Big data analytics

Wireless monitoring (IoT)

Contour crafting of buildings

3D printing of components

Prefabricated building components

Advanced building materials New active materials

Self-healing materials

Drones

3D laser scanning

Integrated BIM

Advanced project- planning tools

Real-time mobile collaboration

Extremely likely

Not likely

Somewhat likely

Like

lihoo

d

No impact

Extremely high impact

Some impact

Impact

Agenda

Introduction



Moving Forward

Q&A

Lighthouse innovation projects and companies provide us a glimpse of how the future might look like – 3 examples

•  Fastest construction of 50+ storey skyscraper

•  Leveraging manufacturing principles from other industries to take pre-fabrication to the next level

•  The Edge – World's most sustainable office building

•  Driving innovation in building design & construction through systematic end-user orientation

•  World's first 3D-printed houses at scale

•  Reducing construction waste through innovative technology that builds on company´s rich experience in building materials

1

2

3

Broad Sustainable Building: Building a skyscraper within weeks Using pre-fabrication and manufacturing principles to enhance project delivery

•  Using factory-made pre-fabrication to energy-efficient buildings that are 5 times more energy

efficient, have multiple times cleaner air (compared to conventional Chinese buildings) and withstand magnitude 9 earthquakes

•  Pre-fabricated elements are manufactured in huge assembly lines where elements are composed building on three basic steel elements – steel column, beam or floor platform – 90% of the final building is pre-fabricated like this

•  Material innovation (e.g., honeycomb steel) to reduce weight & impr. stability for super high-rise

•  Configuration guide on website allows clients to select from an array of building types (e.g., kindergarten, museum or hotel) and specifications

•  Chinese construction company focusing on factory-made pre-fabrication (subsidiary of air-

conditioning specialist Broad Group) •  Founder was motivated by poor environmental performance and quality of traditional buildings – 2008 Sichuan earthquake for instance killing thousands of people •  Company attracted international attention through a number of pilot projects (>30) conducted within

weeks instead of months or years (filmed in time-lapse) •  2010: 15 storey hotel in 48 hours •  2013: T-25 – 25 stories-tower in 17 days •  2015: J57 – A 57-stories mixed use building in just 19 days

•  Planned building of 202 story building within 90 days (+120 days pre-fabrication) – initially halted due to permitting problems, but now company received approval for technology

Innovation/Technology

Source: Broad; Press Research; BCG analysis

Watch time-lapse video

Company Background

Winsun (Yingchuang): Bringing 3D printing to the construction industry 3D printing pre-fab modules to compose entire houses using advanced building materials

•  Developed 3D printing technology for construction sector and was the first company to report successful 3D printing of ten houses in 2013

•  World's largest 3D printer of 6.6m height.10m width and 110 meters lengths adds up layers of special ink (mixture of glass fiber, sand, cement, hardening agents). Pre-fabricated sections of the house are then assembled on site

•  Printed 10 houses in <24hours and completed the world's largest 3D printed building – a five-story apartment block and the world´s first 3D printed office in Dubai

•  Technology significantly reduces construction waste by using up to 50% demolition or mining waste in its 'ìnk' and avoiding waste in the actual construction process

•  High-tech company established in 2002 with a focus on advanced building materials that has ventured into 3D printing in construction

•  >120 patents e.g., Glass-fiber Reinforced Gypsum that is used for the construction of 95% of Chinese grand operas

•  Recently created Winsun Global (together with international partners) to expand globally

•  The company is also actively pushing for regulation & standards for 3D printing

“There is nothing what we cannot print. The limit only is what you dare to think.”

Winsun´s Chairman Ma


Source: Yingchuang; Press research; BCG analysis

Watch video

Company Background

The Edge: The world's most sustainable office building Using smart technology to improve sustainability and usability

•  Energy-positive building using 70% less electricity than comparable office buildings

•  Roof and South-facing facade incorporate photovoltaic panels and aquifer thermal energy storage system provides the energy required for heating and cooling

•  Smart technology (e.g., ethernet-powered LED connected lighting) uses 30,000 sensors to measure and respond to occupancy, movement, natural lighting levels, humidity & temp.

•  Building App that connects every employee with the building allowing to find parking spaces, free desks or colleagues and customize light and temperature

•  Smart facility mgmt. (using big data & analytics) predicting occupancy at lunch & skipping unused rooms for cleaning

•  40,000m2 office building in Amsterdam's Zuidas business district

•  Highest BREEAM rating (98.36%) for an office building and winner of the BREEAM Award for Offices New Construction in 2016

•  Developer OVG RE, designed by PLP Architecture & built by Van Rossum BV, G&S Bouw

•  Project was put on hold during financial crisis and sustainability was made explicit requirement by investor to continue to project

•  OVG currently plans already "The Edge 2" which will include many lessons The Edge


Source: BREEAM; PLP Architecture; Press research; BCG Analysis

Project Context

Agenda

Introduction

Megatrends shaping the industry

Internal Challenges


Moving Forward

Q&A

Do you have any open questions?

29 © 2016 Willis Towers Watson. All rights reserved.

Thank You

https://www.weforum.org/reports/shaping-the-future-of-construction-a-breakthrough-in-mindset-and-technology

https://www.towerswatson.com/en-US/Insights/Newsletters/Global/strategy-at-work/2012/a-powerful-advantage

Karen O’Leonard

© 2016 Willis Towers Watson. All rights reserved. 30

Karen joined Willis Towers Watson in 2015 as the Global Leader of Client Solutions. In this role, Karen works closely with the firm’s business units and geographies to identify topics of future importance and to bring new products to market.

Prior to joining Willis Towers Watson, Karen served as Vice President of Talent Analytics at Deloitte, where her focus was helping HR organizations build their capabilities for data-driven decision making.

Earlier in her career, Karen held senior roles in product management, research, and M&A at Silicon Valley firms Apple, Sun Microsystems, and eBay.

Karen holds a BS degree in business administration and an MBA with a concentration in quantitative methods. With this background, and 20+ years of experience, Karen brings expertise in data and analytics, together with a keen understanding of business issues, to her work at Willis Towers Watson.

Michael Max Buehler

Michael Max Buehler is the Head of Infrastructure & Urban Development at the World Economic Forum. Michael is responsible for managing strategic relationships with approximately 50 global CEOs from the engineering & construction, real estate and urban services sectors. Michael has sixteen years of international, academic and professional experience in the construction, mining and real estate industries including project management positions on major public infrastructure and public-private partnership projects. Prior to joining the Forum, Michael worked with Deloitte in the Infrastructure and Capital Projects Advisory practices in Vancouver, British Columbia. Michael managed projects for clients and industry leaders at C-suite level including major public infrastructure, mining and real estate projects as well as on capital programs and portfolios for private and public entities. Before, Michael worked for Bilfinger, a leading industry player for major infrastructure projects providing worldwide engineering, procurement, construction management, O&M and project finance services. Michael is experienced in managing project stakeholders in complex multi-contract project environments. Michael has a PhD in civil engineering, an MBA with finance and accounting specialization, is registered and licensed as a Professional Engineer in British Columbia and is a certified Project Management Professional. More details on LinkedIn ch.linkedin.com/in/mmbuehler

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Transforming Industries through Technology, Innovation ... · Strategic workforce planning, smart hiring and enhanced retention High-performance organization, culture and incentive