[넘버스]Daewoo E&C, leading smart construction, is still on site?

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Smart construction. It literally refers to smart technology that increases construction efficiency. The use of ICT technology is the key, like many compound words that have the modifier smart, such as smart factory, smart city, and smart farm. In particular, in smart construction, construction information modeling (BIM), Internet of Things (IoT), data analysis, robots, and drones are considered major technologies.

Daewoo E&C is one of the major domestic construction companies with smart construction. It stands out in the field of drones. A total of 4 patents related to drone control systems have been applied, and drone survey services are being introduced on site since 2016. Not only Daewoo E&C, but also large domestic construction companies agree that smart construction has an answer.

However, it is pointed out that domestic smart construction has a long way to go. In order for smart construction technology to be widely used, digitization must be achieved throughout the construction process, because the limitations are clear only by applying a specific technology on-site. The low level of R&D investment, which is less than 1% of sales, is also pointed out as a limitation of technology activation.

Smart construction for productivity and safety

First, let’s look at why we need smart construction. An average of $14 per hour. It is the level of labor productivity of the construction industry in Korea.

According to the report on’Productivity Enhancement Measures for the Advancement of the Construction Industry’ released last year by the KDB Future Strategy Research Institute, the labor productivity of Korea’s construction industry is less than half of that of the leading labor productivity group that produces an average of 30-40 dollars per hour. . In addition, labor productivity in the construction industry has decreased by 27.9% in the last 10 years since 2009. In contrast to the 18.5% increase in labor productivity in manufacturing over the same period. It is estimated that the productivity of the construction industry has stagnated overseas, but the labor productivity of domestic construction companies has gone beyond its steady state and has stepped back.

1.9%. This is Daewoo E&C’s 2019 operating margin. The cumulative operating margin for the third quarter of last year was 5.19%. It is 5.6% in 2018 and 3.1% in 2017. The operating margin is moving around 5%. The average operating margin of the top 10 domestic construction companies in 2017 was 4.4%. It decreased by more than 2 percentage points from 6.5% in 2009. During the same period, the average operating margin of the manufacturing industry increased from 5.8% to 7.5%. Even as of 2019, the circumstances vary from company to company, but overall operating margin declined. ‘Low growth’ and’low production’. These are two words that represent the crisis in the construction industry.

Another word that follows the construction industry like a tag is’safety’. According to the Ministry of Employment and Labor, the total number of deaths from industrial accidents in Korea is on a decline, but the construction industry is still taking a stand on safety issues with a disgrace as the number one industrial accident deaths. The number of deaths from industrial accidents in the construction industry in 2019 was 428. In the first half of last year alone, 311 people died. Construction companies say safety from the new year again this year, but it does not seem to be a problem to be solved simply by shouting slogans without structural changes.

As such, productivity and safety are the Achilles tendon of the construction industry. This is why construction companies say smart construction. If digital technology is introduced in the entire process from design to operation and management, and the construction site is remotely automated, it is expected that productivity and safety will be caught.

Looking at the specific technology aspect, it is possible to reduce errors in the entire construction process by utilizing BIM technology that integrates and manages the life cycle of facilities based on 3D building information modeling, and increases productivity through automation technologies such as surveying and robots using drones. It is expected to be there. In addition, it is expected to increase safety by pre-detecting accidents through digital infrastructure such as intelligent CCTV and Internet of Things (IoT) technology incorporating AI technology.

According to McKinsey, a global consulting firm, it is expected that improving productivity alone will improve productivity by 14-15%. In the aftermath of Corona 19 last year, McKinsey pointed out that digitization of the construction industry is inevitable, and digitization is not an option but a necessity to overcome stagnant productivity, low profitability, and high manual labor rates. It is a technology-oriented structure in which know-how is accumulated through data in a labor-intensive structure that relies on field experience, and the core of smart construction is to seek change from a fragmented production system to industry-specific integration and technology convergence.

A construction company who is stingy in real technology investment

However, the vision for smart construction does not actually lead to investment in R&D. 0.92%. This is the ratio of research and R&D expenses to sales until the third quarter of last year for Daewoo E&C, with smart construction ahead. The ratio is increasing year by year to 0.48% in 2017 and 0.62% in 2018 and 0.73% in 2019, but it is not enough to say that the future has been put on smart construction.

Other companies talking about smart construction have similar circumstances. As of 2019, the ratio of R&D expenses to sales of DL (formerly Daelim Industrial) was 0.89%, SK E&C 0.54%, and POSCO E&C 0.42%. Although direct comparison is difficult due to the nature of the industry, the difference is remarkable when compared to the IT and electronics industries, such as Samsung Electronics (8.8%), LG Electronics (6.5%), and Kakao (15.2%), where R&D is the core.

The Korea Institute of Construction Industry has pointed out that construction companies’ investment in ICT has been stagnant, and this trend makes it difficult to respond to the 4th industrial revolution. The Korea Institute of Construction Industry said through the’Construction Industry Trend (No. 772)’ published last year that the recent stagnation trend in the ICT capital intensity of the construction industry has been fixed. The ICT capital intensity of the construction industry appears to be 5.6% as of 2017, and it is an analysis that the increase rate over three years is 0 to 0.1% point. ICT capital intensity refers to the proportion of the ICT capital stock to the total capital stock. In simple terms, it is an indicator that can be confirmed even though the company has invested some of its assets for ICT assets.

Some research shows that 60% of domestic construction companies are investing only 1-3% of their annual sales in technology. The’Digital Transformation Construction Industry Maturity Status’ report, which Autodesk and market research firm IDC jointly surveyed 835 companies around the world including 50 domestic construction companies last year, shows that Korean construction companies’ technology investment is far more than the world average expenditure. It is low-level and pointed out that in order to succeed in digital transformation, Korean builders should increase their budget for technology.

An official in the construction industry said, “Smart construction is not being actively applied to the actual site, but is still making use cases (use cases),” he said. “Cooperation and development on smart construction technology is being applied around housing.” Revealed.

All of the necessity for smart construction is said, but the actual technology investment is minimal. The government plans to actively invest in smart construction. The Ministry of Land, Infrastructure and Transport announced the’Smart Construction Technology Roadmap’ in 2018, and plans to invest 200 billion won in smart construction technology research and development (R&D) for 5 years from 2020 to 2025. As smart construction is regarded as the future food of the construction industry, the government is saying that it will be a welcome pick, but it seems necessary to prepare measures to activate smart construction so that a virtuous cycle can occur with private companies.

This year too, construction companies refer to smart construction through New Year’s speech. Daewoo E&C’s president Kim Hyung emphasized in his New Year’s address on the 4th that “Drones, BIMs, Freecons, and DSCs (Daewoo Smart Construction) should be activated more so that they can actively respond to technological changes at home and abroad. Ahn Jae-hyun, president of SK E&C, said, “We are trying to improve productivity through active use of smart construction. We will pursue changes in implementation methods such as simplification, standardization, modularization, and active introduction of digital transformation.” POSCO E&C President Han Seong-hee said, “The era has arrived where we can only survive through smartization. In a short period of time, smart construction should be spread to all sites.” Can this year be the first year of smart construction?