Strong Headwinds Disrupting the Built Environment Industries

The built environment sector is often seen as a laggard in productivity and technology adoption. However, this is changing: the strong headwinds of the last few years have forced companies to evolve and innovate.

The pandemic led to widespread supply chain shocks felt acutely by the construction sector and with geopolitical tensions increasing, including in the Red Sea, this issue is here to stay. Covid-19 also led to one of the largest shake ups in the real estate industry with significant drops in office occupancy rates in the move back to hybrid work.

While occupancy rates are recovering, they are not expected to return to pre-pandemic levels. Add to this potent mix, the energy crisis and increasing ESG targets and regulatory requirements.

PropTech Companies Are Injecting Innovation

Property technology (PropTech) companies are injecting much-needed innovation into the industry and driving significant changes across building life cycles from design to construction, operation, maintenance, and demolition. We have published a PropTech Innovator Report highlighting 3 Innovate companies that are providing transformative solutions across the built environment sector.

In line with the AI era,  which IDC refers to as to as AI Everywhere, each Innovator highlighted in the report is leveraging AI in their solutions.

Our research highlights that the top priorities for built environment executives are improving operational efficiency and cost reduction, enhancing environmental sustainability and improving resilience to climatic hazards. Organizations are increasingly applying technology to help support these business objectives.

For example, to meet their sustainability goals, 66% of real estate companies are investing in data and analytics including AI, and 61% are investing in space and workplace technology (IDC’s Sustainable Buildings, Homes, and Districts Survey, 2023, n = 654).

Announcing IDC’s “Worldwide PropTech Innovators, 2023”

The PropTech companies highlighted in the Innovator span the building lifecycle and reflect the diverse range of companies encapsulated in this market. The first innovator — nPlan — is changing the way in which major projects can be planned, designed, and monitored through an AI-enabled software solution drawing on over 750,000 project schedules. The second — Skandal — is providing IoT driven lighting displays that respond to building inhabitants to improve occupant experience and promote behavioral change. Finally, Xandar Kardian’s solution monitors occupant motion through the innovative use of radar technology and can also monitor resting heart rate and respiratory rate for applications in health and social care facilities.

IDC is developing further Innovator reports focused on innovation in the built environment so please get in contact if you are an SME and meet the eligibility criteria – jdignan@idc.com lbarker@idc.com

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Louisa Barker - Senior Research Manager, IDC Government Insights, Europe - IDC

Louisa Barker is a senior research manager in the European IDC Government Insights team, leading research on smart, sustainable, and resilient cities and communities. She has international experience providing analysis, policy advice, and consultancy to the public sector on disaster risk management, urban building and planning regulation, and smart cities. Previous roles have included Urban Resilience Consultant at the World Bank, focused on projects in the Caribbean and East Africa, and as a researcher at technology and innovation accelerators such as the Future Cities Catapult and the University College London City Leadership Laboratory. She is also a Specialist Advisor to the International Building Quality Centre.

Globally, cities are rediscovering the importance of their rivers as a central tenet of the health, wellbeing, and economy of a city. A river was often, if not always, the reason for a city to develop and grow, but during the 20th century city, authorities began to focus primarily on the built environment and to see water management as a less important sub issue of city management.

With the rise of environmental awareness in the 21st century, cities are beginning to relook at the interrelationship between the built environment and their rivers. We have been tracking this new direction through their research on River Cities and how technology now allows us to instrument both water and the built environment in concert.

According to our research, 28% of local governments across EMEA are already investing in smart rivers with an additional 29% considering investing in the future (IDC Survey, December 2023).

The French are Reclaiming their Rivers

France is emerging as a leader in this process, and the clearest example of this will be the opening ceremony of the 2024 Olympic Games.

Paris is the most visited city in the world, and it is impossible to imagine Paris without picturing the Seine. Olympic opening ceremonies are historically held in a stadium, but France will be using the banks of the Seine for the ceremony to increase participation and celebrate the special relationship between the river and the city.

The Digital Twin Project

A further French example of this new thinking is captured in a recently published IDC Perspective Building a River Digital Twin: A Case Study of the Port de Bordeaux. This document provides an overview of a project led by the Port de Bordeaux, an entity managing marine activities across Bordeaux and the Gironde Estuary.

The objective of the project is to create a digital twin of the Estuary – the largest Estuary in Western Europe covering around 635 km2. The Gironde Estuary is formed from the meeting of the rivers of Dordogne and Garonne and spans several cities, the main one being Bordeaux with more than 250k residents. The Port de Bordeaux manages 7 terminals is the 7th largest French port in terms of traffic.

The digital twin was built to help project participants in both their day-day tactical decision-making process (for example, information on water levels, pollution and navigation) as well as addressing longer-term and strategic challenges (adaptation and impacts of climate change). The Port de Bordeaux developed 8 core goals for the digital twin project:

  • Sharing and developing knowledge of the river.
  • Promoting the exchange of data and operational results.
  • Anticipating the effects of climate change.
  • Identifying mitigation solutions.
  • Developing economic, recreational and tourism opportunities.
  • Preserving biodiversity and environmental wealth.
  • Developing coastal and river surveillance (alert systems).
  • Fostering replicability of the platform on other rivers.

 

An innovative aspect of this project is that the project team looked beyond environmental challenges to a broader set of objectives, including, for example, economic and recreational activities. This approach is centred on the view of a river as a complex ecosystem of different stakeholders and an integral part of the identity of the region. The project has a wide target audience, and the use cases, outputs and goals were co-created with the relevant stakeholders at the design stage.

Digital twins are at an early stage of adoption for rivers and marine environments. However, the application of technologies to the blue economy is increasing.

We predict that, by 2027, threatened by water scarcity and extreme weather, 40% of large cities will have digital twins of their water resources to manage water supply, quality, resilience and behavioural change (IDC Smart Cities and Communities 2023 Futurescape).

The Port de Bordeaux is an early adopter and can provide a model and blueprint for others to follow as a core principle of the project was making as many aspects as possible open source. Local stakeholders can upload their own data and use the GIROS platform to visualize their results. This supports a broader community of users being able to take advantage of the model.

Crucially, the Bordeaux project team intentionally designed the solution to be replicable on other rivers; while the numerical model for the Gironde is geographically specific, the framework and architecture of the solution is being made publicly available.

We are soon to publish our first Tech Innovator report on companies involved in rivers and water management and are keen to hear of innovative technology solutions and case studies involving river management for future reports so please do get in touch with us jdignan@idc.com, lbarker@idc.com, rletemple@idc.com

Remi Letemple - Senior Research Analyst, IDC Government Insights - IDC

Remi Letemple leads IDC’s Worldwide Sustainable Transportation and Smart Vehicles Strategies service, where he provides strategic guidance and thought leadership on the future of mobility and transportation. Operating at a global level, he is recognized as a subject matter expert in smart mobility and transportation technologies—including connected, autonomous, shared, and electric mobility—enabled by software-defined vehicle (SDV) architectures, over-the-air (OTA) updates, cloud and edge platforms, and AI, including generative AI.

After much back-and-forth on work models, bold ultimatums from employers and staunch resistance from workers, European businesses are in the process of codifying different ways of where, how, when, and why we work. One of the many reasons for this change is the speed with which technology, especially artificial intelligence and GenAI, have made it possible to work equally well in varying, flexible work models.

The downside of this rapid technology development has been that European organizations simply cannot hire enough workers with current or deep skills – both technical and human. Do you manage highly distributed teams performing complex and interdependent tasks? Certainly not easy. Finding employees trained sufficiently well to safely transition to the use of Gen AI solutions? Not easy either.

Enter the promise of automation and in particular the ability of AI and Gen AI tools to both facilitate repetitive tasks like coding, data entry, research, and content creation but also to amplify the effectiveness of learning in the flow of work and secure company assets.

The following 3 predictions are examples of what work in Europe might look like in the next five years, considering the areas of work personalization, skills development and the impact of climate change on office design.

Future of Work Predictions for 2024 and Beyond

  • Prediction 1: 60% of Large Businesses will upgrade hardware and software technologies to increase worker retention with personalized work experiences and enhanced collaboration by 2025.

Rapidly evolving technologies and work methods are forcing companies to upgrade hardware and implement new software technologies that support better employee experiences, personalization and improved collaboration.

Collaboration apps are becoming more visual and continue to develop features unlike multiplayer games that enable a more personalized view of work and teams, better targeting of projects, and hands-on collaboration apps. Meetings and other work resources, including collaboration resources (workflow, meetings, new document formats, etc.) are translated and transcribed in real time, captured, analyzed and exploited by other integrated business data sources. The results enable faster and more personalized decisions and collaboration, including summaries using generative AI. AI solutions are gradually increasing the ways people consume content and data, and AI itself will become a digital collaborator.

  • Prediction 2: Enterprises will leverage personalized technology skills development to drive $1T in productivity gains by 2026, enabled by GenAI and automation everywhere.

As the development and use of technology in everyday work environments becomes more complex, organizations struggle to find experts for programming, security, architecture, operations, management and many other roles. IDC data from 2023 shows that 43 % percent of organizations lack the capability support needed to successfully implement automation.

One of the reasons Gen AI adoption and experimentation has grown so rapidly is that everyday workers can see its immediate value. As new jobs come online due to new automation requirements and workers learn new skills, Gen AI is being incorporated into tools that create employee training. Workers with entry-level skills can better target individual learning needs based on the speed with which Gen AI can generate code, summarize data, and create first-draft multimedia products. This customized approach ensures that people (including IT staff) receive the most appropriate training, optimizing efforts to increase their skills and competencies as jobs evolve, plus the need to program GenAI applications themselves.

  • Prediction 3: By 2028, organizations will invest in office climate havens, using asset-based/renewable energy to defray 30% of their ongoing operating costs.

It is not just work patterns that are rapidly changing. The environment we live and work in is rapidly changing too. As uncontrolled wildfires, climate change and extreme weather events become more common in Europe, the consequences are affecting human health and the ability to work effectively. Sustainability measures are no longer considered optional as organizations worldwide recognize them as necessary components of strategic planning and sustainable operational excellence.

In future, progressive companies will adopt a combination of innovative building design, digital twins, robotics and integrated climate systems to create climate havens where workers and their families can both find relief and focus on work. Unfortunately, simply rebuilding existing buildings with AI or robotics adds energy demand to an already struggling European energy infrastructure.

Companies that invest heavily in asset-based energy (hydro/tidal, geothermal, solar and wind) on-site in their climate havens, support both their operating costs and potentially create a secondary revenue stream when they feed electricity back into the grid. This is reversing the long-term trend of digital organizations threatening their local communities through excessive power usage, while improving community relations, employee retention and talent recruitment.

 

All the above predictions have much in common – they seek to better understand the intersection of technology and human behavior. Science fiction predicts dystopian visions of mechanized and artificially controlled societies where human efficacy is threatened. IDC far from that point of view, but we also see how the concerns raised by new technologies such as Gen AI can play a big role in hindering adoption—for better or for worse.

Organizational leaders must invest time and money in the strategic planning for the adoption of AI and GenAI technologies, as well as the new roles and ways of working they create. This is not just a technology issue that affects computing, security, hardware, infrastructure, and integration requirements. It is also a human issue that must be addressed employee empowerment through skill development and the development of appropriate, re-imagined career paths.

For more information on the impact of Automation on the European Future of Work, please access the following resources:

Meike Escherich - Associate Research Director, European Future of Work - IDC

Meike Escherich is an associate research director with IDC's European Future of Work practice, based in the UK. In this role, she provides coverage of key technology trends across the Future of Work, specializing in how to enable and foster teamwork in a flexible work environment. Her research looks at how technologies influence workers' skills and behaviors, organizational culture, worker experience and how the workspace itself is enabling the future enterprise.