DIGITALIZATION AND DIGITAL TRANSFORMATION

IN CONSTRUCTION – BENEFITS AND CHALLENGES

Silvia Parusheva1
1
University of Economics – Varna, Department of Informatics,
Varna, Bulgaria, [email protected]

Abstract
Digitalization is essential for the development of the construction sector
with the opportunities it offers to change and optimize the construction business.
Digitalization affects every stage and process, the whole value chain. As for a
number of other industries, as well as in the construction sector, it provides a
number of advantages and benefits, including: increased productivity; increased
speed of construction and saving time in the implementation of construction
projects, significantly higher quality of accompanying construction documenta-
tion, etc. At the same time, there are some challenges related to the lag of digital
transformation in construction, compared to other sectors, the presence of some
specific technical challenges, different degree of application of new IT in small-
er construction companies, which are often in the role of subcontractors and
others. Despite the challenges, digital transformation has no alternative in view
of the future upward development of the construction sector.
Keywords: construction, digitalization, digital transformation, benefits,
challenges, IoT, robots, 3D printing, RFID.

INTRODUCTION
The construction sector is of key importance for the development of
the world economy. It accounts for 6% of global gross domestic product
(GDP) (World Economic Forum, 2017). Construction is associated with
almost all industries. For other industries to function, they usually rely
on buildings or assets that have to be built. In addition, it should be noted
that constructed assets, with all their diversity (residential buildings,
roads, bridges, schools, hospitals, etc.), have a direct impact on the quali-
ty of life of people. Furthermore, the prospects of intensive development
of the construction sector in the future related to rapid urbanization and
investment based on it plus the construction of smart cities and all relat-
ed infrastructure and the introduction of the industrial Internet of Things
concept, etc., should also be taken into account. As an example of the

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expected prospects can be pointed an assessment of growth of urban
population with 200,000 people a day. In this connection, it should be
borne in mind that these residents need housing and related transporta-
tion, communal and other infrastructure and this construction is related
to the construction sector (World Economic Forum, 2017). It is these
global trends that pose significant challenges to the sector and, accord-
ingly, the issues of digitalization and digital transformation are on the
agenda, which will most effectively help address these challenges related
to the expectations of rapid construction.
This report aims to highlight the key benefits that digitalization can
provide to the construction sector and on the basis of which information
and communication technologies and approaches it is possible to realize
these benefits. On the other hand, it is also important to identify the chal-
lenges that construction companies must face in order to be able to take
the most effective advantage of digitalization opportunities.
1. IMPORTANCE OF DIGITALIZATION
FOR THE CONSTRUCTION SECTOR AND ITS BENEFITS
Digitization is essential for the development of the construction sec-
tor with the opportunities it offers to change and optimize the construc-
tion business. Digitization affects every stage of it, its processes, the
whole value chain. As for many other industries, as well as in the con-
struction sector, it has many advantages. The following may be
indicated (Aghimien et al., 2018):
• increased productivity and efficiency;
• increased speed of construction activities;
• saving time in the implementation of construction projects and
improved opportunities for adhering to construction schedules;
• significantly higher quality and safety of construction, incl. and
the quality of the accompanying construction documentation;
• improved design of buildings, etc.
Among these strengths, some authors point out as leading one the
opportunities that digitalization offers to increase the productivity of
firms in the construction sector (Berger, 2016). Research shows that
despite the lagging behind the construction industry reaping the benefits
of digitalization, it is also growing, though not as large as other indus-

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tries. To illustrate this fact, Berger gives an example of construction
productivity in Germany, which has grown by 4.1% over the last ten
years, while in the whole German economy it has increased by 11% over
the same period. The digitalization in construction contributes to reduced
construction costs and to have more successful projects. Considering that
construction is the world's largest consumer of raw materials, digitaliza-
tion helps make more efficient use of scarce materials globally.
2. TECHNOLOGICAL SOLUTIONS AND APPROACHES
CARRYING BENEFITS FOR THE CONSTRUCTION SECTOR
In the field of construction, certain technological solutions and
approaches in the field of information and communication technologies
and digitalization can be mentioned, which influence the business prac-
tices of companies in the construction sector in a very favourable way
and give them a number of advantages (Berger, 2016). These include:
- use of digital platforms for the supply of raw materials;
As a rule, raw materials represent a substantial part of the total cost
in the construction sector, and digital platforms contribute to reducing
these costs. According to statistics, electronic supply of raw materials
helps save, for example, 5% of the value of catalog-based purchases and
10% of value when auctioned.
- implementation of digital tools for smart logistics and mainte-
nance of construction sites - software for managing supply activities,
exploiting the capabilities of the Internet of Things and radio frequency
identification technology;
In construction, the following specifics are observed - construction
workers use only about 30% of their working time to carry out their main
activity. The remaining 70% is used for supplementary activities such as
transporting materials, cleaning and rearranging the construction site,
searching for materials and equipment, etc. This ratio in the use of work-
ing time can be optimized with the help of digital tools, with which the
benefits of digitalization are widespread. Such digital assets may be: the
use of supply management software, which results in materials being
shipped to the construction site at the exact time when they are needed
and work on their storage and rearrangement can be minimized.

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 Another possibility of intelligent logistics is the intelligent, con-
nected construction machines as part of the work environment in the
context of the Internet of Things. These machines can have appropriate
sensors, which can optimize the work of construction workers and their
auxiliary equipment (hoists and vehicles, etc.) - less waste of time for
coordination and efficiency by synchronizing the base sensor signals,
which can be seen as an undoubted advantage as a result of digital trans-
formation.
Radio Frequency Identification (RFID) technology is also an im-
portant digital tool. Building materials, equipment and products,
equipped with this technology can be identified and tracked by electro-
magnetic fields. They can be recorded and scanned, thus optimizing their
location on the construction site.
- use of drones, robots, 3D technology and 3D printing.
The use of drones in the construction industry can potentially be
useful at various stages of construction projects - in the preliminary
planning, detailed exploration and mapping of the construction site,
monitoring of the construction process, post-construction inspections,
sales and marketing (Liu et al., 2014; Anwar et al., 2018). Drones can
have a variety of equipment, such as a high-resolution camera, incl. for
3D capture and video streaming, RFID reader, GPS device, Wi-Fi com-
munication and more. The data obtained from the sensors of these un-
manned aerial vehicles can be processed and analyzed to provide im-
portant business information. Drones can be applied at every stage of the
construction value chain - from pre-construction throughout the con-
struction phase by providing information from the site of designers, con-
struction contractors, construction supervision to the final stages of the
construction project, incl. when preparing impact assessment reports.
Intelligent monitoring of the construction process can significantly re-
duce the effort and cost of monitoring and reporting construction proce-
dures, which are particularly large when implemented in the traditional
way, especially in large-scale construction sites. The benefits of using
them in construction work are contributing to increasing efficiency and
productivity at all these stages by helping to monitor: progress of con-
struction site activities, compliance of contractors' reports with actual
activities performed or with regulatory requirements.

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 Robots can also bring significant benefits to the efficiency and
productivity of construction work. They are used for mapping the con-
struction site, for laying bricks, for preparing the necessary materials,
etc. (Jayaraj & Divakar, 2018). Robots can replace humans in construc-
tion activities, such as working with chemical dyes, at high altitudes,
which pose a threat to normal working conditions. Specific construction
practices are cited in the publications, according to which activities re-
quiring several weeks of normal construction activity are carried out for
48 hours with the help of a robot using 3D construction plans, according
to which it arranges, processes and lays every brick (Berger, 2016). The
benefits of implementing this technology are cost savings and improved
performance.
3D construction printing is another innovative method that offers
advantages in terms of digitizing the construction sector. 3D construc-
tion printing is a new and innovative way of construction and can be
used to produce construction components of various sizes with high pre-
cision - from micro to macro components, creating layer by layer (Ledi-
ga & Kruger, 2017). At the beginning of the process are computer-aided
design and digital scanning models. Specialized software "cuts" the
components into thin sections, each of which is then printed. When
properly designed and used, this method has different advantages over
traditional construction methods, as it creates opportunities to reduce
project time and cost.
3. CHALLENGES TO DIGITALIZATION
IN THE CONSTRUCTION SECTOR
The implementation of digitalization and digital transformation in
the construction sector can be associated with some the challenges that
need to be taken into account. In its study, the McKinsey Research
Company (McKinsey, 2015) found a lag in the construction sector in
terms of its degree of digitalization based on its 2015 McKinsey Global
Institute industry digitization index among 22 compared sectors. Con-
struction ranks second to last (after only the Agriculture and Hunting
sector.) The construction sector has not yet embraced the new digital
technologies that need initial investment, despite the fact that the long-
term benefits are considerably high. Expenditure on research and devel-
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opment in construction are far behind those in other industries: they rep-
resent less than 1% of revenue - a benchmark in automotive and aero-
space sectors are between 3.5% to 4.5%. For its part, IT costs are also
insufficient and account for less than 1% of construction revenues.
McKinsey identifies technical challenges specific to the construction
sector as the cause of the slow pace of digitalization. The varying de-
grees of application of new IT in smaller construction companies,
which often play the role of subcontractors, may also be challenging.
Researchers and research firms (Berger, 2016) see several key
points directly related to the ability to unleash the potential of digitaliza-
tion - digital data, digital access, automation and connectivity. These key
points can have an impact and become a link in the value chain in the
construction sector: in logistics, in the supply of raw materials and pro-
duction and in production, in marketing and sales, and in the after-sales
marketing. Firms in the construction sector face the challenge of decid-
ing which approach to target and how to best implement it. In the stud-
ies, Berger points out that companies in the construction industry that are
more focused on technological development and carefully consider how
to apply technological innovations in the value chain are more likely to
outperform competitive players, because with the introduction of digital
methods, will become more productive and efficient.
Other researchers and research companies (Solis et al., 2014;
Capgemini Consulting, 2013; Ezeokoli, 2016) argue that firms need to
face the multiple challenges of digital transformation to create a com-
plete digital consumer experience, meets their expectations with every
possible interaction. The major challenges include:
- aligning the right resources and the proper management of the
right teams to focus on digital services;
- the perception by companies of the thinking of a prime mover in
the pursuit of digital innovation, or so-called “digital-first”;
- building "digital enthusiasm" and motivation among mid- and
operational-level management;
- requiring appropriate minimum digital knowledge and skills of
employees;
- integrating all digital initiatives and upgrading to the next tech-
nological steps;

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 - search for the most suitable partners for the implementation of
digital initiatives;
- improving digital services to meet new requirements and the
need for adaptation, etc.
CONCLUSION AND FUTURE WORK
This study identifies the main benefits that digitalization brings to
the construction sector, related to increased productivity and efficiency,
increased speed of construction activities, shortening the deadlines for
implementation of construction projects and adhering to construction
schedules, the contribution of IT solutions for improved design of build-
ings, etc. In addition, the main and the most up-to-date technological
solutions and approaches that implement the digitalization in the con-
struction sector are outlined.
On the other hand, the findings indicate the major challenges asso-
ciated with the digitalization of the construction industry, that include
some lag in the construction sector in terms of its degree of digitaliza-
tion, some technical challenges specific to the construction sector, identi-
fying the right resources needed for digitalization, as well as adequately
managing the right teams to accomplish digital transformation. Compa-
nies in the construction sector are aware of the potential of emerging
technologies such as Building Information Modeling (BIM), 3D printing,
robots, wireless sensing, but they are not fully aware of exactly how to
implement them in their organizations’ and digitalization’s strategy.
There are difficulties in identifying the right resources needed for digital-
ization, as well as adequate management of the right digital transfor-
mation teams.
The scope of future work is to identify key success factors for the
construction sector to maximize the potential benefits of digitalization with
special with special attention to companies operating in the Bulgarian
construction sector, which is currently again in a stage of particularly in-
tense development, supported by the growth of the Bulgarian economy.
ACKNOWLEDGEMENTS
The research is supported by the Project BG05M2OP001-1.002-
0002-С02 Digitization of the economy in an environment of Big data

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(DEBD) with basic organization and beneficiary University of National
and World Economy and the partnership of University of Economics –
Varna.
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