Engineering, Construction, and Operations Solutions

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SAP Corporate PPT Template black

Building a Sustainable WorldMichael ShombergGlobal Vice President Engineering, Construction, and Operations SolutionsJanuary 2016

1Hi, Im Mike Shomberg from SAP, and Im going to talk about building a more sustainable world.

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The global population will reach 9 billionby 2050.

Source: U.S. Census Bureau

By 2050, the global population is projected to be 9 billion people.

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The global population will reach 9 billionby 2050. Source: United Nations, Department of Economic and Social Affairs. Worlds Population Increasingly Urban with More Than Half Living in Urban Areas, July 10, 2014, New YorkSource: U.S. Census Bureau

Two out of three people will be living in cities by 2050.

And 2 out of 3 people will live in cities, creating 40 megacities around the world.

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By 2025, the construction industry will have grown by 70% to US$15 trillion.Source: PwC, Global Construction 2025, www.pwc.com/gx/en/industries/engineering-construction/publications/global-construction-2025.html

Source: United Nations, Department of Economic and Social Affairs. Worlds Population Increasingly Urban with More Than Half Living in Urban Areas, July 10, 2014, New YorkSource: U.S. Census Bureau

Two out of three people will be living in cities by 2050.

The global population will reach 9 billionby 2050.

So, by 2025, analysts predict the industry will grow by 70% to $15 trillion.

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75% of the infrastructure that will exist in 2050 doesnt exist today!

Source: Aurora Almendral, 75% of the Infrastructure That Will Exist in 2050 Doesnt Exist Today, Next City, October 22, 2014, https://nextcity.org/daily/entry/75-of-the-infrastructure-that-will-exist-in-2050-doesnt-exist-today

Even more amazing is 75% of the infrastructure in 2050, doesnt exist today. This means we will have to double it and double it again What an opportunity!

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Is our industry prepared to meet the increasing demand in a sustainable way?

Is our industry prepared for the increasing demand. Prepared to deliver in a more sustainable way?

One thing is certain . . . we cant do it using the same inefficient methods and by strip-mining our natural resources. Construction is the #1 consumer of Global Raw materials and produces 50% of the solid waste in the US. (Source: World Economic Forum 2015)7

More complexity

Project complexity

Two significant challenges stand in the way.

First, construction projects are getting more complex. Theyre bigger, taller and more efficient.

Unfortunately, According to an Accenture study, only 30% of large projects are on budget and even less are on schedule

Source : How to boost capital project performance, Omar Abbosh, James Arnott, Michael Grady

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Less experience

Project complexityWorkforce experienceMore complexity

And second, the industry faces a lack of skilled craftsmen across the globe. Its more dire in developed nations, where many experienced professionals and skilled laborers left the industry during the recession and they never came back. Leaving a combination of retiring highly skilled craftsmen and technologically savvy, but inexperienced millennials.

Most contractors are expecting a shortage, but only a few are preparing for it. A large contractor recently told us that they expect their employees tenure to drop from 15 years to 7 by the year 2020.

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More riskProject complexityWorkforce experience

Less experienceMore complexity

This combination is risky . . . risky to profits, risky to the environment, and risky to employee safety.

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Flat labor productivity YearSource: U.S. Department of Labor

Nonfarm industriesConstructionSource: U.S. Department of LaborYear

At the same time, the construction industry has seen flat or negative labor productivity for the last 50 years. In contrast, manufacturing, process, and industrial companies have increased productivity by over 100% over the same period.11

inflection pointWere at an inflection pointYear

YearNonfarm industriesConstruction

However, the construction industry is at an inflection point, where technology is now ready for constructions challenging environment. Innovators are adopting new business models, proven industrial processes and technologies without the painful learning curve. Similar to how emerging nations skipped landline telephones and went directly to cellular, construction companies will jump directly to the most innovative solutions. We call this inflection the industrialization of construction and we expect dramatic improvements in productivity.12

Its time to design and build in a fundamentally different way.

We need innovate now.

Several companies have already started.13

Unlock exciting new possibilities . . .3D printing and robotics enable flexible building manufacturing at a fraction of the cost.

Companies are exploring ways to build using 3D printing and robotics, which use 25% less materials and 50% less labor. 14

Internet of Things (IoT) sensors enhances equipment utilization and improves work site safety

Unlock exciting new possibilities . . .

When a large Middle Eastern contractor faced weak demand in 2008, they had two choices . . . get more efficient or go out of business. Now they use the Internet of Things (IoT) to monitor and improve the utilization of their 16,000 assets, saving approximately $15 million per year, while providing a safer environment for the construction team15

Portable and modular buildings are built with great precision and 50% more quickly than conventional buildings.

Unlock exciting new possibilities . . .

In the UK, a modular space provider uses lean processes to pre-assemble over 2,500 components in a factory setting. Now they can build structures in 50% less time.16

A Chinese firm built a 57-story building in 19 days while meeting higher standards than most buildings today.

Unlock exciting new possibilities . . .

And a Chinese company that built a 57-story building in 19 days Amazing! But even more amazing is they exceeded most of todays building standards and eliminated 15000 truckloads of materials and waste17

How are these innovators doing it?

Its time to reevaluate what the digital age has to offer. As Rupert Murdock stated, In the new world, it is not the big fish which eats the small fish, its the fast fish that eats the slow fish.

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With digitization

How are these innovators doing it?

Most firms are still building everything by hand and at a great cost to safety, to quality, and to profits. In addition, on the job site, significant time is wasted waiting for materials and equipment, traveling, and coordinating work.

These innovators have proven that with digitization, we can do better.

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Digitize

CoreOperations

We can digitize core operations, implementing a combination of construction ready technology, such as real-time project controls, with proven industrial processes, like prefabrication.

The result is better productivity, the elimination of surprises, and single version of the truth.20

Digitize

CoreOperationsExpertise and knowledge

We can digitize expertise and knowledge, providing the tribal knowledge and best practices of seasoned skilled craftsmen to the millennials, at the point of need, so they can work safely and reduce rework.

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Digitize

CoreOperationsExpertise and knowledge

Construction site

We can digitize the construction site, using mobility, sensors on equipment and automation, such as robotics and 3D printing. We can effectively turn the construction site into a modern assembly line, complete with real-time feedback for optimization, minimization of waste and improved safety. 22

Digitize

CoreOperationsExpertise and knowledge

Construction site

Inter-company collaboration

We can digitize stakeholder collaboration to provide ALL participants easy access to the most up-to-date project & design information, eliminating mistakes and litigation. New business models are emerging to incentivize all stakeholders to work collaboratively towards the outcome based goals vs. individual company goals.23

Digitize

CoreOperationsExpertise and knowledge

Construction site

Inter-company collaboration

Commissioning and operations

We can digitize the commissioning and operations, seamlessly transferring the as-built information from the construction phase to operational systems, including 3-D models, documentation and equipment warranty information.

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Eliminating work through automationBetter, faster decision makingOpen talent economy replacing unionsInteractive technology and robotics

Business models

Business processes

Work

Lean methodologiesGreen methodsVisual collaborationPredicting the future and changing for the better

Reimagine IndustrializationAsset-as-a-ServiceIntegrated Project Delivery

But to get there, we need to reimagine numerous business models, processes and work methods. For example, we are seeing new financial models emerge with Public/Private Partnerships and concessions, where construction companies are beginning to operate the assets they build. 25

Eliminating work through automationBetter, faster decision makingOpen talent economy replacing unionsInteractive technology and robotics

Business models

Business processes

Work

Lean methodologiesGreen methodsVisual collaborationPredicting the future and changing for the better

Reimagine IndustrializationAsset-as a-ServiceIntegrated Project Delivery

New processes extend the value of 3D modeling to provide a visual component to everything we do, reducing errors & improving efficiency. We are going beyond BIM, by directly connecting 3D models to the ERP data, such as visual cost and schedules, visual procurement and visual installation & maintenance.

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Eliminating work through automationBetter, faster decision makingOpen talent economy replacing unionsInteractive technology and robotics

Business models

Business processes

Work

Lean methodologiesGreen methodsVisual collaborationPredicting the future and changing for the better

Reimagine IndustrializationAsset-as-a-ServiceIntegrated Project Delivery

All these are implemented to achieve the common goal of Building a sustainable world. 27

Reimagine

Business models

IndustrializationAsset as a serviceIntegrated Project Delivery (IPD)

But to get there, we need to reimagine business models.

To capitalize on the inflection point in construction productivity, the industrialization of construction or the implementation of proven industrial technology, automation and processes, that are JUST NOW construction-ready, will deliver similar results without having to experience the painful learning curve. However, it will require companies to invest and it will eliminate large numbers of competitors who are unwilling embrace change and adapt. Similar to challenge that faced wagon-makers at the turn of the previous century, some hoped for faster horses or better whips, while others embraced the advent of the automobile.

Were also seeing new financial models emerge through concessions and PPPs, where some construction companies are operating the assets they construct.

IPDs will grow beyond just an outcome-based contract vehicle, digitization will encourage participants to collaborate together and evolve roles & processes to deliver better, more sustainable assets.28

Business models

Business processes

Lean methodologiesGreen methodsVisual collaborationPredicting the future and changing for the betterReimagine

IndustrializationAsset as a serviceIntegrated Project Delivery

New, lean business processes will also be needed, like just-in-time manufacturing, prefabrication, and green methods. 3D models are adding a visual component to everything we do, reducing errors & improving efficiency. And predictive analytics are helping to optimize our processes while reducing risk.

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Eliminating work through automationBetter, faster decision makingOpen talent economy replacing unionsInteractive technology and robotics

Business models

Business processes

Work

Lean methodologiesGreen methodsVisual collaborationPredicting the future and changing for the better

Reimagine IndustrializationAsset as a serviceIntegrated Project Delivery

And finally, we need to reimagine work. This will require increased use of automation, software, and robotics that eliminate many tasks, save time, and increase quality.

And expect unions to play a smaller role, as companies will go online to post, review, and hire qualified labor directly, anywhere in the world.

All of this will be done with a common goal: Building a sustainable world.

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Contractor wins contract to build new building

Lets illustrate this scenario based on a real project.

In this case, a contractor is notified that they have won the contract to build a new 57-story building. 31

Contractor wins contract to build new building

Hire through skilled labor network

Because the construction labor pool is available online for ANY region and ANY skill, construction companies can quickly match skills, availability, track records, and certifications and book resources as they need them.32

Contractor wins contract to build new building

Hire through skilled labor networkSelf-perform with industry verticalization and optimized supply chain

Because the contractor is vertically integrated, they self-perform a larger portion of the job, increasing profits. They can also greatly expand and simplify their network of trusted suppliers, negotiate the best rates, and receive items in kits or prefabricated assemblies.33

Contractor wins contract to build new building

Hire through skilled labor networkAugment skilled labor with technologySelf-perform with industry verticalization and optimized supply chain

The labor force is provided with tablets and other technology to provide access to proven best practices, eliminating rework and errors while improving safety.34

Contractor wins contract to build new building

Hire through skilled labor networkUse on-site manufacturing facility to assemble prefab kitsSelf-perform with industry verticalization and optimized supply chainAugment skilled labor with technology

The contractor decides whether to use an existing manufacturing site or build an on-site assembly line to preassemble the kits with fast, assembly-line efficiency. 35

Contractor wins contract to build new building

Just-in-time material deliveryHire through skilled labor networkSelf-perform with industry verticalization and optimized supply chainAugment skilled labor with technologyUse on-site manufacturing facility to assemble prefab kits

Because suppliers can see the progress, they can provide materials just in time, minimizing the need for on-site storage.36

Contractor wins contract to build new building

LEGO-like building assemblyHire through skilled labor networkSelf-perform with industry verticalization and optimized supply chainAugment skilled labor with technologyUse on-site manufacturing facility to assemble prefab kitsJust-in-time material delivery

The assembled building modules are then quickly put in place like LEGO pieces because they were made to high-precision standards.37

Contractor wins contract to build new building

Data-driven asset utilizationHire through skilled labor networkSelf-perform with industry verticalization and optimized supply chainAugment skilled labor with technologyUse on-site manufacturing facility to assemble prefab kitsJust-in-time material deliveryLEGO-like building assembly

High-value assets are optimized throughout the process, eliminating downtime of crews and critical equipment.38

Contractor wins contract to build new building

Contractor completes new, 57-story building in just 19 days.Hire through skilled labor networkSelf-perform with industry verticalization and optimized supply chainAugment skilled labor with technologyUse on-site manufacturing facility to assemble prefab kitsJust-in-time material deliveryLEGO-like building assemblyData-driven asset utilization

The building is delivered in record time. Connected construction solutions like this one:Dramatically lower costsWaste less materialAnd are more environmentally friendly

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Get started

We have a proven four-step process to get you started:

First, we understand your business objectives and align SAPs strategy to your objectives.Second, we help prioritize your strategic initiatives.Then, we develop a solution road map that delivers the expected ROI. And last, we implement the solutions on time and within budget.

Throughout, we help establish governance to maximize investments and accelerate value creation.40

Get started

1 Strategy alignment

We have a proven four-step process to get you started:

First, we understand your business objectives and align SAPs strategy to your objectives.Second, we help prioritize your strategic initiatives.Then, we develop a solution road map that delivers the expected ROI. And last, we implement the solutions on time and within budget.

Throughout, we help establish governance to maximize investments and accelerate value creation.41

Get started

2 Opportunity assessment1 Strategy alignment

We have a proven four-step process to get you started:

First, we understand your business objectives and align SAPs strategy to your objectives.Second, we help prioritize your strategic initiatives.Then, we develop a solution road map that delivers the expected ROI. And last, we implement the solutions on time and within budget.

Throughout, we help establish governance to maximize investments and accelerate value creation.42

2 Opportunity assessment1 Strategy alignment3 Solution road map and ROIGet started

We have a proven four-step process to get you started:

First, we understand your business objectives and align SAPs strategy to your objectives.Second, we help prioritize your strategic initiatives.Then, we develop a solution road map that delivers the expected ROI. And last, we implement the solutions on time and within budget.

Throughout, we help establish governance to maximize investments and accelerate value creation.43

2 Opportunity assessment4 Value realization1 Strategy alignmentGet started3 Solution road map and ROI

We have a proven four-step process to get you started:

First, we understand your business objectives and align SAPs strategy to your objectives.Second, we help prioritize your strategic initiatives.Then, we develop a solution road map that delivers the expected ROI. And last, we implement the solutions on time and within budget.

Throughout, we help establish governance to maximize investments and accelerate value creation.44

Governance1 Strategy alignment2 Opportunity assessment4 Value realizationGet started3 Solution roadmap and ROI

We have a proven four-step process to get you started:

First, we understand your business objectives and align SAPs strategy to your objectives.Second, we help prioritize your strategic initiatives.Then, we develop a solution road map that delivers the expected ROI. And last, we implement the solutions on time and within budget.

Throughout, we help establish governance to maximize investments and accelerate value creation.45

Contact: Anthony Robinson Phone: 404-838-6995 Email: anthony.robinson@vision33.com

Thank you!46

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