When the Construction Industry Institute (CII) analyzed the performance of 975 light and heavy industrial projects in its benchmarking database, it found that only 5.4% met “best in class” predictability in terms of cost and schedule. Some overruns were noted, due to first-of-a-kind technology, increased project complexity and scale, but another factor also looms much larger. All stakeholders in the capital projects ecosystem—project owners, contractors and subcontractors—have generally resisted wide scale adoption of integrated digital tools and platforms to drive project performance. These include advanced analytics, field automation and mobility, 5-D building information modeling (BIM), as well as cloud-based document-management and data-collection tools. It is evident from our research that there are clear examples of E&C contractors and owners successfully reducing costs and improving schedule performance by aggressively pursuing digital solutions, proving that integrated digital solutions and stream-lining business processes are increasing efficiency, transparency and accountability.
Bridging the physical and digital world is often the work of science fiction. From “Blade Runner” to “The Hitchhiker's Guide to the Galaxy”, artificial intelligence and virtual realities have engaged the minds of writers, sci-fi fans and scientists. The world of capital projects and construction has now started to introduce the IIoT (Industrial Internet of Things), the cloud and concepts of Digital Twin platforms into the daily project work stream. Too often, capital projects suffer from cost, schedule, risk, safety or quality issues that were not identified early enough for their impact to be mitigated—going digital helps bridge that gap.
Every problem has a time in its life when it's big enough to see, and small enough to solve.
Digital Twin technology is a digital model of a physical asset, which continuously collects information (via sensors, drones or other IoT and IIoT data collection tools) and applies advanced analytics, machine-learning and artificial intelligence (AI) to gain valuable real-time insights about the physical asset’s performance, operation or profitability. Incorporating the benefits of a Digital Twin into capital projects will help enhance the predictability and performance. When projects or portfolios have repeatable designs or reusable components, the impact of machine learning and the Digital Twin “digital library” can reduce the time to market and enhance the accuracy of cost estimates, detailed designs, schedule elements and all aspects of project development. Digital Twin technology has been used in manufacturing for years, driving lean processes, continuous improvement and predictive analytics, ensuring lessons learned and as-built design enhancements are applied to all future products. The time for adoption of this proven concept to engineering and construction has arrived.
Establishing a Digital Twin model to drive a “connected project” requires a full digital representation of both the physical asset as well as the project workflows throughout engineering, procurement, project management, construction and commissioning. This requires a step change in project management and communication, as all project participants can now interact through the “connected project” platform (the Digital Twin). In effect, this results in driving project execution not through transactional document management and control, but through the continuous exchange of data and information.
Product Lifecycle Management (PLM) concepts are incorporated into Digital Twin models, based on device management, analytics, preventative maintenance, performance and utilization metrics. Here, we are interested in the role machine learning plays in supporting bigger IIoT opportunities in the field of capital projects and infrastructure in establishing a truly “connected project”.
As Digital Twin platforms evolve, Connected Project models will communicate with one another to create a “digital factory” of multiple linked Digital Twin models. This will provide project- on-project predictive performance trending, and the lessons learned will be passed on to project participants and applied to related design or execution enhancements.
In PwC’s Industry 4.0 Survey, some companies report advanced or very advanced current levels of digitization and integration. There are also companies who rate themselves ahead of their main competitors when it comes to building digital operations capabilities. And, some companies have made early investments in Industry 4.0. There is also a select group of companies who score highly on all three of these key dimensions. We identified 71 companies (around 4% of the whole survey population) who are setting the fastest pace. We call these companies “first movers,” and they’re already gaining a nearly insurmountable advantage over competitors. "First movers" expect to gain significant benefits from their more advanced digital capabilities and greater levels of investment. They are far more likely to be forecasting both revenue gains of more than 30% and cost reduction of more than 30% at the same time (see Figure 2). They’re more likely to expect efficiency gains too. Put these all together and you have an enormous impact.1
Long-term benefits of Digital Twin models in capital projects will emerge from historic data and include increased speed to market, reduced project development costs, standardization, recycled designs, cost estimates and CPM schedules based on historical performance and enhanced user experience. Of note, enhanced user experience is typically noted by nearly all project participants, including owners and operators, which results in enhanced customer relationships and repeat business for those E&C companies willing to make the investment in Digital Twin platforms and technology. Only by investing in digital collaborative platforms will E&C contractors differentiate themselves and stand out from their competition.
Beyond the engineering, procurement, construction and commissioning phase of a project, Digital Twin technology has also been leveraged for maintenance and performance monitoring of buildings, facilities and industrial assets. In energy, onshore oil wells and offshore platforms are perfect candidates for Digital Twin technology throughout the project lifecycle, considering the number of participants involved throughout engineering, fabrication and construction of these assets, as well as their remote location.
Using remote monitoring of a Digital Twin model reduces operating costs, including those incurred by the exposure of personnel to unnecessary long-distance travel and related costs and safety risks in these environments. While a Digital Twin platform is a key component to standardization and establishing capital project excellence, the ability to leverage the Digital Twin model to enable monitoring and predictive maintenance to reduce costs during operations, workload and risks to staff is even more vital to long-term operational excellence throughout the life of the asset.
Companies starting to leverage Digital Twin to reduce operating costs include IHI E&C2, which is drawing heavily on advanced information and communication technologies to propose optimal maintenance and operation plans, manufacturing processes and new businesses. In Power and Utilities, PSEG Power uses GE’s Operation Optimization Solutions in capturing data from machine sensors, applying sophisticated analytics and creating insights that drive more profitable decisions.3 Another early adopter is McDermott International Inc. Vaseem Khan, Vice President of Global Engineering, offered this point of view: “these initiatives will transform engineering in the oil and gas industry and enable McDermott to provide its customers with our full suite of services for the life of the project via an integrated and easy-to-use software and 3D-centric platform.” He believes that “McDermott's customers will also benefit from a ready-to-use platform for big data analytics as a component of the digital twin[platform], which will serve as the single source of truth for operations and maintenance.” Most importantly for Khan, “During the project development phase, the digital twin (model) brings new levels of transparency and openness, changing the Owner-Contractor relationship from adversarial to collaborative.”
It is also well known that the construction industry is suffering from a skilled labor shortage, with reduction in apprenticeship programs and less of a focus on trades and vocational skills, resulting in lower productivity, higher safety concerns and rising labor costs to owners and contractors. Leveraging Digital Twin technology to enhance project development, safety and time-on-tools initiatives through field mobility, AI, 3-D and 4-D based smart work-packages, site automation and field mobility will allow owners and contractors to do more with less, by compensating for the skilled labor and supervision shortages by enhancing consistency and predictability in costs and project performance.
A leading technology company’s CEO rightly concluded at the 2018 World Economic Forum that, "We are going to have to prepare the world's workforce. That means not just the youth, but retraining and lifelong learning. You have to prepare the world for these technologies. There's a whole string coming, whether it's quantum or more. You must usher them in with purpose and transparency. This technology is to help you. This is to make you a better human. It's man and machine”.4 Technologies such as Digital Twin platforms, AI, field automation and predictive analytics and cloud-based collaborative project development platforms will change how we work and how leadership makes decisions. "First movers" in Engineering and Construction will establish new revenue streams, develop customer intimacy and drive standardization and process efficiencies, while reducing the total installed cost of delivering projects and operating those assets on these platforms.
1 Industry 4.0: Building the digital enterprise, PWC 2016 Global Industry 4.0 Survey
2 Developing Advanced Technologies, ICT, IHI Corporation (2017)
3 Operations Optimization provides PSEG with real-time data, General Electric (2017)
4 World Economic Forum: 13 Big Tech Stories From Davos, PCMag Digital Group (2018)