Technology can help fix Canada's infrastructure and housing challenges, says KPMG survey

New research from KPMG in Canada has found that digital technology can help clean out the backlog of in-demand Canadian housing and infrastructure projects. Huge demand and a shortage of labourers are two of the main reasons for these backlogs.

KPMG in Canada surveyed 275 construction companies and found that nearly nine in 10 construction companies say the lack of skilled labour or tradespeople is impacting their ability to bid on projects and/or meet project deadlines. The survey also found that digital technology can help make their labour force more effective to address these shortages.

"Technology can help the construction industry address Canada's housing and infrastructure challenges," says Tom Rothfischer, partner and national industry leader of building, construction, and real estate at KPMG in Canada. "Digital tools, if used smartly, save time and money, reduce waste, and improve worker safety and productivity. In short, they help get projects done on time or ahead of schedule and on budget."

He notes that many technologies employed in the manufacturing sector can be deployed by the construction industry to increase productivity and reduce costs. 3D printing technologies in manufacturing have been adapted to the construction industry to lay concrete and build complex steel shapes. Robots can lay bricks and tie steel reinforcement bars. Drone-based surveying can help contractors quickly and accurately layout work, measure quantities, and monitor progress. Building information modelling (BIM) allows project teams to collaborate more effectively to develop solutions to optimize project costs and schedules. Digital twin technologies build on BIM to integrate real-time data from a built asset with its exact 3D virtual replica to test ‘what-if' scenarios, including the impact of design changes, construction sequencing, weather disruptions, and operational changes.

Digital technology adoption has been slow in Canada's construction industry. This is a trend that has happened globally too. Canada's construction industry spans residential and commercial real estate, industrial, institutional, civil, and infrastructure. The COVID-19 pandemic, however, has proven to be a catalyst for technology adoption in Canada's construction industry. The pandemic caused many companies to rethink the intensifying labour shortage with the adoption of new technologies.

"We're seeing a definite recalibration taking place in the construction sector," says Rothfischer. "While many are still just at the beginning of their digital build, leaders see the power of technology to reshape the way they work and plan to invest heavily in the coming years. But having the technology is only half the battle. The real advantage will come to those firms who effectively integrate it into their operations – from the back office to the construction site."

Key survey findings

• 73 percent think that the construction industry in Canada lags behind other countries in digital technology adoption
• 67 percent say the impacts of the pandemic prompted them to invest in technology
• 86 percent agreed that disruptive technologies can generate savings and efficiency, of whom 50 percent agreed strongly
• 85 percent believe disruptive technologies could make their companies more competitive
• 81 percent say their management and back-office teams and 80 percent say their project teams and labour are excited about and supportive of new technologies and approaches
• 46 percent plan to spend more than 11 percent of their corporate operating budget on tech and digital transformation, 33 percent anticipate spending between 6 to 10 percent, and 20 percent plan to spend up to 5 percent.

"Leading firms are already adopting technology to improve productivity and project management, safety on worksites, and decision-making," says Mary Van Buren, president of the Canadian Construction Association (CCA). "There is a cost however to investing in digitization that isn't necessarily shared among all parties in the procurement process. Margins are slim in construction, especially for the small- and medium-sized contractors, making it increasingly difficult for them to adopt these types of innovations in their business operations. This is why CCA continues to work with federal departments in an effort to modernize procurement processes that encourage innovation by supporting shared risk."

Labour crunch hits projects

The survey found that Canadian construction companies grapple with both increased demand for housing and infrastructure and a labour shortage that's challenging the ability to bid on projects and/or meet deadlines.

Because of these challenges, the vast majority of contractors are trying to find ways that help diminish the effects of the current labour shortage to meet the rising demand for new construction.

"The efficient allocation of trades is one of the industry's most pressing challenges and opportunities," says Jordan Thomson, senior manager at the infrastructure advisory for KPMG in Canada. "Many companies are deploying or planning to deploy digital tools to better improve efficiency on site and do more with less. The application of data analytics, wearables and internet of thing sensors, and BIM can help to improve productivity, schedule efficiency and quality, minimize waste, and improve worker safety."

Thomson says that as companies embrace technologies, the composition of the workforce will also need to undergo change to incorporate new roles, such as software engineers, BIM designers, data analysts, and drone operators into the project team. For example, drones are increasingly used for planning and design, site analysis, topographic mapping and land surveys, real-time monitoring, and on-site worker safety.

"With so many construction projects on the horizon, the only way companies will be able to compete and finish the job on time and within budget is by digitizing and modernizing their operations and ensuring they fully harness the potential of digital technologies," he says.

• 90 percent of construction companies are currently experiencing a shortage of skilled labour or trades
  • This jumps to 94 percent in Quebec
• 86 percent say that the shortage of skilled labour or trades is impacting their ability to bid on projects and/or meet project deadlines
  • This jumps to 94 percent in Quebec and 90 percent in B.C.
• 86 percent say that given current labour constraints, they may need to consider other alternatives, such as prefabrication and modularization and/or innovative new tools and machinery (94 percent in Quebec)
• 89 percent agree that better project management tools, such as analytics, BIM, and digital twins help to address labour shortages and improve employee productivity
• 91 percent believe the education system needs to be "much more flexible" to allow young people to pursue the trades
  • 97 percent of Quebec respondents agree
• 77 percent say that digital transformation will require hiring new talent within their organization to a "great" and "considerable" extent (44 percent), and to a "moderate" extent (33 percent)

KPMG In Canada's survey used Sago's Methodify online research platform. KPMG surveyed 275 construction companies across Canada between November 23, 2022, and March 17, 2023, to gauge the progress the industry has made in adopting new technologies and transforming the way their organizations operate. The respondents included general contractors (38 percent), owners (28 percent), suppliers (13 percent), subcontractors (11 percent), and consultants, such as engineers or architects (11 percent).