19. April 2021 2021 | Images: ConReal, iStock
Stefan Schärer is the Managing Director of ConReal Swiss AG, the digital ecosystem for the construction and real estate industry. He is also involved with various PropTech and Construction Tech startups. In this interview, Mr. Schärer, as a digitalization expert, sheds light on the current state of digitalization in the industry and where things are heading next.
Is it true that digitalization is forging ahead more slowly in construction and real estate than in other industries? If so, why?
Yes, this is correct. There are several reasons. One of these is the high fragmentation of the construction process. To date, there is still no standardized construction process. Every project is different, which makes the matter more complex. Furthermore, smaller companies involved in construction tend not to prioritize digitalization as much. They do not have the resources that bigger businesses have available to them. Purchasing the relevant tools is complicated by a lack of experts or budget.
What can SMEs do to keep up with the pace of digitalization of larger businesses, in spite of restricted resources?
This is exactly what our company, ConReal, is studying. The goal of our ecosystem is to provide this target group with a toolbox filled with digital solutions. This comprises, for example, process guidelines or a blend of software and «Business as a Service». In other words, we assume administrative tasks – in part with software, in part with manpower – to allow smaller businesses to focus fully on their core competencies.
Which segments of the construction and real estate industry have already advanced digitalization and which segments are lagging?
Some industries already pushed digitalization at an early stage. Take architects, who have been using CAD software for their virtualizations for years. As a general rule, however, industries characterized strongly by services are naturally easier to digitize than those with more physical tasks.
Do you have an answer for this challenge?
And what does the future hold?
New business models will certainly have potential in certain sub-sectors. However, I do not foresee true disruptions, like the one realized by Uber. There are exciting approaches, such as buildings that are virtually printed. I do not think that they will establish themselves in Switzerland, simply because the country is too small. Digitalized processes are already a reality in timber construction – from planning to the controlled system and ready-made elements. All this to improve the productivity of existing processes from the current 1 percent per year to 3 to 5 percent per year, through digitalization. We will approach this goal step by step.
Is it feasible that there will be an ecosystem that will bring all steps of the construction and real estate industry under one roof?
No, I don’t think so – if only because the COMCO (editor's note: Competition Commission) would step in to break up a monopoly. The freedom of choosing a solution and transparency will remain vital factors in all segments. I am therefore convinced that there will be several ecosystems, that ideally work together with one another.
What is driving progress in construction and real estate?
In my view, these are often small startups, who shake up the market with innovative solutions and are capable of acting quickly. The large businesses have thanks to their resources – experts or financial resources – the potential to challenge these startups. As concerns foreign competition, we are somewhat better protected in this industry. Swiss market entries are not necessarily lucrative for foreign competitors, because of the multilingualism, different regulations and size of the country. They might be able to use economies of scale to profitably design their market entry.
Which requirements must be met to enable innovations?
The developments are underpinned by growing intelligence. To achieve this, systems must be able to process growing quantities of data. Data exchange capabilities play an important role here. This requires the aforementioned open interfaces together with large computing capacities and integration into a stable communication network. To leverage new technologies such as augmented reality and collaboration tools, the various parties involved in construction need to be connected with one another. Wireless standards such as 5G – which allow real-time data transmissions – therefore lay the foundation for digital progress.
What will the role of cultural change be?
With the coronavirus crisis, this is a highly relevant topic. The past few months have given digitization a boost in everyday life and thus increased acceptance. I think that this has helped us overcome a major obstacle.
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