Samjong KPMG "Construction Industry Requires Digital Transformation... Also Capable of ESG Response"

[Asia Economy Reporter Park Jihwan] Digital transformation in the construction industry has been analyzed as a crucial factor not only for financial outcomes such as productivity improvement and increased added value but also for ESG (Environmental, Social, and Governance) management aspects like risk reduction and eco-friendliness.

Samjong KPMG released a report titled "Prepare for the Future Construction Industry with Digital" on the 22nd. According to the report, global investment in construction industry technology sectors amounted to only 12 deals totaling $203 million in 2015. However, by 2020, this had rapidly grown to 43 deals worth $1.763 billion. Samjong KPMG stated, "The proportion of technology sector deals within total investments in the construction industry is 4.2%, which is relatively low compared to other industries such as information and communication (27.8%) and automobile manufacturing (13.6%). However, given the current growth trend, the gap with other industries is expected to gradually narrow."

The report anticipates that construction companies can solve productivity issues by integrating various digital technologies such as BIM (Building Information Modeling), cloud computing, artificial intelligence, augmented reality, and platforms into construction processes. It also explains that if digital technologies are incorporated during the alliances and mergers among construction firms, opportunities to expand into new business areas and increase added value will also rise. According to a 2019 report by the Korea Institute for Industrial Economics and Trade, introducing digital technologies in the construction sector is expected to increase added value by 1.42 percentage points.

Overseas construction companies have sharply increased investments in technology sectors since 2016 through mergers and acquisitions, equity investments, and joint ventures. Among these, investments in computer-related companies accounted for the highest proportion at 47%. Software-related investments ranked second with 16 deals in 2020, making up 37% of the total. In 2020, investments in semiconductors and electronic components also surged, reaching seven deals.

So-called ‘Con-Tech’ companies?a portmanteau of construction and technology?are emerging recently. Their innovative technology weaponizes digitalization of construction processes to boost productivity. Representative examples include the Spanish startup Ogun, which provides a BIM platform; the U.S. insurtech startup Hippo, offering insurance services for homeowners; and Branch Technology from the U.S., which constructs buildings using 3D printing.

Im Geun-gu, Head of the Construction & Infrastructure Industry Division and Vice President at Samjong KPMG, suggested, "Domestic construction companies must establish a clear vision and goals for digital transformation to prepare for the rapidly changing digital future."

This content was produced with the assistance of AI translation services.