What is the state of play in Japanese construction today?
As a member of the Asia-Pacific region, Japan is part of a relatively quiet period of growth for the construction sector at present: growth has been forecast at around 4% per year through 2020, down from 5.4%, with commercial buildings the main focus of mature markets like Hong Kong, Singapore, Australia, Korea and Japan.
This fall in growth is a slight concern for APAC countries, given that the region is the world’s largest for construction, as increasing urbanization and higher expenditure on infrastructure development, plus a need for more affordable housing projects, still need to be addressed.
Other factors that need to be considered include a rise in operational complexities, simply from construction companies growing in scale and expanding quickly, meaning they need to manage diverse projects in different territories while also optimizing asset lifecycle management to mitigate risk of potential delays. Furthermore, tenant expectations are changing: building occupiers such as large multinational corporations (MNCs) expect their buildings to be high performance, with high levels of comfort and convenience plus state-of-the-art security management capabilities and energy-efficient services.
Driving factors in Japan’s construction space
In addition to the above influencers, there are a number of initiatives underway that could see Japan’s construction industry take a leap forward. The country’s infrastructure market is expected to be mutually beneficial to the Japanese government’s preparations for the 2020 Olympic Games, while the government is also investing in reconstruction of properties destroyed by natural disasters, such as earthquakes and tsunamis, on a continuing basis.
The commercial construction market in Japan is expected to receive a boost from increasing tourism, assuming the 2020 Olympic Games go ahead as planned and are not disrupted by the COVID-19 situation. And while the aging population in Japan may mean fewer physically active workers, it does at the same time mean an increase in demand for new and refurbished healthcare buildings.
The employee factor
Another thing influencing Japan’s construction industry in recent times is a shortage of workers in the labor force: Japan has an aging population, and Prime Minister Shinzo Abe has implemented a new law aimed at bringing in more foreign workers from outside the country to bolster labor in the construction industry. However, this shortfall in labor could be offset by the implementation of automation engineering and robots in the field, with Japan leveraging digital technologies to do so. Shifting to more automation could make sense, with the Japan Federation of Construction Contractors trade body estimating that there will be 1.28 million fewer construction workers by 2025 compared with 2014.
The potential for BIM
Smart buildings in the modern era now rely on building information modeling, or BIM, a process that lets companies gather together data from a building, analyze it and exploit it to exponential benefit. The idea is that BIM helps inform on data from environmental information to resident power usage habits, make planning easier and give construction companies and building owners more control over how the building operates. For construction companies particularly, it is intended to help streamline every aspect of a building project and make development smoother overall.
According to research by McGraw Hill, in a study on the benefits of BIM among users in Asia at various levels of adoption, 97% of contractors in Japan have reported a positive return on investment using BIM. Companies have also reported a positive impact in specific terms using BIM, with a 41% reduction in errors and omissions, 31% reduction in re-works, 21% more accurate project estimation, 19% faster project duration and 23% better waste management.
High profile Japanese building projects that have already implemented BIM include Ministry of Justice (MOJ) initiatives in prisons and other facilities to control communication and visibility between inmates and external areas and to prevent accidents and the new Sukagawa City Hall in Fukushima Prefecture, where Sukagawa City project managers were looking for BIM to provide high accuracy and consistency in architectural design as well as for sharing the design contents with public citizens.
Technologies that will play a role
Japan has been mapping out the technologies that will be needed to make our country smart and sustainable for the future, and that means smart cities that are home to smart buildings. 5G will undoubtedly play a major part, since without a powerful network, nothing will be possible in a smart city. That type of powerful connectivity will enable other technologies that will power smart construction, such as IoT sensors embedded in devices and buildings throughout urban locations that gather data and help make life better for everyone. They will be the lifeblood of smart buildings, used by construction companies and building owners to deliver a continuously enhanced user experience to people who live and work there.
The sheer level of data that will be generated by Japan’s smart buildings means AI will be increasingly necessary to process it and convert it into valuable insights. Further to that, AI is already present in construction companies’ planning and design of buildings through to safety use cases that are already in place and autonomous equipment such as the SMARTCONSTRUCTION initiative implemented by Komatsu, where AI provides intelligent heavy machinery, aimed at creating connected and smart worksites. AI in Japan is very much on the rise, with Ernst & Young predicting the market will grow from JPY 3.7 trillion in 2015 to JPY 23 trillion in 2020, a six-fold increase, and that its value will reach JPY 87 trillion by 2030.
An example of this is the construction sector in Australia, which is driving forward and leveraging digital technology to address an increasing focus on safety, a highly competitive market and low margins. There is a growing trend for mature construction, engineering and trade advisory firms to partner with technology providers to create mutually smart solutions. Recently, market incumbents such as GHD, a leading Australian engineering and advisory services firm, and a major regional construction company, have teamed up with Orange Business to co-innovate on an Internet of Things as a Service (IoTaaS) platform called Connected Objects, to separately provide industry-specific data modeling and analysis. This provides a winning solution for each partner as they are able to focus on their value proposition and incumbency for each client.
Japan has an exciting future on the way. Our country is already embracing smart construction techniques to create the buildings of the future and our commitment to them remains resolute. Working with the right digital partner can ensure companies get the maximum return on their technology investment when embarking on smart construction projects.
Head of Cloud Asia Pacific, Orange Business
As Head of Cloud in the region, Christophe is responsible for driving and supporting APAC country teams to grow pipeline and win new and large transformational deals for cloud. He has lived in Japan for more than 10 years, and as head of Orange Business Japan for over seven years, is well versed in the Japanese market.