The Golden Years of Innovation May Be Ending
Guest Column by Mark Klusza
As I leaned against my SUV last week, looking at the price of 94 octane fuel and comparing it to the price of gas just a few years ago, I started thinking about how the oil & gas industry has led and inspired really significant advances in construction technology, and how that may be coming to an end.
As a technology developer, I know it takes resources, guts and commitment to get from cool idea to established best practice, and I know from my own experience that many of today’s construction industry technology innovations would not be nearly as robust—or may not even exist—were it not for the oil and gas industry’s R&D support. But now I fear that, with the weakening of that industry, the construction industry’s rate of innovation will stagnate.
Today, almost everyone uses 3D modeling and clash detection. Early versions existed 15 years ago, but only as very expensive, very limited, high-end tools whose more sophisticated capabilities had to be bought module by module. Before those tools became widely available, re-work on projects typically exceeded 12% of construction costs—or even more. Now, thanks to those technologies, a re-work rate of less than 1% is normal.
The original CAD systems offered no more than a replication of drawing. But the tools that now reduce time and provide better standards control—the true advancements in CAD that have led us to intelligent 3D models—were largely driven by oil and gas industry needs and support.
That industry required models that integrated with other data and had specification support so users could only place valid components, based on the system type, in the model. Automated bills of material, validation of components and data connectivity all were huge advancements driven by oil and gas industry needs, R&D and support.
Those developments benefitted from the industry’s well-funded field trials and annual line items for R&D. Oil and gas became the inventors’ willing partners. It knew the risks, and knew that not every project would be a homerun, but it also knew that it was OK for inventors to fail sometimes. And we technology developers knew we would be welcome back with our next ideas, anyway.
Shell worked directly with both AVEVA and Intergraph as well as with EPC companies such as KBR, Stone & Webster and others. Other EPCs, such as Bechtel and Sargent & Lundy, created design tools in-house to support their power, oil and gas industry work, and those tools ultimately entered the market as well. Both Bentley’s MicroStation and Intergraph’s engineering software trace their roots to software developed to serve the needs of DuPont Engineering.
Chevron and Statoil were key supporters in the development of laser scanning. The development of RFID tools for resource and supply chain management also were bootstrapped by the oil and gas industry. Other technologies with similar backstories include global positioning systems, and even drones. They all got early boosts from the oil and gas industry and wouldn’t be where they are today without it.
As the cost of the fuel flowing into my tank reached the twenty dollar mark, I started thinking about the private equity arms of companies like Chevron, Statoil, and others that have long been putting up money to help inventors turn visions into realities. Had it not been for those massive partners to invention, companies like Leica GeoSystems, Trimble Navigation and others serving construction would not be selling many of the tools we rely on every day to make our jobsites safer and bring projects in on time and under budget.
Yet the price of the fuel that I was pouring into my SUV’s tank will not sustain that. It about covers the cost of one barrel of Texas sweet crude, out of the well, before processing and before transportation.
Who else can provide such deep support to bring our construction technology visions to market? Will the vastly smaller engineering and architectural firms be able to step up and fund the next rounds of research? Will it be the chief operating officers of our design firms, who know the buzzwords and the acronyms for our industry but lack the passion for driving change—and yet control the R&D budgets?
And if they do step up, will they be able to implement and deploy raw technologies—as the oil and gas industry has—on a scale that can quickly move valuable innovations from the Gulf of Mexico to West Africa, to Southeast Asia and the world, and create new “best practices” in just a few years?
Or can we expect the same from companies like Google, with its GoogleX projects, or Facebook, with its acquired Oculus Rift technology? Are those the next companies to which inventors will turn to help build out ideas? Unfortunately, I don’t think so.
Those companies don’t offer the same kind of support that inventors have found in the last decades in the oil and gas industry. Their R&D teams are only making step changes and not big technology advances. They buy innovative companies—they don’t risk their own money on ideas. They can watch 10 start-ups launch and then wait to see which wins, and acquire it from founders who have mortgaged their homes and their family’s lives to get where they are, and who at that point will take almost anything to cash out.
As the price display on my fuel pump stopped just short of sixty dollars I realized inventors can’t expect to keep going back to the same R&D partners as they have in the past. I don’t know what the answer is, but it’s time to start looking for it because if we wait until our innovation engine has run out of gas, it will be too late.