Emerging Technologies Will Change the Entire Face of the Industry Believes Nimish Gupta MD RICS South Asia
What technical innovations and changes in the built environment are required for dynamic developments within a specific industry construction, real estate, and infrastructure?
Recent technological innovations like Proptech, Robotics & Cognitive Automation, Artificial Intelligence, Machine Learning, Virtual Reality, Drones, Internet of Things (IoT) and 3D Printing have transformed the landscape of our natural and built environment. These innovations have disrupted the traditional techniques which were being used to conduct business within the realms of the built environment – not just globally, but also locally.
The effects of disruption have been fairly positive and evident to see in the sector. However, while many other industries have kept pace with the technological revolution, the built environment sector has been a late entrant. There are certain changes that need to be made for the effective development of construction, real estate and infrastructure sectors. In construction, we need to focus on contract enforcement and as it’s derivative – dispute resolution. Despite policy reforms and going up the ranking in ease of doing business – India has gone to 63rd rank – contract law enforcement’s position still languishes at 163. We must improve the ranking in ease of doing business through proper judicial reforms, the introduction of DRS, standard contract forms and contract enforcement.
Poor adoption of technology is another factor. We are still seeing many players building or looking to upgrade their use of technology; while others are hesitant in spending resources for the use of customized applications. Implementation of disruptive technologies is necessary for the future development of the country. Lack of professionalism, ethics and standardisation of practice is an affliction that impacts the sector. These can be tackled by ensuring stringent regulations are enforced, only accredited professionals work in regulatory bodies who are working to the highest standards and an ethical code of conduct while giving reasoned and transparent advice. These professionals are instrumental in building client and market trust, aiding confidence and assurance in the sector.
A key challenge that encompasses and impacts the sector is the growing disconnect between the skills that are taught and the skills that the market needs, which is leaving millions of young people without jobs. The current workforce is unable to deploy technology to maximal advantage due to the huge skill shortage in the Built Environment sector.
How are emerging technologies playing a crucial role in the development of the infrastructure sector in shaping the overall development of the cities?
Infrastructure has been conventionally viewed as a slow, predictable, engineering-driven, labour-intensive domain, not at the cutting-edge of technology. But the reality is changing, faster than expected. A wide range of emerging disruptive technologies like Drones, Internet of Things (IoT) and 3D Printing etc., are rapidly transforming the way infrastructure is built and operated and bringing major implications for every contributor in the value chain. Drones are used for monitoring the progress of capital investment projects, managing maintenance of existing infrastructure and tasks in perilous areas. They facilitate mapping terrains and creating 2D and 3D images for accurate measurements.
Augmented reality (AR) has an extensive array of usage in infrastructure projects, especially at the planning stage. It can help in improving congestion and security in cities help in the navigation of railway stations and airports. It can enhance efficiency during a capital project’s execution – enabling workers to receive and send vital information via smart glasses and accelerating the speed and quality of communication on the job. Smart cities/grid assimilate digital connectivity with intelligent processing in the design, creation and usage of infrastructure. These infrastructure-related activities extend from energy infrastructure to handling carbon impacts to monitoring devices and facilities in houses and businesses.
Internet of Things (IoT) is connected with the rise of smart cities and grids. It offers many opportunities during the construction of infrastructure, including remote real-time monitoring, controlling machinery, appliances and devices through sensors. It assists in providing faster and smarter business intelligence for decision-making, real-time tracking of location and safety of employees, and delivering specific information to workers who are on-site supporting augmented reality. 3D Printing is set to change the face of Infrastructure. The technology will help in constructing buildings that are fabricated – faster, cheaper and safer. It will also aide in the on-site printing of replacement parts to maintain power infrastructure quickly and efficiently. The technology helps to save significant costs by bringing construction projects to market through shorter project timelines and few wastages of resources, as well as boosting efficiency for labour-intensive jobs.
If the focus has shifted from housing for all, providing basic infrastructure to people to large infrastructure developments happening in the city then how can we create a sustainable built-in environment when infrastructure projects are in priority?
With the rapid pace of urbanization and the fact that most of our cities are being tested on their ‘resilience’, it is important to develop a hugely futuristic view of infrastructure projects which will help develop a sustainable built environment. Real estate drives infrastructure – making it imperative that deeper thought is given to infrastructure projects in the built environment’s master planning, scheduling and resilient cities development. RICS is at the forefront of providing necessary thought leadership in the direction of building resilient cities through its flagship thought leader platform – World Built Environment Forum (WBEF). It is important that India realises the benefit of collaborative planning while learning the best practices from around the world to create a sustainable built environment for infrastructure projects.
In terms of technical skills & growth, how is the modern day-built environment is reshaping and responding to the industry’s need?
On the basis of our interactions with the Ministry of Skill Development and Entrepreneurship (MSDE), we recognize and appreciate that the government has put in a lot of focus, efforts and initiatives in creating an infrastructure to foster the skilling cycle around the built environment. However, it remains a challenge to attract the right talent to the sector, both in the domain (technical) and technological fields. While the sector remains a big opportunity in terms of employment generation, what plagues is the irregular and inadequate skills supply.
The industry needs to do a lot more in adopting a rounded approach to reshape and respond to the need. Making real estate a preferred career choice and retaining current professionals by upgrading competencies & skills through qualifications and training is a way to meet the requirement. Additionally, building on vocational skills by way of linking them to professional aspirations and creating entry-level talent and professionals can tackle the technical skills and growth issue. Above all, ensuring to provide a socially sensitive environment to the employees and workers for better retention, can go a long way in helping the sector overcome this challenge.
The industry thinks that the introduction of technological innovation will elongate our life expectancy, completely alter the job market and affect our ecosphere and social life. Your take on this.
It is a fact that emerging technologies will change the entire face of the industry. These remarkable advancements are optimising efficiency, productivity and safety for every sphere of Built Environment in several ways. There will be definite disruption to the way work is being done. Many people approach this technological disruption cautiously thinking that it will kill jobs which is a negative view. This will happen only if people don’t adapt and upgrade their knowledge and skills which are required to operate those technologies. In fact, technology brings in its wake far more numerous opportunities for growth and career progression. Wherever technology has been deployed, it has actually opened up better career opportunities, increasing various human performance parameters leading to the overall development of social and economic development of the sector.
As mentioned previously in detail, already technological innovations like Drones, Robotics & Cognitive Automation, Artificial Intelligence, Machine Learning, Virtual Reality, Drones, Internet of Things (IoT) and 3D Printing are improving the quality of our lives by enhancing safety, convenience and stress-free living along with helping us reduce our carbon footprint, environmental wastage and maintaining the ecological balance of our natural environment. These factors support the quality and length of life.
Are tech advancements optimizing the efficiency and productivity in every stage from planning to construction in a practical sense?
Undoubtedly, technological advancements are optimizing efficiency and productivity in every stage of the construction cycle. As mentioned before, various technologies are available which are automating a lot of processes especially those which are repetitive in nature. Certain technologies like Blockchain aid in large scale data verification and analytics of projects. Design engineering, construction, construction management are greatly enhanced through the use of BIM as it allows preconstruction project visualizations which reduces cost and mitigates risks. Additionally, there are a host of other more recent tech tools available that can effectively monitor and control the execution of projects. All these technology innovations precede effective planning in Construction Project Management and Construction Management leading to leaner construction, optimized cost value, better quality, and value-engineered products. Due to these technologies, systems, processes and skills are likely to be aligned to global best practices and international standards which will help make the sector more efficient and attractive.
Are we equipped to fulfil the rising demand of the industry to execute large projects within financing and time constraints? What is the road map ahead in the times of large infrastructure projects coming up?
Right now, no. There is a gap in the sector that exists in deploying latest technology which is linked to the shortage of skills with respect to people who can operate & manage those technologies and absence of standardization in processes of large infrastructure projects. Whether it is the dearth of sectoral skills in finance or within planning and execution unless these issues are addressed, we will continue to have a void. The focus needs to be on building and creating the right skills through industry-led education, competency mapping in training and qualifications that accredit professionals as it is. This will help the industry in implementing technology as there will be a talent pool whose skills will be in line with the demands of technology. Another key measure would be in ensuring people adopt global best practices, systems, processes and international standards to make sure that they are benchmarked against the best in the world and create the infrastructure that can last longer than the life of an individual. Recent developments of stimulus packages being announced to boost the realty sector are an indication of the Government’s intent to promote the sector – what more is needed than just stimulus to overcome the liquidity challenge that the sector faces – especially residential development.
While the government has taken several initiatives to boost residential housing in the country, we believe that there is room for more steps. A decisive government at the Centre, which has taken a collaborative approach to include key sector stakeholders in the policy & reform agenda and focus on reforming the business environment, does indicate the Government’s intent to promote the real estate sector. However, the Government needs to take further key collaborative actions with Authorities, Financiers, Developers and Customers to ensure that the financial market evolution goes through a system which is well regulated, creating some necessary checks and balances to reignite the residential sector within the ambits of the macro-economic and legal framework., with the help of modern or innovative financial tools to mitigate the financial crisis in the country. On November 4th, at the 1st National RERA Conclave that took place in Lucknow, RICS unveiled a joint report with NAREDCO on “Breaking the Barriers: Reinvigorating the Real Estate Finance Sector in India”, which details some radical solutions to the current liquidity challenge. The report is available for download on the RICS website.
The report lists certain key parameters as a way forward in creating a robust Real Estate Financial System. These include:
•Credible property appraisals and valuations being undertaken in accordance with International Valuation Standards (IVS) and carried out by chartered/qualified valuers as per approved methods
•Adequate measures are taken for risk management including credit & collateral risk assessment, analysis, and mitigation evaluation basis credit information and transparency.
•Identify and use mortgage-related securities to fund housing. Mortgage securities improve housing affordability, fund flows to the housing sector, better risk allocation, and help tap new funds for housing, resulting in reduced risk and risk premiums.
•Scale-up skills and capabilities in the BFSI sector with respect to real estate and project management
•Embrace and adopt the use of technology for data storage, analysis, appraisal and credit scoring.
•Evolve the BFSI sector by embracing new / alternative sources of funding in order to create greater transparency and participation of wider sources of capital (Mortgage Securities & Bonds; Rental Housing Finance; Housing Micro Finance & Finance Subsidiaries; Contractual Savings Schemes for Housing; Housing Provident Funds; Troubled Asset Relief Programme in the form of Revolving Funds; and External Commercial Borrowings for Troubled Assets).
•Professionalizing the sector – entry barriers for qualified stakeholders; employing third party project administrators.
•Policies and regulations to support lower strata financing.
The report further details resolutions to overcome the financing crisis, by looking specifically at each ‘problem-project category’ be it in the Red, Orange, Yellow or Green Categories. The resolutions are extended both with respect to policy matters, as well as regulatory matters and in some cases provide some unique solutions to the current financing crisis.
How can regulation and standards bring in much-needed market assurance and build investor confidence – the role that RICS can play in promoting international standards?
As an entity representing the public interest, RICS is mandated to maintain and advance technical, professional and regulatory standards covering all aspects of the built environment. We are committed to setting and upholding the highest standards of excellence and integrity – providing impartial, authoritative advice affecting business and society. Internationally, we are working with coalitions to promote and enforce standards that will bring about transparency and consistency of practice across borders. These relate to valuation (International Valuation Standards), ethics (International Ethics Standards), Construction (International Construction Measurement Standards), property (International Property Measurement Standards) and land (International Land Measurement Standards). RICS Regulation which works at arm’s length – provides assurance to members, markets and the public that RICS members and firms operate to the standards set out in of RICS’ Rules of Conduct. Members demonstrate this by maintaining professional ethical standards and through continuous professional development. Firms showcase the same by ensuring procedures are in place to provide for the protection of their clients, such as having complaint handling procedures that include an independent redress mechanism.
RICS Regulation monitors, guides and assists members and firms to comply with these rules, regulations and ethical standards. We review and investigate complaints and, where appropriate, take disciplinary action in cases where members and/or regulated firms fall short of what is expected of them. In this way, we underpin the business and best practice of the profession with an appropriate regulatory regime so that chartered surveyors, wherever they practice and in whatever specialism, are doing the best possible job for their clients. RICS Regulation regulates the profession through ethical principles and a regulatory framework that is risk-based and follows the principles of better regulation.
Being a self- regulatory body working in public interest, what is it that RICS can bring forth to the market, considering it is a 150-year-old organization working in public interest and a self-regulatory professional body
As mentioned before, the strength of RICS as a professional body is reflected in its lineage of 150 years, with a reach spread across all major markets of the world. The expertise and experience gained from these developed and emerging markets make us an authority to share best practices through our thought leadership approach, policy advocacy and advisory which we are sharing with the world. The Built Environment domain has been suffering due to lack of regulation. This need for regulations has stimulated the requirement of providing industry-led and competency-based education to come into the sector so that the demand for skills, skills and new talent could be met. RICS has addressed the lack of relevant skills and continuous development in the sector, by providing an exhaustive set of programmes in Education and Training.
RICS School of Built Environment continues to strive in providing industry-led and competency-based education to undergraduates and graduates. Our training programmes are designed around internationally benchmarked competency frameworks which are widely recognized. With India becoming the fastest growing mega economy and poised to have a truly global influence, there is a desperate need for internationally benchmarked education, upskilling of professionals to proven international standards in the current times.
What is it that the RICS is doing or can support/advise the Government and Regulators on with respect to the current transformation in the regulatory framework in the country – be it RERA or IBBI, etc.?
India’s built environment sector is typically the third-largest contributor to its total GDP. While the effects of the liquidity situation are still being felt, RICS is confident that things will move forward. The government’s structural reforms demonstrate, for instance, its growth ambitions and development priorities for the sector. Alongside regulators and authorities like RBI, SEBI, RERAs and IBBI, we are seeing that India is making progress in ensuring its real estate sector becomes a well-regulated financial market. RICS can help these stakeholders and the government through providing expertise in regulation to streamline and improve transparency, increase compliance with standards in order to bring confidence and trust to the market for the benefit of investors and customers alike. We have put forward a detailed set of proposals to help optimise the existing RERA framework and its implementation. We are glad to note that the open common platform, as per the proposed framework of the RICS, has been widely advocated by the Ministry of Housing and Urban Affairs. Also, there are some key recommendations that we are proposing to overcome the financial challenges that the sector is currently grappling with. Just yesterday at the 1st National RERA Conclave that took place in Lucknow, the RICS has unveiled a report on “Breaking the Barriers: Reinvigorating the Real Estate Finance Sector in India”, which details some radical solutions to the current liquidity challenge.
We have also been invited to advise the Ministry’s Committee of Experts, which has been formed to examine the need for an institutional framework for regulation and development of valuation professionals in India by the acting regulator, the Insolvency and Bankruptcy Board of India. RICS has already been in active dialogue with IBBI to promote the recognition of the RICS qualification, as all our accredited professionals practice valuations by the IVS compliant Red Book of Valuation Standards. RICS also has the capability and expertise to train, qualify and regulate valuation professionals within India. This is why we are also working with IBBI to promote International Ethical Standards and train all Insolvency Resolution
Professionals and Valuers.
The Securities and Exchange Board of India recognizes RICS certified professionals specializing in valuation of fixed assets as competent professionals to perform the valuation of REIT assets (as valuers for technical asset valuation). In fact, India’s first successful REIT which was launched recently and has been extremely successful thus far has been valued by RICS qualified professionals based on the Red Book (International Valuation Standards), which is considered the gold standard in valuation globally. The requirement for stronger regulation in the sector is also raising demand for skills and new talent to implement them. By providing a comprehensive set of education and training programmes RICS is helping to address the need to increase the supply of professional skills and to drive continuous development in the sector. We are delivering entry-level skills in India. RICS’ Schools of Built Environment continue to provide industry-led and competency-based education to undergraduates and graduates. Our training programmes are designed around internationally benchmarked competency frameworks which are widely recognized. With India set to become the fastest-growing mega economy and poised to have a truly global influence, there is an urgent need for internationally benchmarked education to deliver proven internationally-recognised standards.
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