Better collaboration and integration for design and construction, combined with more building off site and using new technology and collective metrics to innovate, show promise in reducing the cost of construction, said panelists speaking at the ULI Arizona Trends Day held recently in Phoenix.

Panelists noted ongoing challenges, including competition for talented labor, given that only one in four construction workers returned to the industry in the last decade, and federal trade policies that are contributing to higher construction materials costs. But they said that innovations are helping the industry meet these challenges.

“We have increased our collaboration through integrated design and construction, and we’re starting to blur those lines,” said Jessica Ostoyich, senior project manager at Mortenson in Denver. “We need to have construction integrated earlier into the design process.”

“On the design side, collaboration with the architect is one of the most critical needs—getting these folks who know how to build to weigh in on design,” said Scott Root, an architect-builder and director of virtual construction for the Kapture Group in Phoenix. “On the construction side, we’re putting some construction off site.” His firm has 24 employees off site, and about a third have extensive experience. “In a controlled environment that is measured, new skilled labor can be trained to construct a bathroom” or other building parts that are transported to the construction site, he said. This also allows for more multitrade collaboration, so they can “work in a symbiotic manner” to build more efficiently.

“One of the biggest trends in off-site construction is thinking through it,” said Root. “We now specialize in exteriors to eliminate scaffolding for projects.” Off-site construction has allowed his firm to reduce its labor force by 25 percent, including the number of people on the site, he said. “Safety is also greater off site. We’re doing this because we’re trying to make our worksite safer.”

Off-site construction in a factory setting with some automation has increased predictability and reduced the time required to build, said Ostoyich. “It’s important for us to look at different ways to do prefab to speed up construction and eliminate trade stacking,” where multiple tradespeople are working simultaneously or in tight succession in a single work area.

“Collective metrics are big for us,” said Root. “From design to manufacturing to construction, we try to make smart decisions. It’s an amazing change to see how the data informs our building.”

“For 50 years, we’ve been creating information, but now we’re trying to look at it,” said moderator Charles Dalluge, president and COO of the DLR Group, an integrated design firm in Phoenix. “We’re developing algorithms to create spaces more efficiently, so we can spend more time on design excellence.”

On the front end of a project, “we look at predictive analytics to understand costs,” said Patrick Crandall, managing director for construction real estate at CapitalSource. For funders, “the challenge is to keep up with innovations and to help us to do a better job of underwriting those transactions so we can be more competitive in the marketplace,” he said. “We drill into the expertise of the team, and we’re focused on every aspect of construction. We expect partners and consultants to explain why these construction methods are better.” That “doesn’t reduce the cost of money,” he said, but it can reduce perceived risk.

“What will be the disruptors for the construction industry?” Dalluge asked. Augmented reality “is on the verge of being implemented,” said Ostoyich, and along with virtual reality will allow construction teams to see what will be built. Also, high-tech companies are focusing on the culture and the experience that workers will have. “We’re having to right-size the workplace for each team member and understand their challenges,” she said. Root added that smart camera technology could show how long a worker is in one spot and reduce the need to document through paperwork, which could have a huge impact.

Dalluge asked panelists to assess where the construction industry really was in terms of innovation and how they could do more with less in the future. “A lot goes back to collaboration and making sure we have lessons learned from the industry,” said Ostoyich. “We have to try to share our experiences, which we see as a powerful tool.” Innovations have mostly focused on technology, she said, but they are also important for the recruiting, retention, and training of employees. “We’re looking at robotics in the workplace, but if we only focus on the technology, we won’t gain those efficiencies.”

“I’m optimistic we’ll make significant progress over next decade,” said Crandall. “At the end of the day, it’s still construction, a tangible thing—people with hard hats, building. But we’re slow to change, certainly on the financial side.”