The many benefits of digital twins

Bill Ruh gets results. When the former chief digital officer of US energy giant GE joined Lendlease as chief executive officer, digital, in January last year it was hailed by many as the tech hire of 2019. Ruh is a man who not only has years of experience in leading digital transformation but one who has a track record of delivering cold, hard financial returns as a direct result. Before relocating to Sydney to join Lendlease, Ruh was based in California where he headed GE’s digital business, bringing in a 2.5x increase in revenue through digital products. Now, just over a year into his first real estate role he is gearing up to deliver Lendlease an 8-10% saving on build costs right off the bat by using digital twin technology. The trick to bringing in returns, he says, is to identify a company’s key problem and investigate how technology can solve it, rather than try to take on the concept of digital transformation in its entirety. That and being fully prepared for a wave of resistance in the first instance. “For the first three months in a role like this you just have to get used to people saying: ‘well, we tried that before’ or ‘that doesn’t work here’ or ‘you don’t understand’,” he says. “Once you decide to just get used to hearing those statements for the first few months, you’re OK. “There is usually a 20-60-20 breakdown of where people are at; 20% of people are ready for change and want to help lead that change, 60% are waiting to see enough evidence it works in reality to jump on board and 20% you are probably never going to persuade. Imagine if you could design a building 100 times in software and figure out all of the problems before you actually build it. That will have a phenomenal impact “In my first year here at Lendlease I worked with that first 20% – I call them ‘the coalition of the willing’ – and have gained credibility. They will now spread the word so the 60% is ready to move.” Ruh’s confidence is the sort that stems from past form and, crucially, past success – a success he is on a mission to emulate. “There’s money to be made in by employing technology in this sector,” he says. “This is real estate’s time.” Game changing Arguably it has been Lendlease’s time for a while. The global real estate company, which is headquartered in Australia, has been well known for being a tech-forward firm for years. It uses a number of disruptive technologies and software systems across key projects, including a living lab and internet of things sensors at its Yarrabilba project in Queensland, AI and advanced analytics across its global retail portfolio and 3D visualisation at Barangaroo – its 22ha flagship development in Sydney. The now 32-strong arm of the business focussing on tech in the built environment across the globe has been running since 2013, making it an early player in the world of real estate technology. This, says Ruh, was what caught his eye. “Lendlease has such an incredible backlog of the right type of work around technology,” he says. “I was very careful in picking this company out of all of the options I looked at because I felt it was so well positioned for three reasons: it cuts across the entire value chain, all of the operations are global, and it has a great team. Basically, it is the perfect laboratory to bring in digital products and really change the game.” And it is a game that is in desperate need of changing. “The bad news is that if you compare productivity in real estate and construction against every other industrial sector, the others have all seen a rise of an average of 175% but we are actually down by 20%,” he says. “I don’t think we have had the technology available to impact productivity in this sector in the way it has in manufacturing or aerospace.” There is an upside, though. And that is that times are changing and, crucially, costs are coming down. Key technologies such as sensors to provide data and high-end AI to drive productivity are more affordable than ever before, says Ruh. And that will make all the difference for real estate companies primed and ready to implement these technologies and build them into their overarching strategies. “I really do believe that now is the time,” he says. “I think we can see our industry get to the same productivity levels as those other sectors.” It’s a twin thing One of the key technologies Ruh will be focusing on within Lendlease is digital twin software. Since he joined the company it has been announced that a digital twin of every asset will be built of every one of its balance sheet projects before construction begins. Digital twins are effectively replicas of something in the physical world – in this case buildings. They use software and IoT sensors to create living digital simulation models that update and change as their physical counterparts change. A digital twin continuously learns and updates itself from multiple sources to represent its near real-time status, working condition or position. A digital twin also integrates historical data from past machine usage to factor into its digital model. This, Ruh says, could save up to 8-10% on build costs, adding that early experience using digital twins on Lendlease projects has proven effective. “The digital twin is at the centre of what we do. We’ve decided that for all the buildings we build now and in future, we will have a digital twin in the design phase. And we’ve been doing this for buildings around the globe, primarily in North America and Europe.” [caption id="attachment_1019833" align="aligncenter" width="847"] Lendlease’s Barangaroo scheme in Sydney[/caption] By designing buildings or projects digitally first using digital twin software, Ruh said the company has already seen benefits financially and in terms of saving time and eliminating risk. “Imagine if you could design a building 100 times in software and figure out all of the problems before you actually build it. That will have a phenomenal impact. We have mandated that we will do a digital twin for every one of our balance sheet projects globally. “We have already started and there is one example where we built a building this way and found 161 problems in the design at this early stage. I feel quite confident we may have caught all issues and we know it would have added about 8-10% to the cost of the building at the end if you found them in construction. We have repeated this across a number of projects, and we are seeing the same thing.” Ruh adds that as the cost of this technology comes down, more real estate companies should be able to access digital twin software in the next five years. “In the past, this sort of technology was $1m-plus (£770,000) and it is now in the $150k-200k bracket, which is less than you would spend on a consultant to help on some of these projects. We think within the next five years it could come down to $50k. “We’re also creating a property data platform,” Ruh adds. “In Barangaroo in Sydney (pictured right), we have a million sensors in buildings that are generating data. The data platform will bring all the data together to give us insights on how we can automate a building to improve efficiency and create a better experience. For example, if we couldn’t ascertain if putting a playground in a mall would increase retail spending, we can now make that correlation based on data on dwell time because more dwell time always means extra sales.” Delivering digital returns Ruh’s mention of extra sales, cost savings and revenue increases are significant. On top of the indisputable need to move with the times, these are the phrases companies want to hear when they embark on the still relatively uncharted path towards digital transformation. “I have done it before,” Ruh says simply on reaping financial rewards through digital innovation. “It’s just going to be the same playbook here. In my prior lives at [IT and cybersecurity solutions company] Cisco and GE, in both cases we were figuring out how to use digital technology to drive real revenue gains. I just think about one of the key things that I’ve learned through that is that it is not about the technology first. “It has got to be about which problems you are trying to solve. It is about trying to take a broad technology trend and drive that down into real opportunities. In our sector I think there’s a lot to be done to optimise how we design. Design automation will, I think, help tremendously to speed up and bring down the cost and the risk of what we do. “And if you can tie design automation into automating the supply chain where the design cost, feasibility risk and schedule are not separate but are done in combination, which is what the technology allows us to do, there’s money to be made in that too. The problem is process, design and supply chain and the question is what can we do to automate that to take risk out and get more certainty?” It helps, he says, if the leadership team is on board. “You have to have a strong executive team and all of them here realise that for us to leave a legacy for the next generation, if we don’t do it now, we won’t be in a position to do it in 10 or 20 years. So it starts with the leadership team. The second thing, which I think I can bring, is being able to translate the needs. That’s how I figured out that we needed to focus on design automation. “You have to be a translator and an educator to be a good CDO. A lot of people talk about data being the new oil and that is all great but what the hell does that mean to a person working in the trenches? So what we are doing is that we say we want to be a data-driven organisation, we message that but then we talk about real analytics we have built because having something tangible to show people changes everything. “I’m excited about the analytics we are looking at around workspace; taking all the data from elevators from badging systems and understanding the flow of people we are finding out that often what you think is your optimum space utilisation actually isn’t. I think it is only when we show people things like that they say: ‘OK, now I get it. Now I see why we want to be data-driven.’” Educating and translating is just one of the tasks jostling for position at the top of Ruh’s priority list as he responds to comments from industry players that he is “one of the busiest men in real estate tech”. “I have to travel a lot to make this work, so I guess that’s where a lot of my time gets taken up,” he says. “But I am committed, I am excited. This is a mission for me, and I think the next decade is all about the future of tech in real estate. I’m so busy that sometimes I feel dizzy but it must be done. Now is our time.” To send feedback, e-mail emily.wright@egi.co.uk or tweet @EmilyW_9 or @estatesgazette