Technology procurement challenges for ‘smart building’ developers and operators

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Originally Appearing in Corrs Chambers Westgarth, July 13 2020.
Authors Daniel Thompson, James North

State of the art ‘smart building’ technology has rapidly become a key differentiator for all stakeholders in the real estate value-chain – owners, operators, tenants and end users. However, as building technology becomes more complex, building developers and operators face new challenges that require technology-specific skill sets to address.

The data-driven ‘smart buildings’ of tomorrow will be made possible by the core technologies of Industry 4.0 – namely, 5G, IoT, AI and cloud. They will offer unprecedented customisation and control, operational efficiencies and cost saving, and will also generate valuable data sets. Smart building technology will use fleets of IoT sensors, machine learning and data analytics to learn occupant preferences, monitor occupant activity, connect physical and electronic identity, provide digital design tools, and automate ‘operational’ building technology (e.g. climate control, lighting, fire, and security).

COVID-19 has brought many of the benefits of smart buildings into acute focus: automated and remotely managed building systems have minimised the need for onsite staff during lock-down, and technologies such as thermal cameras, occupancy monitoring systems and dynamic space allocation management offer innovative solutions to safely return to work. However, with these benefits come a number of new challenges that require technology-specific skill sets to address, for example:

  • IoT devices used in smart buildings, and their connection to various cloud environments, present a far greater attack area for hackers to gain access to building systems, and the interconnectedness of building systems will increase the risk of harm that may be caused by cyber breaches;
  • the data sets generated by smart building sensors and analytics systems are likely to contain personal information of individual occupants or visitors and will require rigorous attention at the design stage and ongoing controls to ensure privacy compliance; and
  • the design, integration and lifecycle management of smart building technology will involve an increasing number of vendor solutions and greater complexity to manage internally.

Many developers and operators will not have the internal capability to address these challenges and, for this reason, procurement and management of smart building technology is increasingly outsourced to specialist building technology contractors, or ‘Master Systems Integrators’ (MSIs). However, the procurement approach to (and commercial and contractual model for) engaging an MSI is not well established.

Traditionally, building developers have contracted numerous technology vendors for a range of particular building systems, generally under the head building contractor and after the building planning and design stages are complete. As technology moves from the periphery to the centre of future building design, early engagement with an MSI will be integral to ensuring that technology solutions are adapted to meet business objectives and overall building strategy.

MSI engagements will become far more complex than traditional technology contracts, and will often involve outsourcing end-to-end responsibility for design, build, commissioning, and ongoing management, support and evolution of smart building technology. Developers and operators of smart buildings should be rethinking their procurement and contracting approach to technology implementation in order to reap the benefits promised by smart building technology.