6
Discussions
Given the title of this book, it was necessary to tackle three distinct subject areas, namely: smart cities, general contractors and business models. In the following sections, we clarify our contributions to the available academic literature that relates to these themes.
6.1. Theoretical and methodological contributions
We first list our contributions to the topic of smart cities, followed by that of general contractors, and finally of business models.
6.1.1. On smart cities
6.1.1.1. Definition of smart cities
Today, definitions of smart cities are numerous and variable (Cohen 2012; Kitchin 2014; De Jong et al. 2015; Simard 2015; Eremia et al. 2017), are often disparate and can lack meaning. For some, smart cities are places that can guarantee higher quality of life. For others, however, smart cities are eco-friendly places, focusing on the environmental aspects of a city; monitoring and reducing pollution and GHG emissions, as well as energy and water consumption. Others regard social equity, together with a greener living environment, as key considerations in the development of smart cities. In recent developments, new ideas have emerged, with the smart city concept being defined as a combination of people, activities and environment. Places in which a dynamic balance between economic, environmental and socio-cultural development objectives could be achieved; outlined by local governance systems characterized by increased citizen participation.
Today, “smart city” has become a catchword, drawing increasing attention among research agencies, universities, governments, officials and specialized companies. All over the world, smart city programs have been promoted and have therefore proliferated; market potential for smart city solutions is set to be substantial. As we have mentioned on a number of occasions, smart is a word that is used in construction to enable companies to sell their products faster at higher prices; this often creates misconceptions about smart cities among end-users, and sometimes even among industry experts. Today, although the concept of the smart city maintains a favorable position, implementing initiatives in countries with vastly different needs makes it difficult to establish shared definitions and common trends at the global level. That is to say, there is no clear-cut definition of the term smart city, nor any general agreement on what its inherent features are. In Latin America, for example, smart city projects tend to be weighted towards the improvement of security, local government management and mobility, whereas in Asia, the emphasis is instead on the improvement of infrastructure and mobility; there again, in Europe, the focus is on boosting efficiency in terms of the public offering, establishing a socially inclusive culture and improving the well-being of citizens.
Our contribution here is in the form of a comprehensive definition of smart cities: “A smart city is a city that is conceived, developed and run by the government and the people, both smart, for the sake of promoting citizens’ well-being and ensuring a better quality of life for all”. Clearly, our definition omits the GC as we believe they would act as an out-of-sight mediator, standing between public developers who own large construction projects and people who would eventually invest their money to buy properties in those projects. Frankly, it is neither the government nor the people who would build smart cities but construction companies. However, for this to be conceivable, a centralized decision-making process should be espoused, with communication channels remaining open at all times between all stakeholders at the outer edges of the construction value chain. In our views by defending the interests of all stakeholders involved in construction projects and creating bridges between them, maven GCs, as central operators, would be able to ensure the successful execution and delivery of smart projects in general.
6.1.1.2. Smart city components
The smartness of a city is indicated by the set of physical and legislative infrastructures that support economic development, ensure social inclusion and allow environment protection. The smart city model (in particular, that of Giffinger et al. (2007)) is said to be the most illustrative in terms of its capacity to demonstrate and exhibit the strategic components of a smart city. Nevertheless, since these components were established around 10 years ago, numerous authors have referred to them year after year to develop more elaborate frameworks and strategies, namely Cohen’s (2012) Smart City Wheel. For us, a synthesis of the works of Giffinger et al. (2007), Cohen (2012) and Simard (2015) allowed for a better understanding of the relevance of smart city components. Indeed, in our study, we stated that, although all smart city components are important, some of them are more important than others; this is why we chose to split them into primary and secondary components. Depending on the type and scale of the construction project, some components seem to have more weight in comparison to others. Overall, we believe governance and people are the key components of smart cities.
Furthermore, we believe, our contribution to the literature on smart cities went beyond the theoretical to reach the practical. In fact, we made use of some real-life smart city examples to elucidate our viewpoint. Songdo (South Korea) was put forward as an example of a failing smart city model and Copenhagen (Denmark) was given as an effective one. While the former focused on technology for the building of the city, the latter instead concentrated on human-related aspects. Within this framework, we continued by affirming that a smart city is a number of smart things: governance, energy, infrastructure, transportation, healthcare, building, etc. Looking at the world’s experience in this domain, we could clearly see that some components are now being prioritized over others.
Currently, the components that are drawing most attention globally are governance, energy and infrastructure. Nevertheless, our research findings show that “people” is the key factor to the successful building of smart cities, and that it is only by ensuring parity between the various dimensions of construction projects that those projects would end up being smart. We stated that this is only possible through smart governance, the assignment of a central operator who, in collaboration with other stakeholders (including end-users), would oversee and manage smart construction projects effectively. Finally, we have showed that the building of a smart city is a dynamic and evolving process in the sense that what is thought to be central today could lose ground over time. Year after year, new components come in and others go out. More precisely, though the environment or mobility, for instance, is not currently a primary component of smart cities, we expect it to be in the near future. In addition, while mobility, for instance, may possibly rank first in Copenhagen, this would not necessarily be the case in London, Amsterdam or even Paris.
In our GC BM for smart cities, the “smart city component” was used as a control variable to ensure suggested solutions took account of the requirements of smart cities. For the dissemination of problems identified in the construction industry today, the latter was not part of the four-stratum BM used to this end. Alternatively, problems were spread across the layers of the TLBMC (economic, social, environmental and technical), which actually enabled us to grasp how and why construction activities today do not align with smart city requirements. As mentioned, our choice of the TLBMC was influenced by the inherent similarities between its layers and the components of smart cities, as illustrated by Cohen (2012). For the most part, problems identified related to two components of smart cities: governance and people. This is why narratives such as “with smart cities, it is a question of urban governance that should be developed using a human-centric approach” can be found throughout the entire text. Even by looking into the global smart city market and how it is segmented across various categories of smart things, we can clearly see that smart cities are primarily a question of governance and people. Whenever these two (primary) components are safeguarded, the remaining (secondary) components will automatically follow. Finally, we recommended that in France, the focus should now be on working out public–private partnerships to encourage smart city initiatives at national level, as well as encouraging the involvement of end-users in large construction processes, from initiation to closure.
6.1.1.3. Are all cities destined to be smart?
The smart city concept is subjective. Indeed, we stated that there are no right or wrong smart city models, as the meaning of a smart city is likely to change from one place to another, across cities and countries, based on their cultures and traditions. For this reason, we acknowledged that by using their own resources and abilities effectively, refining communication infrastructure and web-based services, allotting ample financial resources and adopting appropriate funding schemes, and creating apposite value chains that ensure fair interplay between stakeholders, all cities around the world could become smart; at different rates perhaps, and in their own form.
6.1.2. On general contractors
6.1.2.1. General contractors, central operators in the new construction value chain
There is a growing shift today from an old to a new value chain in construction where a central operator would be entrusted to handle the management and running of large projects, from start to finish. Nonetheless, in the literature, there is no mention of who could play this particular role. To our knowledge, today, in France at least, (incompetent) public developers or assigned architects are fulfilling this role. Yet, things do not seem to be moving in the right direction, as the number of problems faced in construction seems to be on the rise. For this reason, we thought of endorsing a GC for this vacant position. Using a basic analogy, a central operator is the equivalent of a strategi under Copenhagen’s smart city model.
By definition, a GC is a stakeholder – an entity or a person – who supervises daily activities at the construction sites and ensures all construction works are carried out properly. Moreover, a GC supplies the labor, building materials, machinery, raw materials and all other kit necessary for the successful completion of construction works in general. To us, GCs are mavens in construction and are therefore qualified to handle the management of smart developments. As its name suggests, a central operator is a machinist who, if given the requisite power and authority, has the ability to competently oversee construction works and manage teams involved in the process. Yet, “central” refers to the centralization of decision-making, meaning the GC would have the final say in project-related matters. In English-speaking economies, the GC is frequently regarded as a central operator who provides tailored solutions to clients and expertly manages worksites, tradespeople, deadlines and budgets. Moreover, we explained, given GCs do not always have the expertise required for completing all construction works by themselves, they tend to maintain a network of specialist subcontractors who can help them complete the work. Furthermore, the GC role is interesting in the sense that the person who assumes it has direct and regular contact with clients to keep them informed about progress, as well as with other construction actors throughout the whole construction project lifecycle. With that said, we believe GCs to have the perfect profile to fill this vacant central operator role, especially in large construction projects.
6.1.2.2. Rogue analogies
A rogue analogy was made to better exemplify the role of GCs (as central operators) within the new construction value chain. GCs were compared to music conductors; we also illustrated the rather astonishing similarities between the two. We also asked the following questions: Why are orchestras structured the way they are? Why do the oboes and tubas not sit at the front? Why do flutes and violins not swap positions? Why do trombones and French horns not sit right up front with the music conductor? In fact, we affirmed that there is a good reason for why pretty much everything we experience in life is the way it is, and the orchestra’s seating arrangements are no exception. To better elucidate our idea, we referred to big orchestral arrangements (denoting large construction projects). Until the 20th century, the violins, first and second, were seated opposite each other. However, a few years later, the conductor Leopold Stokowski tried something new, seating the orchestra in every conceivable way in an effort to find the perfect amalgam of resonances. He eventually came up with a new, better seating arrangement. At first, his suggestion did not stick but a couple of years later, the so-called Stokowski Shift gained serious momentum and became popular around the world. In our view this is in fact the responsibility of the central operator who, like music conductors, tries to bring all construction actors together in order to create beautiful melodies rather than mishmashes of conflicting sounds.
The GC role (like the Stokowski Shift!) in France is new or nonexistent and current market players, we assume, would not welcome such a proposition despite it being reasonable. Thus, although our suggested BMI may not be adopted today, we hope that it will be in the near future. In our view, the GC BM is innovative in that it identifies problems that are faced in construction today and suggests pertinent solutions for their resolve. Problems are identified per construction stage and split into four different categories. Hence, through the GC BM, which enables problems in construction to be broken down, companies would be able to circumvent all types of snags that will likely hinder their business performance in the medium- to long-term. Within this context – and under the GC BM for the building of smart cities – our contribution lies in the endorsement of the GC role, which is practically nonexistent in France. GCs are popular in English-speaking economies but not yet in Europe. As explained earlier, we believe the GC is perfectly equipped to fill the central operator role in the new construction value chain suggested by Vrijhoef and Koskela (2000). Being a maven in construction, he has sufficient knowledge and know-how to handle and manage large construction projects. Moreover, we stated that GCs, along with end-users, are at the heart of solutions to the problems faced in construction today. Again, we emphasize that smart city projects are best managed by one entity, a maven decision-maker or a strategi, based on a centralized governance scheme. Copenhagen’s experience in this domain is proof that such a governance model is likely to succeed if it is well implemented. However, for this to be viable, GCs must first have the ability to play this role. Smart cities are connected chains and any flaw in or damage to any part of the chain would undoubtedly affect the entire chain. Hence, GCs would play the role of connectors, bringing together all stakeholders involved in the process and thus, linking the entire construction value chain, down to upstream.
What is more, the “ensemblier” concept, which already exists in France, is not the right solution for the various problems encountered in construction today. Let us take the case of Bouygues for instance, a big market operator with lots of subsidiaries whose activities cover almost the entire construction value chain. Bouygues is now facing many challenges handling and managing the work of its own subsidiaries as all of them have the ability to make key decisions that often cause snags and hitches. Why? Simply because, within a project, if more than one decision-maker exists, the odds of operational problems occurring are high. This reflects the absence of centralized decision-making which is in line with Flyvbjerg’s (2014) findings: in the case of large and lengthy construction projects, decision-making should be put in the hands of one entity and the management of smart developments preserved throughout the entire construction project lifecycle.
With that said, the GC BM we are proposing constitutes a plausible solution to such problems. Indeed, in our time, big operators like Bouygues are very well equipped to advocate for this new GC role in the running of smart developments. Furthermore, for GCs to fulfill their roles effectively they first must be given the required authority and power to do so. Accordingly, they should act as co-owners of construction projects rather than mere stakeholders.
6.1.3. On business models
6.1.3.1. Definition of a business model
Despite the recent deluge in the literature on BMs, we believe there is still no clear definition existing today (Chesbrough and Rosenbloom 2002; Afuah 2004; Casadesus-Masanell and Zhu 2013; Massa and Tucci 2014; Baden-Fuller et al. 2017; Foss and Saebi 2017). While for some authors, the BM constitutes a key vehicle for innovation at the corporate level, others see it as a representation of how a company generates, conveys and captures value. From our side, we have contributed a further definition to the existing literature:
A BM is an architecture of the product, service and information flows, including a description of the various business actors and their roles; a description of the potential benefits for the various business actors; a description of the sources of revenues.
6.1.3.2. A business model for the building of smart cities
We have demonstrated that BMs could be described as stractics, an assortment of corporate strategies and tactics. The rationale for our aforementioned definition of BM is quite straightforward; companies typically start by choosing a logic of (strategy for) value creation and value capture, which would be reflected in their BM. They then make tactical choices that are driven by their intent to maximize stakeholder value. Therefore, sequentially, strategy comes first and tactics follow, and the BM falls in between the two. With that said, we simply used the expression stractics to describe BMs because they simultaneously reflect company strategy and influence company tactics. Within this setting, we have also emphasized, albeit indirectly, that generic BMs do not fit the construction industry very well. If BMs are to be useful we believe they must be carefully divided into strata to allow construction companies to keep track of the works at every stage of the process. Therefore, the practicality of generic BMs in the construction industry comes into question. In terms of our GC BM, it is multifaceted in the sense that it is both solution-based and multisided. It is also dual-use because it consists of a BM within a piloting tool. Additionally, it shows which construction actor intervenes and at what time. In the world of smart cities, it allows for problem-solving in construction and the suggestion of plausible solutions for their resolution. The GC BM is a corporate BM that construction companies may use, along with other technologies available in the market, to better track and manage their construction projects. Using six different strata could help construction companies track problems as they arise, at each stage of construction. It shows the dynamics of problems in construction according to their type – economic, social, environmental or technical – and shows links between them. As it is operational, the GC BM could be used for simulative purposes, too. Using the business model simulator that we have created with the help of a developer using specialized IT software (Angular 2+), dependency graphs (between problems) and construction maps (for both problems and solutions) could be generated. The GC BM is therefore innovative in that it allows links to be made between the various layers and building blocks of the TLBMC, something that has still not been sufficiently addressed to date.