Digitising the Estonian built environment. This show comes from Tallinn, the capital of Estonia. Tallinn has a really incredible reputation for being the ‘most digital society in the world’ and for this this reason alone, it’s a place I’ve been wanting to visit for a long time.
I sat down with Virgo Sulakatko. Virgo has a really interesting background. He currently sits on the Board at Novarc Group, one of Estonia’s leading AEC consultancies.
He is also the Vice-Chairman of the Estonian Digital Construction Cluster and you’ll hear more about what that is in the show.
In this episode, we’ll be answering some big questions, like:
- How is the most digital society in the world approaching the digitalisation of their construction sector?
- How can innovation thrive in a country where ‘everyone knows each other’?
- What benefits can be sought when you have your national digital construction platform in the same system as your digital healthcare, digital taxes, digital voting? From a data perspective the opportunities are just mind-blowing!
- Estonian Digital Construction Cluster
- Novarc Group
- Book Recommendation: 1984 by George Orwell
- LinkedIn: Virgo Sulakatko
In Tallinn, Estonia and I'm joined by Virgo Sulakatko. Thanks very much for joining me, Virgo. How are you?
Hi. Thank you for interviewing us. I'm very good, thank you.
Good. Good. And you're the member of the board at Novarc Group here in Tallinn?
Yes. I'm the member of the board and also in our subsidiaries. And I'm also board member in our digital construction cluster. It is one of the main initiatives here in Estonia from the private company side.
Yeah. I'm very excited to learn more about the digital construction cluster, but first, can you just briefly tell us how you got involved in construction and how you came to join Novarc Group?
Construction. This was quite usual route, I think. I went to study as a construction engineer and then I worked on a construction site as project manager for about five years. But after this, it got interesting. Then I started my doctoral studies and also went to the ministry, where I was preparing the digital transformation of the construction industry. And after that, that was about 5, 6 years ago. Then the field got wherever interesting because of the transformations that are happening currently now in our industry all over the world, not only in Estonia.
Yes. You've got some really interesting background and some really good experience. If you can start, we'll talk a little bit more about your role in the ministry and some of the projects that you did there.
But at the moment, at Novarc Group, can you explain a little bit about who Novarc are and the type of projects you carry out?
Yes. We are architecture and engineering company and we see ourselves also as building and mining data consultants, meaning that as we work with architectural and construction engineering and other disciplines, we also are the creator of huge amount of data that can be used for decades. I'm in the board and responsible for the international operations and international cooperation so my main focus goes to the Nordic market and not too much to Estonian market.
Okay, so you work a lot internationally and you have offices across the Nordics.
Yeah. We're mainly working in Estonia. It's the core of our business, but also in Norway and Finland. But this internationalization or also the transformation to digital construction, the globalizing and these trends are helping us quite a lot because the industry is changing and this opens up new opportunities.
Okay, yeah. So do you think by being a global company and by having experience in different countries, you're more experienced, you're learning more, and you're advancing quicker?
Yes, because in every environment there are things that the specific area is good and then we can then combine different approaches and also get something from one market and transform it the next market that we are on.
I'm glad you said that. Yeah. Because that's the concept behind Future Distributed, When I started, I also believe that every country has really good stuff that we can all learn from. And then I'm hoping to share that message and collaborate across different boundaries. So that's good. Good that you mentioned that. I know that a core focus, and you've mentioned it already, is the whole life cycle approach to data management.
Can you tell us a little bit more about how Novarc are innovating in this way?
Yeah. Maybe shortly about the history. We have worked now for 30 years. About 10 years ago, we started to use the BIM technologies, Revit, and then the other software. But recently, this is business as usual. So we're looking for the new approaches and what we can develop and also what are the services that will come up in the next years. And we see that we can provide the most value if we can share the data that we create to the operational maintenance phase of the building. Because in the construction phase, the data is already used. Construction companies can do it themselves, but we still need operators and on maintenance service providers to be on board. With this, we're more valuable. In that sense, our data and our activities are more valuable.
For example, in the operational phase, what we are looking for is how we can optimize first in that inner climate and also there are a lot of technical systems in the building. Mainly, we're focusing on office buildings and public buildings, which are large, and if there are the technical aspects and there are a lot of ventilation, cooling, AC, heating, and they have to work altogether. But these systems are, they're getting complex and more complex and more automated. So one maintenance guy cannot automate it manual anymore. And for that, there are already thee sensors in these systems, but the question is, are they seeing it from a holistic point of view and can they work together? So currently, we have a structured data that we can put in the BIM model that can be used for the optimization during the operational face, meaning that the cooling and heating, and I think the future will go also in that direction that the AI will see what kind of whether there will be, for example, after two hours or three hours so they don't have to heat, for example, in the morning anymore. So this will expand a little bit the horizon of the building to the built environment in general.
Okay. Yeah. Very interesting topic there. And you talked a lot about the use of data for optimizing the operation phase of these buildings. I'm interested in... I think traditionally, you do more architectural engineering projects.
Do you have data teams here now that focus only on, like, analyzing this data?
Yes and no. Yes and no. Currently, we are more focused on not all the data that we need, because we have too much data already in the BIM model. The question is, if we can take only specific data out and use it in a very focused way. So we don't have, like, the big data from the buildings, but we are working with the structures, and then this is what our BIM department does. But we don't work with big data in the context of buildings. In the urban planning, this is more usual that they use the data from the telephones from telecom operators. This is the more usual but not in a if we look it up one building perspective, then this is not the topic yet.
Okay. And the one thing I'd noticed in Estonian industry so far is that there seems to be good collaboration between companies, and I think that's facilitated by the digital construction cluster. Right? There seems to be this focus and this drive amount of energy of trying to achieve the same thing.
Yes, this is correct. This is why Estonia, I would say, is unique. We're a small country and more or less, the whole nation knows each other and we work in a close collaboration. And this is why we can work together with different disciplines or different stakeholders of the construction process so that the data formats or the standards for the industry are put in place quire quickly. And then the digital construction cluster is a group of companies from all stages off the building life cycle, meaning that we have the developers, architects, engineers, main contractors, also some subcontractors, owners, the maintenance, software providers -- quite a lot of different disciplines are together and through this collaboration, we can look into the business model each company has and provide the value for the next one and for the next one. So this is a quite a good push from the market how to deal with the increasing amount of data because we need to get the value out of data, not to provide just data.
Okay. And you talk about... I think you're suggesting that the information flow between the architects, the subcontractors, the client, and the digital construction cluster is a way of facilitating this and working together to ensure that everyone has access to the right information. Is that what you said?
Actually, it doesn't facilitate. With the cluster, we provide a place or the platform where people can come together and work out and decide what is the best solution for all disciplines, all stakeholders at the same time. Because, it's all about people. Actually, that people have to use this data in a way that they find the best. But it's really difficult for one partner to decide what is the best if there are eight or seven or 10 or even more different stakeholders in the group and all of them need different kind of data sets.
So the cluster provides the platform where all of the disciplines are together and we can decide and we are unique in a sense that, as Estonia is quite small, then in Estonia we are the only job organization that gives out the guidelines to the interest in general; meaning that if we decide in this group, then they can be taken as a standards for the whole industry.
And you mentioned that the subcontractors are also involved in this group from the UK experience, where 97% of all construction companies are very small subcontractors who might do painting or dual fixings. These sort of tradesman type contractors, some people say that the BIM option in the UK has been very slow because they were not really included on the journey.
Would you say that the Estonian digital construction cluster is helping these smaller businesses also?
In a way, because the majority of the companies overall in the industry are SME's. So this is... This is overall the same. This is yes and a no because what we are doing, we are changing the work methods and we're changing traditions and this is really difficult. So I think we don't get too much positive feedback if you want to change everything. But with the data, we need to provide, like an alternative that they will do the same things. They will, for example, submit some documents at the same time, but for example, they're machine readable and they do the same things. But this is the data that we can use afterwards. Maybe this is the main focus that we deal with the subcontractors. We don't want to change them too much because it's too much of a hassle.
Okay. Interesting. Now, I want to move on to Estonian's general reputation for being very, well the most digital society in the world, basically through the e-Estonia program and also platforms X-Road.
Yes, I just checked that we have been ranked the best country in the world for digital life. Yes. We are, I think the most digitally connected, if we can say this one, meaning that we can start a company online; we can do taxes online; we can vote online; we have all the medical documents online; we have a pharmacy; we don't need any documents anymore -- paper documents.
Yeah. So my question is, what influence is that having on the construction sector and how are you trying to digitize construction?
This has already had an effect because a lot of our construction projects, if we take it from the main contractor's perspective, they are already online and facilitated digitally, meaning that the documents are provided online and we have the digital signature. So meaning that document, for example, you need that signature from the supervisor, from the owner, from the subcontractor, different disciplines, and also maybe the architects, and also the authorities. This is already put in in one platform and everybody can access it digitally and sign digitally.
So this is, I would say that everybody does. But for a couple of years, the main contractors and the bigger projects are already digital. And there have been paperless projects also so this is not too new to us anymore.
Okay. And before we spoke today, or before we started recording, you were telling me about how you're currently building this digital... Virtualization digital world, basically. Digital Estonia whereby you're integrating all of the data -- 3D and non-graphical data that you got as a country into one model.
Can you explain a bit more about that project?
Yes. This is our e-construction project. This is lead by the Ministry of Economic Affairs and Communications and the idea behind this one is that we only have the X-Road and the X-Road is only a connection between different databases. So that data can be located in various places but the queries can be made from another one's. And we must admit that we already have a lot of data about buildings, build environment in the cities. We have the possibility for lesser scannings from the from the skies so the preview data is more less already there, but it's not systemized.
So what e-construction is dealing with, one thing is just to visualize the current data that is already there. There are very good test pilot projects already done, and as I have heard, the whole nation will be taking two represented for this one, and it's it doesn't take too much effort. And the other thing is that, as we already have the digital construction permitting process and that's the one where the authorities can access the documents online. Then they show us that we need more metadata in this one. So our little initiative is that we are structuring a little bit IFC. The IFC is already an acceptable format for the building permit. But we need a little bit more structure in this one. And regarding the automation of the data from the IFC, I think they will be ready in 2021 with the plans, so it's not very far away. Not very far away. We have the infrastructure; we have the existing X-Road; we have the digital signature so all the things are already in nice perfect order.
Yeah. What I like about it is, from the diagram that you showed me earlier, you can see the impact on where the construction process sits within all the other services in Estonia. So it's kind of all integrated in one platform, really.
Yeah, and it makes it quite visible also for the different stakeholders -- who does what and where is it stuck currently? So this helps some quite a lot.
So in 2022, for example, what kind of benefits do you see this all of having all of this data in one place? What's is that going to help you do?
You know, this is interesting because as we are an architecture and engineering company, we see that the buildings get more complex all the time. They get more optimized. A lot of more technical aspects come into this topics. Also, the inner climate will be more automized and then maybe personalized in different spaces of the building. So this means that in five years, I don't know what will happen because the progress is so fast. We are putting so much data in everywhere and the amount of data that is available just for new business model is enormous. And what is happening?
So what we see is that if we make the secure data available, then from the data, I don't know how many new business ideas are generated, but this is, I see that this will be an explosion from that point of view.
Great. Very exciting.
Very exciting and also, but there is also the regular stuff that happens in the construction industry that we will lose the papers, probably more or less. We don't need to print out everything and this is also good for the environment.
Great. Okay. Yeah, very, very interesting. I do want to switch topic slightly. We've talked a lot about the X-Road and the e-construction platform, but now I want to switch back to your Novarc hat. And I saw some interesting work on value-based procurement on your website.
Can you talk a bit more about your work in value-based procurement? Because it's quite a hot topic in the UK at the moment.
Yes. This is relevant because if we take the whole life cycle again of the building, go to the construction then in the beginning we'd make the major decisions, meaning that the work of architects and engineers, this has a really high impact of the costs of the building and also the operational phase and also the outcome of the business case that developed had. But quite often, we have procurement that the lowest cost is the primary thing that is observed. And now we are developing this Estonian Association of Civil Engineers that is putting better framework, and they will submit it to the major state procurer who will test and then benefit out of this one. But the idea is to remove the price label so relevant parts of the of this life cycle of the building. And what we want to do is look into the competence is of the building and look also in the collaboration of the team because the building cannot be done by one or two person. There is some maybe 50 or 100 people behind this one, and if they cannot collaborate, then this might be a failure.
So one part is the references that the, for example, the company has, and then the competence of a specific persons and also the teamwork of the whole group together, what can be decided. But it depends a little bit on the procurement method, but this is how we want to proceed.
Awesome. Okay. No, that's very clear. Okay. I do have one more question before we move into the quick fire round and I've just thought of it off the top of my head as you were talking. It's not very planned, but this might be a difficult one to answer. I think you've done some great work in the ministry and in the cluster and I think a lot of progress has been... Like you say, everyone in Estonia knows each other.
If you were to get planted into another country's digital construction ecosystem, maybe like Germany or the UK, one just maybe bigger and you don't know everyone, what advice would you give the people that are trying to do this in other countries?
You mean in the implementation of the... This is interesting because in a sense, we are unique because our culture adapts changes quite well. So if we compare to UK or Germany or France, then the industries are large and there are a lot of interest in this one. But as I see that the industry and also the technology is moving very fast. So I think the business models has already changed and will change but what is the main issue is the people behind this. So we have to get the people to be willing to adapt the changes and be willing to learn new things. But what I will advise is just look around and go, "How is it done in different countries in different regions?" Because it cannot be done exactly the same because there are too many things different. But definitely, there are some things that can be taken and adapted. And I think this is the key because we don't have to discover everything, don't have to develop everything by our own.
A lot of things are done already in the industry and it is just enormous how much information and how many people are working on this digitization field? We don't even know it and if we don't go around, then we don't see it. And we cannot actually look for it because we don't know the key words, what to put in.
Yeah. I'm going to get you to write the introduction for my website, I think. Because that's exactly it. Another quick question.
When you first set up the cluster, which countries did you go to where you're looking for inspiration?
Singapore was one area, but also, as UK was at the time a very large initiator, then also the UK. Regarding the standardization, topics I have see, topics that the Nordics are, I think, the leading force in the global world altogether. So, yeah. And also US. US, UK, Nordics, and Singapore. It's more like countries.
Okay. Well, that's been really interesting and thanks very much for your answers. I do want to finish with the quick fire around. So it's three or four questions and you just tell me your first thoughts on each of them. Sound good? Ready? Okay.
If you could change one thing about the Estonian construction industry overnight, what would it be?
The procurement methods, I would say. But not only that. Price is relevant, but competencies of the teams are relevant. I think this is one of the key issues that has major effect of the outcome whole building.
Okay. What book have you read that you think everyone else should be reading?
This has probably nothing to do with construction industry and digitalization but would say that I really like Orwell's books, and I think a quite a large impact at 1984 on me because there are that global players in the world and a lot of things happens with communication and I think that Orwell describes very well what you can do with communication if you only slightly change the direction. And with the communication, you can well change the minds in the people's also the people's minds.
Yes. Still very relevant today.
Okay. So what are your goals for Novarc, and maybe for the digital construction cluster over the next three years?
Overall, I think that we're not anymore only architects and engineers. We are a technology company. We are moving into technology and the engineering and architecture will be moved into the technology. So I think where we are going to is more into data management. Also to big data on and will be more related to the operational and maintenance phase of the buildings, more or less. Because there are a large amount of value that can be generated. And then if some a little bit more data comes, it's more structured than this is where we can have a large impact.
Great. Yeah. Completely agree. Okay, The last question.
You must have a big international network of people that you know from traveling around different places. Who would you say is the most innovative person you know working in the environment sector. Who should I go and meet?
I wasn't prepared for this question, but not I'm thinking. I will say that's he's a Norwegian and he just retired, meaning that that he's not the young generation, the youngest, but he's from Statsbook and David Houg is the name. And I would say that he has very good point of view, approach, or perspective of how the industry is changing and where will it go and also that we need the whole stakeholders involved into this one to have the impact that so that the technology will change our life in more more, I would say, David Houg is the name.
Great. Well, thank you very much. Thanks for your time today. Thanks for hosting me here in the Novarc offices, and all the best for Novarc and for growing the digital construction cluster over the next few years.
Thank you, Will, for coming and I'm happy if I can share my point of view.