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INTRODUCTION

The U.S. building-related industries—planning, design, construction, building materials and products, equipment manufacturing, facilities operations and maintenance—are an important part of the nation's economy, whose products touch the lives of everyone. Construction alone typically employs some 5 million to 6 million people and, with an annual output of some $440 billion (in 1990), accounts for approximately 7 to 9 percent of gross domestic product. New building technology and subsequent innovation can, in these construction-related industries, have a major impact on productivity, not only within the industries themselves but also for the myriad social and economic activities that constructed facilities shelter and serve.

THE GOVERNMENT INTEREST

The federal government spends some $15 billion annually for the design and construction of buildings and other facilities. State and local governments, in aggregate, account for perhaps an additional $50 billion each year. Billions of dollars more are spent to operate (e.g., heat, cool, and illuminate) and maintain government facilities.

Government agencies thus have a substantial stake in new technology and the rate of innovation in building-related industries: design services, construction, building materials and products manufacturing, and facilities operation and maintenance. These agencies—and the taxpaying public—stand to gain directly from the development and use of improved building products and processes.



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The Role of Public Agencies in Fostering New Technology and Innovation in Building 1 INTRODUCTION The U.S. building-related industries—planning, design, construction, building materials and products, equipment manufacturing, facilities operations and maintenance—are an important part of the nation's economy, whose products touch the lives of everyone. Construction alone typically employs some 5 million to 6 million people and, with an annual output of some $440 billion (in 1990), accounts for approximately 7 to 9 percent of gross domestic product. New building technology and subsequent innovation can, in these construction-related industries, have a major impact on productivity, not only within the industries themselves but also for the myriad social and economic activities that constructed facilities shelter and serve. THE GOVERNMENT INTEREST The federal government spends some $15 billion annually for the design and construction of buildings and other facilities. State and local governments, in aggregate, account for perhaps an additional $50 billion each year. Billions of dollars more are spent to operate (e.g., heat, cool, and illuminate) and maintain government facilities. Government agencies thus have a substantial stake in new technology and the rate of innovation in building-related industries: design services, construction, building materials and products manufacturing, and facilities operation and maintenance. These agencies—and the taxpaying public—stand to gain directly from the development and use of improved building products and processes.

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The Role of Public Agencies in Fostering New Technology and Innovation in Building Some agency officials would seek to foster the development and adoption of new building technology to meet their own needs or to enhance the productivity of U.S. industry, but feel that slow domestic innovation and restrictions on the purchase of foreign goods and services (i.e., "Buy American" and other programs) combine to place government programs at a particular disadvantage in using new technology when renovating aging facilities or developing new ones. Other officials suggest that although new technology may present opportunities for improved performance and productivity, the risks of applying technology that is not yet widely employed require that responsible government managers use proven methods and materials. In addition, agency officials must answer to the public and its elected representatives, and may hesitate to accept risks that cannot be justified by clear opportunities for financial returns. As a result, agencies contracting for the design and construction of public buildings and other facilities have often adopted conservative policies toward the application of new building technology. However, many government officials claim both the willingness and, if government policy is supportive, the ability to adopt new technology that promises solid payoffs in enhanced economy or performance of public facilities. There are also those who assert that government agencies, and federal agencies especially, should do even more. These proponents of a more aggressive policy refer to seemingly low rates of innovation in the building-related industries—particularly in comparison to rapid advances in electronics, biotechnology, communications, and other fields—and suggest that government should actively foster development of new building technology. They argue that government agencies have unique ability to share the financial risks associated with trying new building materials, equipment, designs, or techniques, and in doing so would provide leadership and enhance innovation rates. They argue that conservative policies toward new technology hinder the government's and the private sector's ability to gain early benefit from technological innovation and, consequently, that the nation misses opportunities for improved productivity and quality of life. As the latter point suggests, government's concern for innovation extends beyond that of the government as purchaser. The president's 1990 statement of U.S. technology policy (Office of Science and Technology Policy, 1990) asserted the need for our society to focus on ensuring the translation of technology into "timely, cost effective, high quality manufactured products" and "a legal and regulatory environment that provides stability for innovation and does not contain unnecessary barriers to private investments in R&D and domestic production." Government plays a critical role in establishing a favorable environment for innovation through private industry's research and development activities and the aggressive pursuit of commercial applications of technologies resulting from these activities. In the case of

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The Role of Public Agencies in Fostering New Technology and Innovation in Building some technologies such as solid-state electronics and new materials, the government has played a very active role in funding both basic research and product development, primarily for defense applications. Proponents argue that this role should be pursued in the case of building technology. BENEFITS AND RISKS OF NEW TECHNOLOGY Controversy over government policies toward new building technology reflects the general conflict between the rewards of enhanced performance and reduced cost that new technology can offer, and the risk that this new technology may not work. With building technology, this risk can involve not only costs to repair, replace, or make do with the facility or component that has failed to perform as anticipated, but also the safety of construction workers and facility users. Because of the long service lives expected of constructed facilities, the benefits and risks of new technology can be long lasting as well. In one example of the controversy, the inventor of a new base isolation system2 proposed to at least two federal agencies that they use his devices in the seismic upgrading of their structures. Although similar systems have been used, experience with their performance in actual earthquakes is very limited, especially in the United States. The particular device in question was completely untried. Agency officials declined to adopt the device and subsequently had to explain their decision to congressional inquirers. In another example, an agency permitted the use of an experimental additive to concrete to enhance that material's resistance to the chemical and physical attack of seawater, hoping to increase the service lifetime of the structure and reduce the costs of maintenance. The experiment failed, and the agency was faced with costly repairs. Many times, the adoption of new technology is successful. For example, single-ply roofing3 was developed initially in Europe and advanced by U.S. government and private sector research. With new high-performance membranes and effective seam-sealing techniques, single-ply systems have in slightly more than one decade captured approximately 35 percent of the U.S. nonresidential roofing market. Recycling of highway pavements, roller- 2   Base isolation devices are designed to isolate a building's superstructure from the underlying soil and rock through a foundation system that attenuates seismic force transmission, thereby potentially reducing earthquake-caused damage to the structure, its contents, and its occupants. 3   This is in contrast to the multiple layers of material built up to shape and reseal older conventional roofs on large buildings.

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The Role of Public Agencies in Fostering New Technology and Innovation in Building compacted concrete, and low-energy-loss windows are other new technologies developed in the past several decades that have become common because they offer cost-effective and safe improvements in performance. However, special leadership is sometimes needed to motivate the adoption of new technology. For example, the Urban Mass Transportation Administration sponsored the first U.S. use of precast concrete segmented tunnel liners on one part of the Baltimore subway system—and accepted the associated risk—years after such liners were widely used in Europe. Such cases illustrate the broad conflict that anyone responsible for selecting and using new building technology must face. New technology can yield real benefits in time and cost savings and improved performance, but in view of limited budgets and possible safety hazards, the decision maker must weigh carefully the possible consequences of adopting any new material or system. The decision can be especially difficult for government agency officials. These officials must consider not only the cost and safety implications of their decisions, but also the impact of other public policies that may be unrelated to the facilities themselves. Valid differences in priority among conflicting public policies may lead to decisions for or against the adoption of new technology in any particular instance, and those seeking government adoption of their inventions may understandably disagree with agency decisions. However, agency decision makers may be called on to justify their judgments to other executive or legislative officials. SOURCE AND SCOPE OF THE STUDY Faced with these concerns, the agencies of the Federal Construction Council (FCC)4 asked the Building Research Board (BRB) to advise them on factors to be considered in making decisions about the use of new building technology. Recognizing that the users and benefits of new technology are not restricted to federal government, the state and local government agencies of the Public Facilities Council (PFC) 5 also participated in the study. 4   The FCC is a group of 18 federal agencies with interest in facilities and construction. These agencies have combined construction budgets exceeding $7 billion annually. 5   The PFC is a group of some 20 state and local government agencies responsible for the design, procurement, and management of public facilities in their jurisdictions. These agencies sponsor and participate in selected BRB activities, in a manner similar to the agencies of the FCC.

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The Role of Public Agencies in Fostering New Technology and Innovation in Building To respond to these agencies' request, the BRB established the Committee on New Technology and Innovation in Building to study new technology and innovation in the U.S. building industries.6 Meeting over the course of about 14 months, the committee undertook to identify key issues and develop its recommendations. Liaison representatives from sponsoring government agencies and other invited participants worked with the committee. This report is the product of the committee's work. The study began with the topic of how government agencies should consider new technology in their building programs, but also looked beyond to the larger concerns of the building-related industries. It is said that we live in a technological age, and we have come to accept and to expect a steady stream of new products and services based on applications of science to practical purposes. In comparison to great strides being made in electronics, medicine, or biotechnology, many observers contend that innovation in buildings and construction—in the United States of the late twentieth century, at least—is lagging. However, data and careful analyses to support such contentions are sparse. Studies made by the BRB and others generally show that aggregate spending by industry and government on research and development in building-related fields—at about 0.4 percent of annual construction output—is well below levels that the industry's size and importance in the nation's economy warrant, and proportionally less than other industrialized countries (BRB, 1988). However, R&D figures are, at best, a proxy indicator of technology development. Research and development does not lead inevitably to innovation, nor does the absence of explicitly identifiable R&D activity necessarily mean that innovation will not occur. The term R&D is used to refer to a range of activities that researchers and research managers may identify more explicitly and distinctly with such terms as basic research, applied research, technology transfer, testing and evaluation, or others. Various aspects of the U.S. building-related industries deter innovation: many smaller firms operating in narrow geographic areas, a complex regulatory framework of building codes and liability litigation, and government policies that seem to discourage the longer-term view that business needs to realize the payoffs of developing new technology. Yet none of these characteristics has been shown to be decisive in limiting opportunities for new building technology. Past innovation in building is poorly documented, and there are no generally accepted bases for measuring this innovation. Although interindustry and international comparisons do suggest that the U.S. industry is lagging (e.g., Civil Engineering Research Foundation, 1991), it is difficult to assert with 6   Brief biographical sketches of committee members and staff are presented in Appendix A.

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The Role of Public Agencies in Fostering New Technology and Innovation in Building confidence that the rates of U.S. building innovation are low by any absolute measure. Nevertheless, regardless of current or historic experience, increased rates of new building technology development and innovation can yield broad benefits to the industry and the nation. Some observers argue that higher rates of innovation are a competitive necessity (e.g., Tatum, 1989), and committee members familiar with Japanese and European construction industries were inclined to agree. Thus, the committee addressed itself to the broad concern of whether specific government actions are warranted as a cost-effective way of motivating technological innovation in the U.S. building-related industries, innovation that can improve performance and lower costs of buildings and construction for both the private and the public sectors. The committee's primary goal was to develop practical recommendations regarding government's role—as purchaser of goods and services for its own use and as an instrument of broader public policies—in fostering, developing, applying, and transferring new technology and innovation in the design, construction, maintenance, and rehabilitation of buildings and other facilities. The committee focused its discussion particularly on the following issues: characteristics, current status, and rates of occurrence of building innovation, in the United States and other countries, that suggest the need for government policy or action; how characteristics of the U.S. market influence building innovation and perhaps thereby limit or direct government policy or action; whether current rates of innovation and new technology development in building are affecting the ability of the U.S. building industry to support a high domestic quality of life and compete internationally, to an extent that warrants government attention; whether the roles played by private industry and universities, as well as government, in building innovation could be made more effective through changes in government policies or programs; actions that could be taken by government, private industry, or others to foster innovation in building; and procedures for implementing the committee's recommendations. STRUCTURE OF THE REPORT This report documents the committee's deliberations, conclusions, and recommendations. Chapter 2 reviews selected research and analyses on technological innovation that formed a background for much of the committee's

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The Role of Public Agencies in Fostering New Technology and Innovation in Building discussion and considers in general terms the interests of government at national, state, and local levels in fostering new technology. These interests are reflected in a range of possible strategies that provided a basis for testing the committee's conclusions and developing recommendations. Supporting Chapter 2 are three appendixes. Appendix B reviews briefly key points from the vast literature on technological innovation. Appendix C reviews the current practices of several government agencies. Appendix D presents a list of principal federal laws and regulations with direct relevance to this study. A thorough review of innovation in the building-related industries was beyond the scope and resources of the committee's study. Chapter 3 draws largely on the committee's experience to assess the nature and status of U.S. building technology, how innovation in the U.S. building-related industries is influenced by the structure and operating environment of these industries, and the importance of innovation to these industries and their clients and customers. Chapter 3 is supplemented by three appendixes. Appendix E summarizes background discussions on technological progress and innovation in the building-related industries, which formed the basis for the assessment in Chapter 3. Appendix F is a review of U.S. tort law and its influence on innovation in the construction-related industries. Appendix G discusses in some detail the various ways in which new technology can become innovation. Chapter 4 presents the committee's assessment of the merits of strategic roles that the U.S. government might play in fostering new building technology and innovation. The result of the committee's deliberations is a proposal for change, at both the policy and the operating levels, involving federal agencies' encouraging applications of new technology for their own projects, government activities to enhance the effective transfer of such technology to the U.S. private sector, and increased support for targeted efforts to develop new technologies in specific areas, perhaps through existing and new university-and industry-based centers for the development and demonstration of new technology. Such change does not come easily, and will require action by agency officials and encouragement by congressional leaders. Chapter 5 presents the committee's specific recommendations for actions to implement its proposals. REFERENCES Building Research Board (BRB). 1988. Building for Tomorrow: Global Enterprise and the U.S. Construction Industry. Washington, D.C.: National Academy Press. Civil Engineering Research Foundation and Japan International Research Task Force. 1991. Transferring Research into Practice: Lessons from Japan's Construction Industry. Washington, D.C.

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The Role of Public Agencies in Fostering New Technology and Innovation in Building Office of Science and Technology Policy, Executive Office of the President. 1990. U.S. Technology Policy. Washington, D.C. Tatum, C. B. 1989. Organizing to increase innovation in construction firms. Journal of Construction Engineering and Management. 115(4):602–617.