Few organisations would tolerate a scenario where projects typically take 20 percent longer to finish than scheduled and/or run up to 80 percent over budget. Yet this is the norm in the global construction industry as highlighted by a recent McKinsey article, ‘Imagining construction’s digital future’.
Another concerning trend highlighted in the analysis, which considers insights from industry and government on large construction projects around the world, is that construction labour productivity hasn’t kept pace with overall economic productivity – and has actually declined in some markets since 1990.
These findings represent a general trend that is likely to be familiar to many construction companies in Australia, and not just those from the big end of town. Clearly there needs to be a better way forward.
A digital dinosaur
Not surprisingly, the McKinsey research showed that the construction industry is one of the least digitised. Key takeaways are that the sector:
- Is slow to adopt new processes and technologies
- Does not invest in innovation
- Neglects to take a longer-term view
- Has inflexible contracts
- Delivers volatile financial returns to its stakeholders
To catch up with other industries and prosper, the construction sector needs to embrace the inevitable digital disruption we all face and implement new technologies. The opportunities – particularly for early adopters – are significant.
Of course, not every construction company is ignoring the digital trend – many we work with have a future-focused approach. Below we highlight our experience working with these construction organisations: the key challenges they face and how they leverage technology to help overcome them.
The Australian story: key hurdles for local construction companies
Below are the three key challenges facing the mid-size Australian construction companies we speak to or work with:
- High labour costs mean the focus must be about ensuring efficiency – in terms of individual efficiency and productivity and the smooth running of business operations to minimise idle time and delays.
- Managing dispersed operations, and the associated communication costs, is another key challenge. A mid-size construction company may have 3 or 4 branch offices and 30 projects running in parallel across 25 different locations.
- Mobility and collaboration issues and the need to enable everyone to be fully productive regardless of location, to access the same information and minimise travel time. This extends beyond internal employees and includes contractors and other external partners.
Leveraging technology to deliver on time and on budget
We work with a number of construction clients who recognise that technology is a key driver of efficiencies and innovation – not just an inconvenient cost. As a result, these organisations are better able to navigate some of the challenges described above. Here are some of the ways they are using technology to gain control:
High labour costs
Working with an outdated computer can waste up to an hour each day because of slow response times and maintenance issues – multiply this by 250 or 500 staff and the costs add up at an astronomical rate. Forward thinking organisations know this, that’s why they:
- Invest in regular technology upgrades to ensure smooth operations. This includes PCs, servers and peripherals and is often done on a pay-as-you-go, CAPEX model.
- Recognise the importance of pro-active monitoring of hardware and software to minimise the risk of IT issues and the costly idle time – from both employees and partners – that often accompanies this.
Managing dispersed locations
New branch offices go hand-in-hand with business growth but the communication set-up costs can be exorbitant, especially for businesses who choose to invest in purchasing new, on-premise technologies. But with the right cloud-based solutions all that is required to start a new office is a quality network connection and a subscription to services that allow you to:
- Enable, fast reliable communication between all sites and locations
- Remove roadblocks to information access and keeping data up-to-date.
- Quickly roll-out communication and co-working tools such as SharePoint to increase collaboration between branches and sites.
Delivering on the mobility / collaboration promise
Enabling everyone to be productive from any location is a key priority for the construction organisations we work with. And it’s no longer a buzz phrase, today’s technologies are simple yet powerful and help minimise unnecessary travel, improve decision making and enable up-to-date sharing of information and documentation. Specific examples include:
- All remote staff having secure access to the one datacentre through secure connections – with all data automatically backed-up.
- Collaboration solutions that allow suppliers and sub-contractors to access the documentation they need in real-time through secure, managed access to information such as OH&S directives and contract details.
- A CRM solution to allows construction managers to better manage their supplier and sub-contractor relationships and make more informed decisions; for example to access supplier ratings at a glance and decide which one to engage for a specific project.
A digital future for construction
For our forward-thinking clients, technology is a constant and strategic part of our ongoing discussions. They are always looking for and planning the implementation of new solutions that will continue to improve their business operations.
Top of mind is leveraging IoT (Internet of Things) to help better manage equipment repair schedules, inventory management and safety – among other requirements. We are also planning for the implementation of next generation 3-D and 5-D building and information modelling solutions – helping to establish a future-ready design platform.
The way forward
To remain competitive and operate increasingly complex projects, it’s vital that technology and a digital mindset become ingrained in the strategic planning process of all Australian construction companies
Advanced technology platforms are not just for the large players – mid-size construction businesses are also benefiting from investing in the right IT solutions. And those that do so early will establish that critical competitive edge.
If you’d like more information on how the right IT solutions can help to transform your business, get in touch with us to see how we can help.