The world has been redesigned for ease of use and efficiency. Whether we order a ride on an app, tap to pay, or drive handsfree, everyday our daily interactions are simpler and more immediate. The underpinning of this new experience is rapid digital transformation.
Across all industrial and commercial sectors, digital advancements are enhancing productivity, employee wellbeing, business performance insight and customer experiences. All sectors, that is, except construction. The construction sector generally ranks last related to digital technology investment and productivity. In fact, according to the Water Environment Federation, over the past 50 years construction labor productivity in the U.S. has decreased by at least 15% while non-farm business labor productivity has increased well over 150%.
Why is this? The construction industry suffers from lagging digital investment, fragmented and uneven delivery, and a risk-adverse “we’ve always done it this way” culture. Think about the last time you visited a construction site. There is a good chance you saw 2D paper drawings laying in the construction trailer, yellow-iron equipment, materials and labor being applied just as they were 10 years ago, and layers of on-site management or oversight. In the U.S., there are more than 700,000 engineering and construction companies, 80% of which have 10 or fewer employees. With so many tiny outposts across the construction industry supply chain, mobilizing sector-wide digital transformational change has proven to be a slow process.
As the industry comes to grips with an aging workforce, a shortage of skilled labor and lean resources, technologically advanced engineering design models (think BIM) and rising customer expectations are reshaping the industry’s future. Evolving our approach and embracing digital solutions is a requirement for survival. The smart construction digital transformation is here. Are you ready?
Digital transformation is here
The sector’s historic productivity gap is now an enormous value creation opportunity for companies that act quickly. Digital application providers are flooding the market with innovative products and integration schemes, such as RFID tracking systems and construction-focused augmented and virtual reality (AR/VR) platforms. Traditional construction companies are reimagining their offers. Take for example tool manufacturers offering job-site Internet of Things (IoT) sensors and asset management platforms, or yellow-iron manufacturers providing semi/fully autonomous control systems. The transformation of construction services providers is, unsurprisingly, being led by large cap-ex construction companies, in some cases with support from business solutions firms. Select small/niche firms and regional companies are also stepping up to become leaders or first and fast followers.
Securing value from the digital transformation
For many companies the first steps of a digital transformation journey may be the hardest. The scope and pace of change feel insurmountable. However, there are proven approaches to embracing digital and leveraging its value.
Choose to lead
Lagging behind as the industry embraces its digital future is not a sound strategy. Companies should lead with strengths specific to their capabilities and market space. This is easier said than done and will require, at a minimum, a cultural shift. It’s vital to establish a culture that challenges the old ways of working; embraces innovation and creative thinking; and is agile and willing to fail fast. As mentioned in my colleague Monica Dupre’s article, to truly transform your organization you must focus on your customers’ experiences. How can you address customers’ immediate challenges while adding new and unprecedented value using scalable digital solutions? This won’t be accomplished overnight, but a journey of continuous improvement makes it more manageable.
Redefine the customer experience
The construction industry has traditionally delivered projects that are predominantly over budget, behind schedule and riddled with changes, claims and disputes. Digital solutions are changing this precedent. As more companies adopt data-driven digital solutions, simply getting work done won’t be enough to retain clients. Instead, focus on digital solutions that enhance your customers’ experiences while also adding value to your business.
The explosion of digital data collection and visualization tools are making work more collaborative and transparent. Construction management platforms use dashboards that simplify project status and performance information. 360° camera technology and AR/VR allow project owners and other stakeholders to see the outcomes and challenges of a project in real-time. These tools improve decision-making and communications between owners, contractors and other stakeholders. In turn, this has a positive effect on overall project efficiency and cost.
Start small, scale up, and be prepared to learn from failure
Digital applications lend themselves to rapid deployment, initial pilot-scale application, and quick learnings. No matter the size of your firm, it is important to start small and leverage proven digital technologies that are well aligned with your objectives. Tools that once seemed futuristic, like using drones for digital data collection, are market ready. They’re accessible, easy-to-use and able to deliver results faster and safer than in years past. To maximize the impact of these tools, embrace a digital sprint mentality. Rapidly deploy and measure value from digital technology – and be ready to quickly scale-up the most valuable solutions. Recognize that failures will occur as it is inherent to the nature of new technology, but failure provides opportunities to learn and apply those lessons learned to future opportunities.
In the new digital way of working, no one goes it alone. Prepare to co-invest in pilot programs with technology providers, supply chain partners, and customers. A collaborative approach means all parties manage risk and share the rewards. Working with trade groups, universities, think-tanks and tech startup hubs can also provide a diversity of perspectives that build stronger, more holistic solutions. Part of leading the industry’s transformation involves proactively engaging with regulatory agencies. It can be disheartening to transition to a paperless 3D-, 4D-, or even 5D-BIM environment and then be required to make all permitting submittals on triplicate paper copies!
Take a fresh approach to contracting
Owners and contractors (supported by professional organizations and trade groups) need to come together to explore new ways of encouraging digital innovation and sharing the associated risks and rewards equitably. This effort starts by developing contract documents that do not simply push risk down the project supply chain, but rather incentivize innovation from all project participants. Contract documents should encourage and incentivize adoption of smart digital construction solutions that add value, and then measure and reward the commensurate success.
Enjoy the journey
The key to digital transformation is understanding that the journey is not aimed at a specific end point. Instead, it’s a series of ever-evolving milestones. Rapid disruptive change is never easy, and there will be setbacks. However, companies that embrace cultural change and are equipped with a digital transformation roadmap will be prepared to thrive in the smart construction era.