The Impact of Digital Transformation on the Construction Industry
The second instalment in our regular series about digitising industries focuses on the construction industry and digital transformation.
This is an industry that accounts for around 7% of the world’s working population, but in the last 20 years boasts only a 1% average yearly increase in labour productivity. The global average is 2.8%.
If you work in construction those numbers aren’t especially encouraging. However, the good news is that the potential for positive change is enormous. Indeed, digitalisation of the construction industry could lead businesses to productivity gains of 14-15% and cost reductions of 4-6%, year-on-year.
This is how we foresee construction companies getting up to speed.
Before we can explore the possible solutions, we need to understand the problems. Just why have the construction industry and digital transformation proven such uneasy bedfellows so far?
The answer to that question lies in the fragmented nature of the industry itself.
Construction projects are made up of many moving parts, from many different companies – most of whom work together for a single bespoke project, then go their separate ways.
With multiple contractors and subcontractors involved, competing suppliers, and a general lack of repeating, long-term problems to solve, creating a business case for digitalisation of the construction industry on a project-by-project basis can be tricky.
Costs are a heavy consideration here. Even if the many different businesses involved in a construction project could agree on a specific technical solution, and find a way to share the costs behind it, it’s debatable how many would be willing to invest when it might not benefit them on the next project too – or the one after it.
The overarching answer to this dilemma is for the individual companies involved to modernise their efforts in ways that help them partner with other companies more effectively.
We suggest five key approaches to help make this happen:
1. Focus on Problem Solving; Not Technology for Technology’s Sake
Remember when social media first exploded, and businesses rushed to set up pages and write attention-grabbing posts – before they really understood why it was a good thing, or what their customers would get from it?
The result was expensively-staffed creative departments producing unfocused content with little intent or strategy. They may have garnered lots of followers and likes, but most businesses had very little actual, useful return on investment to show for their efforts.
Done the wrong way, the digitalisation of the construction industry could lead to a similar situation; brand new ‘flavour of the month’ IT systems going unused, or being used for the wrong reasons, because they don’t actually solve the problems construction teams face on a day-to-day basis.
For instance, incepting a way for site workers to share their feedback and challenges might sound like a great idea. But if what you give them is more akin to an online message board, you probably shouldn’t be too surprised when you end up with a long list of ‘thank you’ posts to colleagues.
It might sound simple, but the right mindset at this early stage, together with careful choices, can save construction businesses millions down the line.
2. Create Compelling Business Cases that Bring Teams Together
The example we gave above shows what happens when you make a business case for digitalisation in the construction industry but come up with an ill-suited end product. Here, we’ll imagine what a good solution might look like.
To get to that solution, you have to first make a business case which clearly defines the logistical problem, alongside the tangible benefits of solving it.
For instance, the idea above began with the notion that workers sharing feedback and challenges would be a good thing. Why?
Let’s say you make the case that your construction business spends hundreds of extra man-hours correcting manufacturing faults, with no way to capture issues ahead of time in order to fix them before work begins. Suddenly, having a way to capture those faults early on could be an enormous cost-saver, with substantial financial benefits to all future projects.
The path to building a specialised app then opens up, becoming no longer a case of “should we make one,” but of “what features will it have” and “how quickly can we get it.”
That’s just one example of how the construction industry and digital transformation can go hand in hand. If you’re in construction, what would your business benefit from?
3. Upskill Workers to Adapt to New Technologies
Once you’ve done the thinking and built a business case for the positive impact of digital transformation on construction, it then makes sense to enable your teams to use the new technology effectively.
In the case of the app mentioned above, incepting training and processes should be relatively straightforward. The human and technological challenges only grow, however, when you start to think bigger.
One good example is the wide proliferation of computer design tools. On a human level, their use necessitates ongoing training to help designers stay up to date. On the tech side, getting the most from these tools means investing in Cloud-based databases, which allow construction teams to not only store designs for future reference but access them from anywhere, on any device.
The latter is an especially relevant concern for site managers and office staff, who in a post-pandemic world could find themselves working at home one day, on-site the next, and in a corporate office the week after.
4. Factor New Digital Tools into Project Planning
One of the reasons the digitalisation of the construction industry hasn’t proved as profitable as it might, is that when construction companies do invest in new digital tools, they often don’t plan effectively around them.
Used well, digital tools can help site managers lower unnecessary resource use, manage their site staff’s time more efficiently, and generally speed up workflows. In theory, they cut costs, bring separate teams together, and save everyone time and money.
However, because construction companies have been slow to adopt new technologies, many lack the knowhow to accurately plan these timelines and resources around these tools. This can leave workers in limbo before the next phase of a project, and feel more of a waste than the ‘old’ way of working.
This learning curve, however, can also be a strength. The same digital tools designed to help different companies collaborate on projects can also help their managers work together to pilot new technology on a smaller scale, monitor the results, and learn from each other’s areas of expertise. They’ll then be in a better position to roll out these new tools on a wider basis.
5. Transform Digitally at the Company Level
When it comes to the construction industry and digital transformation, the truly savvy companies are the ones who will take the innovations from one project and apply them to many. In doing so, they change the way their entire enterprise operates.
For instance, construction buyers might use digital tools powered by machine learning to take an in-depth inventory of their current stock. This would allow them to better understand variances between similar items from different suppliers, and make the right purchasing decisions for specific designs on every project they’re working on.
The knock-on effect is that having the right materials, to a uniform standard, would mean workers on each project need to spend less time adapting and modifying materials to suit the project’s specifications.
That’s just one example of how digitalisation of the construction industry in one area can lead to savings across the board. How many more could you think of?
Is Your Construction Business Ready to Transform?
It might be amongst the slowest industries to adapt to modern technology, but as we mentioned at the outset, the impact of digital transformation on construction could be enormous. So, the real question is, can your construction business afford not to go digital?