Digital transformation is on the radar for the majority of construction companies. Today, 71% of construction companies say digital transformation is a priority, according to the March 2022 Digital Transformation in Construction Survey conducted by the National Association of Women in Construction (NAWIC) and Safe Site Check In.
While digital transformation offers the promise of greater efficiencies and productivity, adoption has been especially challenging for the construction industry. Yet in an October 2021 survey of construction professionals conducted by Dodge Construction Network, only 15% have implemented a digital transformation strategy. What’s the disconnect?
One explanation is the complexity of the ecosystem – owners, designers, builders, insurers, etc. all have to participate in digital, voluntarily or not. A second is that fast moving projects generally get priority over IT infrastructure projects. And a third explanation is the cultural divide between the building trades and knowledge workers.
Today we’ll focus on a simple truth about digital transformation – it’s not a project. It doesn’t have a defined beginning and end, much less a fixed budget. Instead, it’s a journey that requires on-going investment. This is contrary to the way construction works in that building projects start and end while digital transformation is ongoing.
Building Buildings vs. Building Software
When you build a building, you begin with the structure’s blueprints, scope the project, estimate ROI, estimate supplies and staffing needs, fund, build, inspect, repair defects, handoff to the project owner, and then move on. Ideally, the team achieves a profit above its overhead burden and is duly rewarded.
With digital transformation, you look at organizational processes (the blueprints), scope a promising opportunity for efficiency and ROI, estimate supplies (technology) and labor, then build. Because you are the “owner,” you negotiate the punch list with your internal customers – departments like finance or HR, and project operations – before deciding whether to put the new digital process into broad use. The sequence repeats itself and adoption may be spread out over time. The failure to budget for the iterative nature of digital transformation programs is why, too often, contractors give up before they realize any ROI.
Today’s construction workers are ready for digital transformation. In fact, 95% say new technologies designed for the construction industry make them more productive, according to the NAWIC survey. While every contractor will have their own path to digital transformation, the framework for success comes down to:
1. Identifying Agile Leaders
Privately, many construction executives acknowledge that a generational transition to a younger generation is necessary to fully effect digital. But perhaps this is overstated: Construction’s complex ecosystem of owners, designers, builders, financers and professional services makes business process measurement difficult for smart managers of any age, even if they can bridge the gap between HQ and projects.
Assembling a transformation team with personal characteristics such as knowledge of cross business functions, personal communication skills, curiosity about technology and a willingness to take risks are more important.
2. Finding the Biggest Bang for the Buck
To accurately see the big picture and be able to dig into the details requires integrating technologies that are used in the office and in the field. Field data is a critical missing part of many digital strategies which reduces the ability to improve day-to-day operations across the entire firm.
Forward-looking firms are realizing the benefits of sharing field data such as who is or was on a job site, what they did there, and the status of each job based on pictures and automatically uploaded daily reports. And they’re integrating this information with their project management platforms. Integration eliminates duplicate or conflicting information while reducing admin at HQ.
3. Identifying the Right Technology
When identifying the right technology, the criteria should go beyond low cost and high ROI. It should be simple to master, make jobs easier, and allow the data it captures to connect to other sources of information that are being used throughout the company. Any new technology investment should complement existing technology investments such as Procore and Autodesk to create a comprehensive and realistic picture of how each project is driving profitability.
Integration costs can run high if the right questions aren’t asked before the purchase of technology. Without micromanaging, consider establishing or revising tech procurement policies to ensure new technology doesn’t emerge without approval. This will make sure the digital transformation runs more smoothly. It also helps to avoid unnecessary integration sticker shock and the costly and risky impact of shadow IT caused by inconsistent project data, data voids and malicious downloads.
4. Setting Realistic Expectations
Every executive wants to know how soon their investment in digital transformation will pay off. Since it’s an iterative process, you need to establish KPIs so you can measure progress over multiple iterations.
For example, to accurately measure the return on a project management platform, establish a benchmark at the beginning of the process, six months after implementation, and then after one year. The one year evaluation should come before the annual contract renewal. The factors to consider are how quickly staff learn the platform and the estimated cost it takes for employees to get up and running. Also, the cost to maintain the platform, including IT staff or consultants. And how much value it provides in helping support strategic and tactical decisions that impact the profitability of the company and each project.
Project iterations that automate a process lend themselves to milestones. For example, replacing a paper-based process with digital technology – such projects lend themselves to something closer to fixed price/fixed schedule. But automation data will be critical to downstream consumers of the data – the iteration that will follow every automation project.
Digital transformation is underway in the construction industry. The companies that embrace it with a strategic view that recognizes the iterative process, and establish guidelines and ROI metrics stand to gain the most from the effort.
