From an ageing workforce to a national skills shortage, the industry is facing a perfect storm of challenges. In this article, Kenny Ingram, VP construction and engineering, IFS, explores how construction technology can rebuild the industry
The construction industry is facing a perfect storm of challenges. Having to contend with an ageing workforce and a national skills shortage, the sector sees poor productivity feeding into inefficient project delivery performance, making a significant dent in companies’ bottom line.
Throw a global pandemic into the mix, along with subsequent material supply shortages and rising inflation, and the need to transform the sector becomes even more acute.
The latest figures paint an ever-clearer picture of a sector beset by uncertainty. According to S&P Global’s construction purchasing managers’ index (PMI), business optimism recently hit its lowest since July 2020 amid stalling orders, rising interest rates, and the growing threat of a recession on the doorstep.
Technology is serving as a key enabler to evolving the construction industry
However, all is not necessarily lost. The construction sector is resilient – as shown by its return to growth in September after two months of contraction. Furthermore, disruptive times can bring new opportunities for this traditionally conservative industry to rebuild with innovative digital tools and modern methods of construction.
The time has come for construction to draw on greater reserves of resilience and agility to evolve into a next-generation industry, with technology serving as a key enabler.
While dealing with a plethora of current challenges, construction companies are being asked to broaden their horizons and deliver a much more diverse portfolio of projects. In effect, they must simultaneously deal with disruption and commit to reinventing themselves as a modern construction business.
Going far beyond ‘just’ building new assets, many are now taking on contracts to design, operate, maintain, modify, and eventually dispose of the asset. This is a move supported by the ongoing migration of the sector towards building information modelling (BIM). This broad term describes the holistic process of creating and managing information for various built assets, including buildings, bridges, roads, and tunnels.
The BIM market is forecasted to reach an estimated $9bn by 2025
While the traditional construction industry continues to be battered by recent turbulent events, the BIM market appears to be booming. According to the “Building Information Modeling Market Report: Trends, Forecast and Competitive Analysis”, the market is expected to reach an estimated $9 billion by 2025, with a CAGR of 9% to 11% from 2019 to 2025.
Alongside rapid urbanisation and growth in infrastructure projects, one of the biggest drivers within the construction sector is to have a digital representation of the asset throughout its entire life, which is essentially what BIM delivers.
This expansion in scope clearly supports the sector’s ongoing shift towards total asset lifecycle management. It is a key trend in an industry where the lifecycle of many assets may be well over 20 years. In the case of some buildings, factories, plants, and infrastructure, lifecycles may even extend to more than 100 years.
Therefore, over a building or infrastructure asset’s lifespan, maintenance contracts can potentially be worth 120%-to-200% more than the original cost of construction.
For innovative, agile construction companies, this offers a new, service-based model based on provision, for example, a quote of rooms or beds over many years, providing a new, guaranteed stream of income. It also enables the company to plan and visualise the entire project from the very outset, which helps to mitigate risk and reduce overall costs.
Given these opportunities, it is imperative that the lifecycle of assets across the construction industry is considered and managed. But how can construction companies derive maximum value from this trend without letting it put a whole new layer of pressure and complexity on a sector in chaos?
Companies must push to modernise their processes with construction technology
To deal with these myriad pressures, companies must now modernise their processes with construction technology to optimise operations and maintain control over these increasingly complex asset projects. Doing so will ensure that asset performance is consistently tracked throughout its lifecycle, helping teams to keep their projects on track even during the most disruptive times.
Today’s construction companies are often about far more than just building – they regularly work in close partnership with the companies that own the buildings or those that are responsible for their management and maintenance.
Often, the construction company will have multiple divisions or business functions. One may be pure construction, another may be field or service management, and a separate department may be focused on asset maintenance. Therefore, it is vital that all these divisions can work efficiently from a single, unified source of truth.
Technology will enable companies to deliver projects on time and within budget
With intuitive, high-quality construction technology, companies can support the full asset lifecycle across the entirety of their units and operations, leveraging streamlined processes that deliver exceptional project management – all from the same solution.
This tech-driven approach enables best practices, allowing companies to ensure projects are consistently delivered on time, on budget, and with high quality. It is a clear example of total asset lifecycle management in action.
To compete effectively today and in the future, construction businesses increasingly need to embrace a modern approach. A recent McKinsey report underlines the opportunities missed by failing to keep pace – if the construction industry could stay in step with other industries like manufacturing, it would be set to reach a value of $1.6 trillion per year.
Harnessing the latest digital innovations could well be key to enabling the industry to evolve to new models of working.
Intuitive, integrated business systems that support mobility
At present, however, many organisations within the sector are continuing to fall short. Some have more than 50 business systems in place, leading to flawed and cumbersome processes, disjointed operations, and siloed ways of working. Other companies continue to have a significant overreliance on Excel spreadsheets, which can put a block on innovation and creativity.
To deliver a business advantage and ensure a greater competitive edge, these companies will need to rethink their business. This will involve changing the way they build and putting in place intuitively, integrated business systems that support mobility.
Intricate modular construction methods and webs of subcontractors have increased the complexity of today’s construction projects. This requires more effective supply chain management solutions to track inventory and achieve truly efficient coordination, reducing time-wastage and mitigating unnecessary, costly duplication or mistakes.
The need for a ‘single view’ of resources
Companies also need their field workers to have mobile capabilities to raise jobs, re-order stock, and progress their work activity more rapidly than before. This simply cannot happen if the field worker is left waiting for manual input at head office.
There is a growing need for a single view of all their resources and requirements across every site, with access for all that need it. This should encompass policy, covering document management, finance, procurement, sub-contracting, inventory, service management, training and development, HR and payroll, project management, risk management, and plant hire.
The right software will be able to streamline traditionally disjointed and siloed processes, from management accounting to tendering and on-site operations. Furthermore, modular integration will enable this process to be undertaken in steps, smoothening the transition from legacy to modernised ways of working for companies, no matter how far along their transformation journey they currently are.
Construction companies should also consider moving towards more outcomes-based models. This involves having a vested interest in the continued viability and management of the building or infrastructure rather than simply taking a prescriptive, short-term approach.
Service level agreements will become necessary for this change, requiring real-time data, end-to-end project and lifecycle visibility, field service scheduling, and optimisation. Leveraging the tools to support an outcomes-based mindset will incentivise and empower companies to deliver the best possible long-term results, unlocking better value, better performance, and lower costs.
Using common sets of data to drive informed business decisions
To achieve all of this, companies will need common sets of data that they can use to make more informed business decisions. In effect, they need much more modern technology.
Innovations in 3D digital twin models are opening new opportunities to enhance modular construction, as having the ability to create virtual replicas of physical assets enables companies to simulate, predict, and inform decisions based on real-world conditions and ‘what-if’ scenarios. The BIM process is central to enabling cradle-to-grave assessments of the environmental impacts of construction products and services.
Integrated enterprise resource planning (ERP) solutions play a central role in enabling companies to calculate operation, maintenance, and refurbishment from model data when tendering for outcome-based construction projects. When combined with BIM, a truly optimised, a profitable workflow can then be established.
Therefore, organisations should integrate BIM data into all stages of a building or structure’s lifecycle as an asset. Taking this approach will enable them, where necessary, to achieve rapid and friction-free integration of further modules for more specific management, maintenance, or other service capabilities.
Adopting construction technology to push the industry towards a new, industrialised future
Today, the use of these pioneering digital tools and modern methods of construction is growing fast. There has never been a better time for companies to embrace these technologies and harness them to build agility and resilience as the industry transitions towards a new industrialised future.
Construction technology has an ever-greater role to play – and not only in helping companies overcome current disruption and economic headwinds. These technological tools are also ready to support forward-thinking organisations as they innovate well into the decades ahead by transforming their total asset lifecycle management offering.
Kenny Ingram
VP Construction and Engineering
IFS
