In the span of a generation, many construction industry design and management processes have been transformed. Designs that used to be completed and laboriously updated on drawing boards by hand are now generated and amended on computer screens. The drawings themselves are no longer printed out, copied, folded or rolled, and then mailed to their recipients; today, they might be sent as email attachments or shared via an online collaboration platform. And double-entry bookkeeping in traditional ledgers is now managed via Excel or in industry-specific finance and accounting software.
However, the construction industry is a long way from being truly digitally transformed. According to the McKinsey Global Institute, it is almost at the bottom of the US digitization league, just above agriculture and hunting, while the Gartner IT Key Metrics show construction has consistently ranked last in terms of investment in technology. Spending in construction averages just 1.2% of revenue, with over a third of companies spending under 1%.
Spending in construction averages just 1.2% of revenue, with over a third of companies spending under 1%.
Some of this underspend can be attributed to the industry’s structure, with its high proportion of micro-businesses and small to medium sized enterprises. Tradespeople operating their own one-person businesses may not feel the need to invest in IT. However, even in larger companies, the CFO and board colleagues may regard IT as an expensive overhead that eats into already tight profit margins, rather than as a potential investment in efficiency and productivity.
‘Silo’ mentality can also interfere, particularly in large multi-disciplinary businesses–a keenly felt need for new software in one division may not be echoed across the company. And the conservative and risk-averse attitudes of many seasoned construction people can also slow adoption. Such people just want technologies that are tried, tested, and proven, not to be a testbed for something new.
But sometimes a ‘disruptive’ technology can quickly prove its value and become almost indispensable. The introduction of web-based construction management platforms is a good example.
Avoiding the IT Blockers
When these Software-as-a-service applications were first marketed in the late 1990s and early 2000s, construction project managers could quickly see how the technology would speed up collaboration on documents and drawings, how they could avoid mistakes due to everyone sharing up-to-date information, and how they could benefit from better process visibility. However, back at head office, the CFO and CEO sometimes insisted that email could achieve the same result, while the IT team (if they had one) might say they “could build something out of Sharepoint,” rather than trust something to an external supplier.
As a result, early adoption was often driven by the project delivery teams, effectively cutting the board and IT out of the loop and avoiding ‘company politics’, and including the expenses in project preliminaries or general costs. Such projects often out-performed traditionally managed ones, providing a strong business case for wider adoption.
Such projects often out-performed traditionally managed ones, providing a strong business case for wider adoption.
In the past decade, opposition to cloud-based construction management software has softened, partly because construction businesses realised the cost and time savings of having a ‘single source of the truth’ for project delivery. Instead of jealously guarding their IT empires, CIOs are outsourcing some risks to vendors with the skills and resources to provide high levels of service security, speed, and uptime. And the company’s efficient use of the latest technology can be marketed as a differentiator.
‘Bottom-up’ Technology Adoption
The consumerization of technology has also had an effect. At one time, you went to work so that you could use the latest software and hardware. Nowadays, we often have more powerful applications on our personal smartphones and tablets than we have in our offices or jobsites. Nevertheless, resistance to new technologies can be overcome.
I recall a 55-year-old site manager who insisted that pen and paper was all he needed, and resisted being given a tablet for punchlisting. Once he was shown he could spend more time on site, less time walking back to the site office to be able to transcribe notes onto a computer, and save the time he spent searching email threads, he was hooked. This skeptic become a technology evangelist, boasting to other site managers about how efficiently he managed his subcontractors, and spawning a ‘bottom up’ demand for technology that quickly outstripped any past ‘top down’ mandates from the contractor’s distant head office.
Building the Business Case for BIM
To some, Building Information Modeling, BIM, is the latest fad: an expensive technology shift, rather than, as its proponents say, a digital transformation of outdated processes and systems. But in some markets, such as the UK, investing in BIM is necessary simply to remain competitive.
Once the UK government made BIM mandatory for all its major public sector construction projects, companies either had to invest in BIM to retain a foothold in that market, or seek work in other sectors where, perhaps, they had no expertise. However, in a recent webinar, London-based David Miller Architects (see this case study) said it invested in BIM as it offered increased efficiency and profitability, and a better way of working. It also recognised that BIM is not just about technology: “half of the cost is training…. We view BIM as an investment in our team and working methods rather than in technology.”
This example, as with the collaboration and mobile technology examples, shows that many technology buying decisions are not just about the hardware or software functionality, or the associated costs. They are about investing strategically in the business and its people. Decision-makers also need to consider how technology will be accepted and adopted so that it delivers the expected efficiency and productivity gains, and helps its people build a sustainable competitive edge.