Hardly any construction company has yet fully captured the benefits of going digital. According to this McKinsey Capital Projects & Infrastructure article, there are things you have to look out for to move beyond construction project silos and open the value of digitalization across the construction industry.
Companies spend huge amounts of money and invest a lot of time testing out new project management software and working methods that end up being abandoned. Attempts at implementing digital solutions to streamline projects usually end up failing to deliver as envisioned. Some companies make it in the pilot phase but a handful flounder in scaling the solutions’ applications.
Workers on-site and in the office would complain about having to adopt newer technologies before completely giving up and going back to old working habits and methods. Project delays and cost overruns would follow just like before. These situations are all too familiar in construction because it is one of the world’s least digitized industries.
However, despite the difficulties, a handful of companies are increasingly overcoming the digitalization challenges of construction businesses and projects. When a McKinsey study assessed those that have been successful at implementing digital technologies and workflows, they found out that there are common hallmarks that work regardless of conditions.
Look out for digital construction strategy fails
Only a few in the construction industry have fully digitized their construction operations and processes outside of individual major projects. If you are experiencing the same, fret not because you are not alone. Across all other industries, companies report that digital transformations more often than not disappoint. The common digitalization challenges include poor or unclear definitions of what is digital, a vague idea of what the transformation is expected to achieve, and deficient integration of digital tools with construction processes. Here are five common digital strategy fails that construction companies need to look out for:
Strategy Fail 1: Focusing on introducing IT solutions instead of paying attention to solving pain points
Most construction companies make the common mistake of focusing too much on IT improvements as the ultimate solution. Don’t fall into the trap of deploying the best software and tools before you have even figured out whether and how your chosen tools can improve your processes and operations. Your digital tools will not deliver visible benefits if not adopted and implemented correctly.
Instead of a tech-first approach, focus on a process-centered one by first identifying what changes will improve your performance then defining digital use cases that will allow you to create the operational changes you’ve set out to solve. An effective strategy should specify these three things: a process change, the required enablers (data and technology tools, capabilities, change management responsibilities, legal and contractual requirements, etc.), and the desired benefits.
Strategy Fail 2: Failing to apply digital use cases that encourage collaboration
Another strategy fail involves the preselecting or cherry-picking of digital use cases that only apply to one project. The reason for this is to avoid the difficulties that come with working across projects in the fragmented value chain. By doing so, a lot of valuable opportunities are missed. You need to devote your attention to activities that include multiple teams and stakeholders and establish use cases that smooth and streamline communication and interactions among all of them.
Implementing digital solutions that promote and support collaboration among stakeholders and on-site teams will result in improvements in project planning, execution and delivery. Smoothing out communication and collaboration would result in a reduction in rework hours.
Strategy Fail 3: Disregarding the reskilling and restructuring of on-site teams
With new digital technologies come new technical skills and digital ways of working. The shift from a traditional and linear set of construction activities to a more agile approach requires that construction professionals adopt a new mindset. By automating repetitive work and standardizing processes and operations, and restructuring on-site teams with new skills and mindsets, more time will be allocated for valuable work.
Strategy Fail 4: Overlooking project baselines that express actual value
Most construction companies report that they have seen productivity gains but have only seen little impact on the bottom line (company’s earnings, profit, net income, or earnings per share, etc.). According to them, savings from improved productivity don’t compensate for the costs of system or software implementation. For full bottom-line benefits to be realized from digital use cases, you must adjust your baselines to get rid of unproductive time and create value instead.
Digital tech and tools can facilitate accelerated construction by getting rid of defects and avoiding risks and hence reducing rework. But if labor is not streamlined to other activities, your workers will end up with unnecessary downtime waiting around instead of using that time on rework and other tasks, which will, of course, result in additional costs.
There are a few ways you can capture the benefits of your increased productivity: compressing schedules, reducing non-critical resources, and limiting overtime. There are so many ways you can do to adjust your baselines.
Strategy Fail 5: Neglecting to link projects on a company level
Connecting projects unleashes a whole new surge of value in the chain as the company works hard to standardize its digital platform and tools across projects, and share more data on a company level. Some examples of how you can link projects on a company level follows:
- Integrating cost and schedule data from all projects to increase the bid accuracy for future tenders and to increase the margin
- Creating a central source for all designs at the element, package, and project levels so those designs can be repurposed on future projects
To successfully execute a digital transformation, a construction company must begin with a clear definition of how digital will create value for the business. An equal amount or more of time must be spent on operational change as on technology—doing so results in significant productivity outcomes. A properly implemented digital transformation can result in productivity gains of 14 to 15 percent and cost reduction of 4 to 6 percent.