The Importance of Digitalization in Construction
Digitalization in constrution is finally happening
For years, construction decisions makers agreed that construction has lagged behind other industries when it comes to digitalization. Study after study revealed that other sectors were adopting technology and integrating data sources to increase productivity. For example, research by McKinsey shows that digital transformation can result in productivity gains of 14 to 15 percent and cost reductions of 4 to 6 percent. Yet engineering and construction (E&C) companies that drive the world have been slow to adopt.
After years of watching digitalization trend up, by 2020, increasing numbers of E&C executives agreed that it was time to prioritize digitalization. In some cases, adoption was driven by a desire to increase modular construction manufacturing (MCM), also known as prefabrication or offsite construction. MCM supports efficiency and improves quality via lean methods, which are easier to apply in a shop environment than on a construction site. Another benefit of lean methods is that their efficiency translates into doing more with fewer skilled workers, reducing the challenges of construction skill scarcity.
Digitalization adoption was ticking up. Demand for data integration across systems was increasing. Then, with almost no warning, the COVID-19 pandemic struck.
Construction projects dwindled. The need for remote work capabilities skyrocketed. New safety practices were instituted. Firms previously focused on one-and-done construction sought new revenue streams via cradle-to-grave lifecycle services. These forces have converged, increasing the importance of integrating reliable and accurate construction data from multiple sources, particularly for E&C firms.
The McKinsey October 2020 article, “Rise of the platform era: The next chapter in construction technology,” stated: “As the global COVID-19 pandemic forces many construction players to digitize and use technology to ensure the safety of their workers and boost productivity, this dynamic will likely only continue to accelerate.”
Many construction processes, including time recording, punch lists, submittals, job reports, schedules, quality control, and purchase orders, were ripe for digitalization long before the pandemic. Remote work during the pandemic created the push needed to accelerate digitalization of these processes.
Digitalization and data integration support smart decision making
As E&C companies attempt to collect increasingly complex data for each project, more companies will experience growing pains. Many of these pains stem from establishing best practices for data accuracy and accessibility across organizations to drive smart decision making.
Siloed data sources lead to data duplication in each tool, and the subsequent inefficiency and increased risk of errors. Custom-built IT integrations to replicate design, operations, field, and finance data often involve long lead times, invasive process changes for staff, and high upfront capital investment with no guarantee of success. Cautionary tales are all too common among E&C companies, as McKinsey’s 2019 “Decoding digital transformation in construction” explains:
“After spending five years and countless sums on trialing new software platforms and ways of working, the executive team at a large contractor was nearly ready to call an end to its digital-transformation program. Dozens of attempts to streamline projects with digital solutions, such as 5D BIM, had failed to deliver. A few had succeeded in the pilot phase, but the company had struggled to apply those solutions at scale. Site and office workers grumbled about having to adopt yet more new technologies—before abandoning them and returning to their old ways of working. Overall, projects hit delays and ran over budget as frequently as before, and productivity had barely budged upward.”
iPaaS as a new trend to manage data
The solution? A new option has emerged for E&C companies to manage data across disparate sources: integration-platform-as-a-service (iPaaS).
iPaaS solution benefits include:
- Rapid implementation: often weeks vs. months or years for custom-built IT integrations.
- Customization: custom flows can be built quickly to match your specific business needs.
- One platform to integrate data: look for a service that can combine data from on-prem and cloud solutions. Bonus points for cloud-agnostic services offering the flexibility to use any or multiple cloud options.
- Low cost: upfront costs and total cost of ownership (TCO).
- Standardization: apply data and reporting standards across construction operations, finance, and supply chain.
- Ease of use for business users and technology teams.
- Flexibility: easily extend and scale the solution.