The global construction industry has been growing by leaps and bounds – so much so that by this year, it is expected to hit a whopping value of $20 trillion. India too is no exception. From 2019 to 2024, the Indian construction market is anticipated to register a CAGR of 6%. The current government has announced a massive investment in the infrastructure and construction industry in order to boost the economy and create jobs. Construction is an essential indicator of the state of the economy and generator of massive employment in the country. At initial take, one could argue that the recent COVID-19 pandemic has disrupted all plans and thrown massive brakes on the world economy. While India like the rest of the world is grappling with what the new normal is and will be after the lockdown is lifted and the engines of the economy restarts, what is probably clear is that there is a new normal. But we also believe that the government spend on construction (at least infrastructure) will be delayed but not stopped since the sector can be seen as an essential engine to restart and boost the economy. But we believe that this COVID-19 impact is also an opportunity to create the new normal. This new normal, led by technology, will give more credence to the environment, sustainability, social distancing, and accelerate the need to digitize various aspects of the construction projects from design to procurement to execution. We believe leaders and executives in the capital projects, real estate, and construction industry will accelerate their decisions embrace technology in all aspects.
Why the construction industry must imbibe technology for better outcomes?
The fundamentals of the construction industry that has evolved over the past few decades has not changed. Delivering a construction project today implies that multiple stakeholders (owner, design consultants, PMC, contractors, suppliers to say the least) have to come together for the duration of the project to deliver the same. And although the technology landscape used to manage the information during the project lifecycle is evolving, it is still largely fragmented (ERP systems for accounting and finance, scheduling systems for time, Excel based trackers for all other functions, email and other collaboration solutions) and data is also in silos like people are. All this implies that project controls are largely ad-hoc, reactive, and bad news (of time and cost escalations) are typically known when it is too late for decision makers to intervene. But the industry environment has changed dramatically and COVID-19 has brought a mirror to each company to look at themselves hard internally and find ways to optimize costs and increase resource usage efficiency. The construction project, unfortunately, is at the intersection of all these systems and stakeholders and hence, the real transaction cost of information flow and latency of information flow across stakeholders has not bubbled to the top of priority for most decision makers until recently.
Today, COVID-19 has created an environment wherein everyone needs to go beyond understanding direct costs and think about indirect, hidden transaction costs and look to optimize the same. Managing construction projects efficiently means managing an information supply chain. Once that realization comes, decision makers will realize that technology adoption is mission critical, and capital project owners and real estate developers, in particular, have to lead the change and drive the adoption from the front.
But all of this come with a word of caution. Decision makers should begin with the end in mind, and ensure that people, process, and technology are aligned in order to realize ROI from their technology investments. Based on our experience, a rolling adoption of technology that incrementally automates one process at a time will have a better chance of success.
Construction Technology is Coming of Age
Technology has found its way in all industrial sectors as a way to improve operational efficiency and construction industry is no exception. Construction 4.0, the construction version of Industry 4.0, is also similarly sweeping through the industry. It is being built on the backbone of near ubiquitous availability of connectivity, access to computing on the cloud (on the go), mobile connectivity, and connected devices. Today, connected equipment and tools, telematics, mobile apps, autonomous heavy equipment, drones, robots, augmented and virtual reality and 3D printed buildings are no more far-fetched dreams for the construction industry. There are solutions available for each of them. But as mentioned above, decision makers have to begin with an end in mind. If the final intent is to have a single source of truth, a single connected data source, then their choice of an integrated project controls platform chosen has to include that as the primary objective during the decision making. The platform has to be extensive, flexible, and adaptable to be incrementally rolled out. It should be bi-directionally inter-operable with multiple point solutions since there will not be a single solution that caters end-to-end to all the requirements of a project (or sector or stakeholder). In short, the choice of the technology platform should be one to eliminate technology (and people and process) silos and not create one of its own. And since above all, the objective of the technology platform is to help decision makers make decisions, it should be capable of going beyond simply automating processes to intelligently connecting various data sources and giving lead indicators into future time and cost delays, so that they are more empowered to course correct their projects before they go south.
How various technology forms are ushering innovation and reshaping the future of construction industry?
The first wave of construction technology that every mid to large (if not small also) have already adopted as point solutions include ERP systems to automate accounting and finance. These are scheduling systems to manage project schedules. Gone are the days of hand drafting and drawings done on 2D CAD systems. Large companies are looking at and exploring migrating to 3D BIM authoring solutions. But that is the tip of the iceberg. Significant processes in the design-to-procure-to-construct parts of the project are “tracked” in spreadsheets. Most of the decisions and collaboration are done on emails and messaging solutions. Site data collection is through pen and paper if not in spreadsheets that is collated and re-entered to other systems for analysis and reconciliation. Management reporting is manually collated and presented in hard copies if not in presentations. In short, data is in silos, and although there is a lot of information available, there are no insights to decision making. The following are the next level technology solutions that can build on top of the existing systems and bring value to project controls:
Smartphones and Mobile Apps: Hassle-free communication and smooth collaboration are made easy now, thanks to near ubiquitous availability of smartphones and apps to help automate various processes. These provide solutions that sync in real time to backend systems and make it possible for various stakeholders to give and get data from the field. They can get decisions on their issues, report progress, digitize quality and safety to name a few, add notes, make changes in drawings, instantly respond to requests for information (RFIs) and share updates with all in one go. While care has to be taken to ensure that there is no “app fatigue” by using multiple apps each day, having a comprehensive app that collects all field data is a significant productivity improvement for site personnel.
Building Information Modeling (BIM): With availability of more powerful computers and development of technology, design of capital assets is moving from 2D to 3D. Outside India, in a number of countries this is being mandated. And if the experience of those countries are to be considered, BIM is not a technology, but a process. Experienced BIM practitioners will tell you that to realize the potential of BIM, whether it is 3D, 4D, 5D or nD BIM, the foundation comes from creation of purpose and process for collecting and organizing information. It is not creation of 3D models in a 3D authoring software.
Project Management Integrated Systems (PMIS): The distributed and fragmented nature of construction in terms of stakeholders (internal and external) is here to stay. And because of this fragmentation, pundits acknowledge that it will not be possible to have one monolithic construction technology solution also that can be deployed for the project lifecycle. There is a need for an integration platform that can interoperate with existing systems, interconnect the data sources, and provide a connected digital thread. PMIS systems can provide insights, forward looking KPIs and actionable alerts from them. This platform provides a common data environment on which analytics and insights can be gained at a project and portfolio level.
Data Analytics, Artificial Intelligence (AI) and Machine Learning (ML): With availability of computing power, the use of structured and unstructured data to analyze and gain insights is another area of interest. Insights can be gained to predict future time and cost impacts or provide alternatives to crashing the schedule at a single project level or improve any or all areas including starting from bidding, benchmarking performance of various processes, help improve productivity of equipment and labour. Using video or photo analytics to predict safety and quality violations is another area of interest. More analysis at the portfolio level can help establish performance and reliability metrics for agencies. Another application is in the area of studying contracts and predicting claims. Technology is pushing boundaries in all of these areas, but the foundation for all of this is a reliable process and a platform to collect all structured and unstructured information relevant for the project. Without the data, the technologies are ineffective.
Virtual Reality (VR) and Augmented Reality (AR): The area of AR/VR is another technology that is gaining attention. Initial successful applications have been on providing training on safety and quality procedures. But the technology has a lot of potential for collaboration and decision making. At the site, it helps deliver information in spatial context to the execution team by designers and helps both of them collaborate in a more seamless manner. All of this can help eliminate RFIs and associated expensive time, cost, and rework. At the other end, it also has the ability to provide CXOs a more immersive way to review project status and performance.
Internet of Things (IoT): IoT is also an area that is gaining momentum. One of the failure points of enterprise systems is that they are depending on humans to put data in at the right time and frequency. Without data, they cannot provide the output and deliver the ROI. IoT has the potential to reduce reliance on humans to collect data that these systems require and hence improve the reliability with which data can be collected. But a lot of the initial application of IoT is for the already built environment. Use cases for IoT in the design-procure-construct phases is an area that will take a few more years to develop and mature.
As seen above, during the construction phase of the project, lots of data are collected from both internal and external stakeholders. This data is collected in existing legacy systems and through some of the new age systems, but unless there is a strategy to collate all of them in a common data environment using the data to gain insights will be a challenge. But if the data can be leveraged, there are insights to be gained. Technology has the potential to create a digital thread that connects all the people, process, and information and help decision makers make decision in near real time and eliminate future time and cost delays, but as mentioned earlier, decision makers have to begin with the end in mind.
Bill Gates has rightly said, “The advance of technology is based on making it fit in so that you don’t really even notice it, it’s part of everyday life.” Imbibing technology in the construction industry can make day-to-day construction progress monitoring more reliable and predictable and creating a sense of flow in the project. All of this could help the industry complete projects on or ahead of schedule and on or under budget without compromising quality and safety. In the post COVID-19 new normal, adoption of technology for anything from virtual design collaboration to remote project monitoring is not a luxury of a few but likely to become something that is essential for survival.
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