There are several factors to consider when a company undertakes digital transformation. Leadership teams essentially have to redesign their businesses to cater to their industry’s upcoming needs. At GHD, we have wealth of industry experience and growing digital capabilities, which give us a unique position in the market. But the most compelling question to ask is: is the market ready for the change?
Recently, I presented at the 2019 Master Builders Construction Conference where I sought to address and expand upon this question. While professional services and financial services industries lead the digitisation of work practices and assets, the Engineering and Construction (E&C) industry is amongst the least digitised. A recent McKinsey report highlighted that with the low track record of technology adoption and major productivity challenges, the construction industry is a prime target for digital disruption. With more than 100 million people working in the global E&C industry, the socio-economic impact will be significant if this happens.
Economic outlook
The outlook for infrastructure and urban development industry continues to be very optimistic. The E&C industry that accounts for six percent of global GDP continues to struggle with large projects taking 20-25 percent longer to finish, with up to 80 percent cost overruns. The financial returns of almost all key players in the E&C value chain are declining, with many contractors operating in a volatile environment that can make their businesses non-viable. In an industry with billions of dollars of investment and revenue, why are so many large E&C companies struggling to remain afloat?
The key challenges they are facing include:
- Low productivity
- The fragmented ecosystem of architects, engineers, contractors and asset owners
- Short-termism
- Low trust and collaboration
- Commoditisation of products and services with declining margins
- Lack of urgency to adopt innovations and new technologies
- Policies for procurement
To achieve a step change in performance and productivity, the E&C companies and asset owners alike need to reimagine their futures leveraging digital technologies, innovation and new business models. The E&C industry should embark upon technology-enabled transformation to increase productivity and customer value. This transformation can lead to a paradigm shift in the way the industry operates and create a platform for key companies to not only survive but thrive.
The World Economic Forum report on Shaping the Future of Construction, prepared in collaboration with the Boston Consulting Group, identified the following priorities for the industry based on CEO input:
- Attract new talent and build up required skills
- Increase integration and collaboration across the value chain
- Adopt innovative technologies at scale
- Implement digital models and data usage
- Identify new products and services to sell and segments in which to compete
Introducing Digital Engineering (DE) and Building Information Modelling (BIM)
Several progressive companies are currently exploring strategies for digitisation, including introducing DE, which enables people to easily find, use and share trusted data to improve decision making and outcomes for your project, asset or organisation. DE/BIM provides a common ‘digital’ language for coordinating and sharing information across all phases of the value chain and helps reduce waste through streaming knowledge and information through all project phases.
BIM is the digital representation of physical and functional characteristics of a building, piece of physical infrastructure or environment. According to a report from the Australasian BIM Advisory Board, “BIM serves as a shared knowledge resource for information about an asset throughout its lifecycle - supporting decision making - from strategic appraisal and planning, design and construction to operation, maintenance and renewal.”
In complement to this, “Digital Engineering is the collaborative way of working using digital processes to enable more productive methods of planning, designing, constructing, operating and maintaining assets throughout their lifecycle.” (National DE Working Group, 2018)
The benefits for DE and BIM include:
- The ability to create 3D models that enhance the analysis of geotechnical elements, help in clash and issues resolution, enable the development of Virtual and Augmented Reality (VR/AR) solutions
- Supports the creation of a value chain that is connected, collaborative and efficient. This would contribute to improvements in performance.
- Allowing for one source of truth in a federated model between all key players before, during and after the asset creation process
- The 3D and 4D designs help in constructability reviews
- Improving visualisation and stakeholder engagement
- Creating a foundation for a digital twin. A digital twin is a dynamic digital representation of a real asset or system that is used to collect, understand, predict and optimise performance.
A digitisation and DE initiative will help E&C companies provide the right information to the right people at the right time to enable better decision making and outcomes that will contribute to productivity gains and operational efficiencies.
Kumar Parakala
President - GHD Digital
An entrepreneur, business leader and a trusted advisor, Kumar Parakala has more than two decades of experience in building new and existing professional services businesses in global markets. As the President at GHD Digital, the fast-growing digital transformation and technology engine of GHD, Kumar is responsible for the execution of the firm’s digital strategy and innovation. For more information please visit ghd.com/digital or contact Kumar Parakala at Kumar.Parakala@ghd.com.
