THE BIG PICTURE CONSTRUCTION TECHNOLOGY & the Path...

THE BIG PICTURE

CONSTRUCTION TECHNOLOGY& the Path to Productivity

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Copyright © 2018 by the Construction

Financial Management Association

(CFMA). All rights reserved. This article

first appeared in CFMA Building Profits

(a member-only benefit) and is reprinted

with permission.

THE BIG PICTURE


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Fortunately, fundamental business practices do not change as rapidly as technol-ogy. When contractors make technology investment decisions driven by business needs, the return on those investments are measured against the results – such as improved productivity, reduced jobsite injuries, and increased profitability.

Today, an analogous convergence is happening with IT, and it holds as much or more potential for change as the Watt’s Steam Engine did for the Industrial Revolution in the late 1700s (see Exhibit 1 on the next page). The challenges lie in the growing number of IT infrastructure and application options and the ability to ensure these investments grow and produce positive business outcomes.

Technology Is Picking Up Speed

Just as the steam engine complemented or replaced the need for muscle power, cloud-based and mobile-friendly software has come to hold the potential to complement the analytic power of the mind.

In an industry often characterized by hard hats and

heavy equipment, information technology (IT) has recently

taken center stage in construction.

From cloud computing and virtual reality-powered building information

modeling (BIM) rooms to smartphones and blockchain, these digital tools promise

contractors a competitive edge. Given the growing complexity of projects and the ongoing

challenges of managing remote, multi-contractor teams, it is more important

now than ever to know when and how to invest time and money in IT.

By Wayne Newitts

With cloud computing, data is centrally stored and processed so that it can be accessed remotely through such standard tools as a web browser. It affords access to a virtually unlim-ited amount of data and processing power regardless of the connected user’s device or location.

The combination of a sustained public cloud services com-pound annual growth rate (CAGR) of more than 20%1 with a smartphone penetration rate approaching 80% in the U.S.2 demonstrates the beginning of transformative change.

Yet with an increasingly digitally connected workforce and nearly 90% of contractors open to integrating the cloud as a computing platform,3 the construction industry still ranks next-to-last in use of digital technologies, as shown in Exhibit 2.

In an industry known for high competition, low margins, and considerable risk, it’s understandable that investment in unfamiliar technologies has not been a high priority.

However, if IT options can be linked to reducing risk, improv-ing margins, and ultimately giving contractors a competitive edge, then the investment may be worth the consideration.

Integrating Construction Technologies

The new digital machine built from cloud computing and smart mobility is only as valuable as the fuel used to keep it moving. Like the mechanical engine that converts water into steam to perform work, the emerging digital engine turns data into actionable intelligence to manage work.

800

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600

500

400

300

200

100

0

7,000

6,000

5,000

4,000

3,000

2,000

1,000

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WORLDWIDE HUMAN POPULATION–right-hand scale

HUMAN SOCIAL DEVELOPMENT–left-hand scale

WATT STEAM ENGINE INTRODUCED, 1775

HU

MA

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MIL

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PEO

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8,000 BCE

6,000 BCE

4,000 BCE

2,000 BCE

0 BCE2,000 CE

Source: The Second Machine Age, Eric Brynjolfsson and Andrew McAfee

Exhibit 1: The Impact of Steam Power on Civilization

CFMA Building Profits July/August 2018



THE BIG PICTURE



While data analytics is not a new field of study, the combination of

powerful analytics with cloud accessibility and mobile connectivity are the ideal ingredients

for an industry transformation – JUST ADD DATA.

Assets Labor

Overall

Digitization

Digital

Spending

Digital

Asset Stock

Transactions

Interactions

Busness

Processes

Market

Making

Digital Spending

on Workers

Digital Capital

Deepening

Digitization

of Work

ICT

Media

Professional Services

Finance & Insurance

Wholesale Trade

Advanced Manufacturing

Oil & Gas

Utilities

Chemicals & Pharmaceuticals

Basic Goods Manufacturing

Mining

Real Estate

Transportation & Warehousing

Education

Retail Trade

Entertainment & Recreation

Personal & Local Services

Government

Healthcare

Hospital

Construction

Agriculture & Hunting

Sector

Exhibit 2: The Construction Industry Is Among the Least Digitized

Relatively lowdigitization

Relatively highdigitization

Digital leaders within relatively undigitized sectors

Usage

July/August 2018 CFMA Building Profits



THE BIG PICTURE

Exhibit 2: The Construction Industry Is Among the Least Digitized

Source: McKinsey Global Institute Industry Digitalization Index; 2015 or latest data

While data analytics is not a new field of study, the combina-tion of powerful analytics with cloud accessibility and mobile connectivity are the ideal ingredients for an industry trans-formation – just add data. Let’s look at three ways in which leading companies are taking advantage of the new IT tools at their disposal.

#1 Predictive AnAlysis

Good reporting and benchmarking are bellwethers for suc-cessful contractors. Knowing the status of project financials and operational performance is vital to bring projects to profitable completion. Successful businesses also learn from past performance.

Although accurate and timely reporting is necessary, utiliz-ing traditional reporting methods alone is no longer enough to remain competitive. Business reports answer only the questions asked. Predictive business intelligence finds cor-relative connections between activities or processes – con-nections that are not obvious in many cases.

By applying intelligent algorithms to large sets of accurate data, business intelligence software can help a contractor avoid costly missteps before they occur. One poignant example comes from a 2012 study that analyzed safety data from 250 construction worksites4 and predicted future safety incidents with a 75% accuracy rate, as shown in Exhibit 3.

Beyond this prediction, the algorithms were able to identify correlations between safety report findings and the accidents that did occur. This is the moment that report information turns into actionable intelligence that is applicable to the present. And in this example, the information could prevent injury or even death.

Predictive analysis does not take the human mind out of the equation. It remains the job of the business or operations manager to ask the right questions and take actions sug-gested by the analytical answers. However, with this ability, managers can make proactive decisions driven not only by rearview-looking reports, but also by forward-looking intel-ligence.

#2 the intelligent edge

Case studies abound demonstrating work not translated into smart business action; it is easy to second-guess unfortu-nate decisions in hindsight. Therefore, it is imperative that decision-making processes are based on holistic, data-based views of company operations.

Becoming an intelligent organization means raising the “com-pany IQ.” Intelligent people can help a company grow, but a company in which everyone serves as a source of input and shares in the output of analysis can help a company grow to scale. Ideally, every person and every project serves to add to the knowledge and experience base used to continually improve operations.

Decentralizing the use of business intelligence does not mean decentralizing control. It means giving field manag-ers better intelligence more frequently, which they can use within their existing spans of control. For example, a project manager who knows which members of her crew tend to be faster or more reliable in certain situations can make smarter onsite decisions when the unexpected occurs.

Pushing business intelligence to the front lines of construc-tion operations is not a very controversial topic, but until the advent of mobile-friendly, cloud-based, intelligent software, it has been logistically challenging. Today, whether com-pany-issued or employee-owned, nearly all staff – from the field apprentice to the CEO – carry mobile devices capable of accessing business intelligence that was almost unimaginable just a decade ago (see Exhibit 4 on the next page).

The front line of the jobsite is not only where intelligence can be applied to immediate effect, it is also where contractors can extract more data than ever before.

This is a domain where exciting new tech developments live – from drones that make programmed site surveys and estimate percent complete to internet of things (IoT) technologies that help contractors monitor site security and implement better equipment controls. But even integrating a mobile app to record jobsite conditions or equipment usage is a huge leap forward.

The intelligent jobsite is more than a buzzword or an inevita-bility – it is an important step on the path toward optimizing operational efficiency that contractors must actively pursue and a way to engage staff in a collaborative effort to work smarter and safer.

#3 the connected teAm

The industry has seen many attempts to realize better coor-dination between all project stakeholders, from physical plan rooms to digital standards such as BIM. After ground break on a project, however, the best laid plans can begin to fall apart as different players rely on different information sys-tems to get their portions of the job done.



Given the very different types of companies that come together on construction projects, finding a standards-based approach like BIM to unify construction business management processes is unlikely. The business software used by a project owner or design firm is typically different from that used by a general or trade contractor.

Fortunately (and thanks again to the emergence of device-agnostic, always-available software platforms), disparate project stakeholders can now come together with relative ease to share information with each other as it occurs, using online file sharing and electronic forums.

While these enhanced, real-time communication platforms have been a huge step forward, communication does not equal collaboration. Rather, collaboration is coordinating the flow of information, resources, and work among all project participants. Therefore, true collaboration systems must help guide the way in which work gets done among multiple companies while respecting the fact that each company likely has its own management system in place.

Balancing these requirements means designing a shared system that all parties can easily use and also integrates with project managers’ financial and operational applications to maintain the consistency and integrity of project information.

With predictive analytics helping to drive more intelligent decisions, a connected and intelligent jobsite helping to pro-duce and consume this intelligence, and collaborative play-ers equipped to work together as a team, the construction industry is on the cusp of overcoming many of the obstacles that have kept productivity stagnant (see Exhibit 5).

Considerations for IT Decisions

Although contractors that choose to embrace this ongo-ing digital transformation will be rewarded by streamlined operations, improved financial performance, and a safer, more productive workforce, they will be also be challenged to continuously learn and adapt their business operations. Here are some final tips to consider when making technology investment decisions in today’s environment:

KeeP the Business horse Before the technology cArt

Too often, technology is seen as a panacea for problems with root causes in poorly-informed or implemented busi-ness practices. Before deciding on new software or other new tech investment, start with the company’s workflows. Review the way information and work flows among and across individuals in all departments (such as financial


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AT A

CTU

ALL

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CCU

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Exhibit 3: Predicting Safety Incidents Before They Occur

# OF INCIDENTS PREDICTED

1

60

120

0 50 100

INSPECTION DATA EXPLAINS 75% OF INCIDENTS

LINE OF PERFECT CORRELATION

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100

0

WORLDWIDE HUMAN POPULATION–right-hand scale

HUMAN SOCIAL DEVELOPMENT–left-hand scale

HU

MA

N S

OCI

AL

DEV

ELO

PMEN

T IN

DEX

8,000 BCE

6,000 BCE

4,000 BCE



Exhibit 3: Predicting Safety Incidents Before They Occur

Source: Predictive Analytics in Workplace Saftety, Predictive Solutions, and Industrial Scientific Company


management, operational execution, and workforce develop-ment), and identify any weaknesses or gaps. Then evaluate your technology options in the light of these needs, and ask your technology vendors to do the same.

leArn from vendors & vAlidAte with Peers

Understanding the breadth and depth of technology options is challenging (especially since IT vendors are not only best equipped to educate, but they also have products to sell). Beyond vendors, there are more trusted advisors available than ever to help you filter through the options and make informed decisions. These advisors are as close as local trade

associations or vendor user groups, and financial advisors often have technical resources to help their clients make unbiased decisions on technology investments.

AdoPt A toP-down & Bottom-uP APProAch

Typically, when software or IT infrastructure decisions are made, they are either driven down into the organization from senior management or driven up the organizational chain by individual groups or departments seeking solutions to spe-cific problems.

In the former case, getting buy-in and adoption by end users can be a challenge, especially if they were not part of the deci-sion process. In the latter case, companies that invest in multi-ple, disconnected point solutions cannot take full advantage of the power that predictive analytics can provide on integrated business data. Companies that instead address the needs of individual departments as part of a holistic, thought-out IT investment strategy with executive level buy-in stand the best chance of realizing a return on these investments.

understAnd the totAl cost of ownershiP

For technology solutions in general and software systems in particular, the costs of ownership go beyond the initial purchase price or subscription rate. Be sure to request time and money estimates for implementation and user training, clarify if maintenance and support are included in the pric-ing, and consider the often-ignored costs of integration.

As contractors adopt more sophisticated data analysis meth-ods, the need for a single database will grow in importance. Contractors, especially those that tend to invest in a bottom-up manner, often have more software systems and databases than fingers on which to count them.

Integrating and normalizing the data from multiple point solutions can be accomplished – but there are associated costs and ongoing effort is required to keep all systems work-ing together and regularly updated.

No matter the path, arriving at a point where information flows in a timely, accurate manner among the office, project teams, and jobsites is going to become more of an imperative as the construction industry continues its digital transforma-tion and pushes closer to breaking the code to improved productivity. n



THE BIG PICTUREExhibit 4: The Importance of Mobility to Contractors

30.3%

VERY IMPORTANT

IMPORTANT

NOT VERY IMPORTANT

28.9%

41.4%

2012

16.9%

40.4%

2017

42.7%

INSPECTION DATA EXPLAINS 75% OF INCIDENTS

Copyright ©2017 JBKnowledge, Inc. All rights reserved.

Exhibit 4: The Importance of Mobility to Contractors


Endnotes

1. www.forrester.com/report/Predictions+2018+Cloud+Computing+Accel

erates+Enterprise+Transformation+Everywhere/-/E-RES139611.

2. www.pewresearch.org/fact-tank/2017/01/12/evolution-of-technology.

3. www.softwareconnect.com/construction/technology-trends-2018-report.

4. info.predictivesolutions.com/hubfs/MultimediaContent/ebooks/Four_

Safety_Truths_White_Paper.pdf?hsCtaTracking=72ccdcdc-615a-4ac7-

90d8-89e845fdc545%7Ca9d5a1bf-d447-4dc6-8d5b-6ca3a939cccf.

WAYNE NEWITTS is Director of Strategic Partnerships at Viewpoint in Portland, OR, one of the leading providers of software solutions for the construction industry. He was previously head of marketing at Dexter + Chaney, which is now part of the Viewpoint family. Wayne began his career as an engineer and project manager, and has spent the majority of his professional life designing, implementing, and promoting technology within the con-struction industry. He is an active CFMA member at both the national level and in his local chapter in Portland, OR.

Phone: 503-803-3600 E-mail: [email protected]

Website: www.viewpoint.com

Exhibit 5: Connecting the O�ce, Team & Field

DATA

FIELD OFFICE

ARCHITECT

PROJECTMANAGER

TEAM

ENGINEER

OWNER

SUB-CONTRACTORS

GENERALCONTRACTORS

Exhibit 5: Connecting the Office, Team & Field



THE BIG PICTURE


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