The coronavirus (COVID-19) pandemic has accelerated the shift towards digitalization in construction – with further intense focus on health and safety, as well as business resilience.
In an industry that has long suffered from low margins, firms that implement digital practices have seen savings of up to 20%. Around half have seen increases in productivity, according to McKinsey.
Yet its reports have shown that construction is one of the least-digitalized industries in the world.
That’s because digitalizing business processes can be highly challenging for construction firms.
Often, they find themselves as victims of their own success, when winning more contracts leads to an exponential increase in management, administration and reporting.
Read this article to find out how digitalizing your construction business can save you time, money and effort – which will ultimately allow your people to focus on value-add activities.
Benefits of digitalization in construction
There are a number of benefits that your business can garner when it comes to digitalizing processes. Here are three of them:
1. Increased profit
In total, 56% of construction businesses that adopted digital systems cut their operating costs. A further 43% saw increased win rates.
Among the top 100 contractors, the average profit margin was just 1.5%. Even small changes can make the difference between making a profit or a loss for construction firms.
Robust systems also ensure tighter control of inventory. Inventory is another form of cash, and keeping it moving is one of the best things you can do to help your business.
2. Increased productivity
Around 54% of construction companies that have adopted integrated digital practices have seen an increase in workforce productivity.
Without digitalization, profits will be lower – leaving less money for investment in digital innovation.
3. Streamlined operations
According to Causeway, six out of 10 construction firms said that improving invoicing was one of their biggest challenges.
Of those, 44% who’d invested in e-invoicing said they’d reduced costs by between 10% and 20%.
How to digitalize your construction business
Before making any changes, communicate with your team to maximize engagement.
Work together to carry out an objective review to audit which of your systems and processes are working and which aren’t.
This should include the following:
Task management and resourcing
Carry out time and motion studies to understand how your people are spending their time, to identify areas to streamline systems and processes.
At a time of significant challenge and change this will ensure your team are working effectively.
Lean reviews are helpful for identifying sources of waste – in terms of movement, duplication, or materials.
Health and safety
Review your incidents, accidents and near-misses, and carry out home-working assessments. Use data to underpin a new digitalized approach.
Does your entire team understand financial performance? Is it easy to report on the performance on each project, site, or activity?
Use data to build a new system.
8 top features of a robust digital system for construction
Any new system designed to make processing business information more efficient should include the following features…
1. Data visibility
Give staff the opportunity to see data that is key to their roles. For many firms, this includes real-time information about financial performance and profit – so everyone is aligned on specific targets and goals.
Without digital processes, much of this insight only comes at year-end, by which time it’s too late to make changes.
You should be able to view data according to the project, stage/phase and type of materials.
2. Reduced manual processing
Implement a system that integrates all processes in the lifecycle of construction projects, from tendering to order management and compliance through to handover of the project.
Encourage use of the system, and supporting technologies such as barcode recognition and mobile apps to manage documents.
Move physical documentation such as timesheets and purchase orders online. Phase out the use of physical processes such as scanning, photocopying, signing and using spreadsheets.
Whenever possible, assign a Yes/No option as options on common tasks to automate as much routine administration as possible.
A high specification system will ‘learn’ patterns to continually speed up processing of information. Implement technology to automatically ‘read’ documents such as delivery dockets.
Move to real-time data to maximize proactive control of your business.
3. Ability to implement controls
You should be able to tailor any business management system to meet the specific needs of your business.
Set controls to ‘design out’ mistakes and edit project names to make it clear it’s your system. Implement rules to ‘design out’ mistakes right from the start.
4. Enable mobile flexibility for your teams
Face-to-face interactions on sites and in offices have reduced considerably during the coronavirus pandemic.
Consider offering staff and contractors access to an app to help them to support these processes wherever they are working.
By making it easier for people to self-serve and process routine transactions such as confirming a delivery, you can free up people’s time – which can be redeployed on to growth activities such as tendering or marketing.
This also ensures flexibility of your workforce, ensuring you can cope with increases in workload without having to recruit.
5. Excellence in reporting functionality
Any system should offer the functionality to generate real-time data on individual hires of equipment, labor costs, hours worked, accidents and incidents, compliance status, and projected vs actual costs.
You should be able to generate reports within a few clicks about specific financial workstreams within your business – according to project stage, month, individuals or material type.
Functionality should include the ability to compare estimated vs actual costs to ensure your business stays on track.
6. Robust library function
Having files online is only useful if people can find and access the information they need. Make sure you have a logical filing system to organize the data consistently.
7. Can accommodate integrations and migrations
A new system should be able to work with any existing programs you use in your business.
8. Focus on bidding and business growth
Any system should offer maximum insight to inform sustainable growth, and be as easy to use as possible to avoid replacing one type of administration with another.
As you can see, digitalizing your processes for your construction firm offers a number of benefits.
From improved productivity to providing the opportunity to work on more tasks that add to the bottom line, taking a digitalized approach should be considered sooner rather than later.
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