The Global Construction Industry currently faces several significant challenges over the coming decade. Whilst regional variances exist, the following two items apply across all major economies and regions.
· Poor Productivity – A recent McKinsey report shows that labour productivity growth has greatly lagged other sectors over the past couple of decades. Construction has seen an approximate 1% per annum labour productivity improvement versus 2.6% for the total global economy and 3.6% for manufacturing. This lag in productivity costs the Global economy $1.6 trillion a year.
· Labour Shortages [EK1] –The number of entrants into construction is on a downward trajectory as younger people have more options than previous generations. The internet has decreased entry barriers into several segments of the economy, increasing job options that were previously hard to access. This will continue to put pressure on Contractors’ costs and margins and restrict the ability of contractors to grow their businesses. This problem exists for both office-based staff and tradespeople.
How has a lack of Digitalisation led to poor Productivity?
Large-scale projects still largely rely on the use of inefficient manual means of capturing, sharing, and tracking site safety data. For example, project supervisors must check workers’ training, equipment inspections, method statements, and permits on sites before any tasks are carried out. This information must be collected from various stakeholders through a combination of manual, separate IT-based, and email-based means and then shared with other project stakeholders, such as clients and safety teams.
The net result is that the multiple handing of information leads to excessive admin tasks where on some projects, overheads can reach 15-20% of a contract’s value. Additionally, Direct labour productivity is impacted on site whilst supervisors and sub-contractors chase data before completing tasks. It would not be uncommon on projects where a site could lose up to 10% of their working time per day seeking, verifying, and sharing work permits and method statements. Considering the industry operates at less than 5% in terms of average EBITDA, the potential value creation opportunity that exists is enormous.
Why is Construction behind other Industries with regard to Digital Adoption?
The main reason Construction lags in terms of productivity and is suffering from labour challenges is that Construction vastly lags behind other Industries in terms of digital adoption. The general narrative that this is because Construction teams are stubborn and against change is incorrect. Anyone who has worked within project teams can testify to the constant need for innovative thinking and problem-solving under pressure that exists to deliver construction project. Site teams will always use the right tool for the job if its works. The lack of adoption, can be explained by other factors, including.
· Insufficient Infrastructure – More so than other industries, Construction happens ‘on the go.’ Desktop-based and back-office applications can work well for most Industries, but for key processes to go digital then, solutions must be mobile first. Up until recently, inconsistent internet on sites and a lack of mobile devices created a barrier to this
· Lack of Interoperability – Unlike other Industries, every Construction Project is a prototype and involves a diverse and ever-changing mix of suppliers, subcontractors, and other stakeholders. Getting such a range of participants to all change to a new system is extremely challenging and impractical where project teams are under constant pressure and have little time to spend learning to use and switching to new systems. To get adoption solutions must overcome this challenge.
· Back office rather than Frontline Focus –Construction happens in the field and is driven by on-site collaboration between supervisors, managers, engineers, and sub-contractors, often from different companies. Legacy systems within construction have generally been focused on back-office teams and, as a result, have failed to get adoption on sites.
· Solutions built by IT teams rather than Construction teams – Construction is a dynamic industry that requires delivering outcomes within a complex web of interacting supply chains and stakeholders. Solutions that may have worked well in other Industries don’t necessarily mean they will work in construction. Real solutions require a collaborative approach with site teams and need to be driven by experienced construction management.
However, these factors are now quickly changing with the growth of Cloud-based solutions in parallel to ubiquitous internet and infrastructure on projects. By embracing the Cloud, the Industry is well placed to quickly accelerate and possibly leapfrog certain sectors in the coming years in terms of Productivity growth.
How can Software Help?
Practical cloud-based solutions such as Boxcore can help improve productivity by eliminating several manual admin tasks, reducing labor downtime caused byprocess lag on projects, and making compliance much simpler. Our Solution creates a single source of truth for a projects key safety data and is accessible through any device via our user friendly and intuitive app.
Furthermore, to win the war for talent, Contractors must have a progressive view in terms of embracing tech. Nowadays, digital native college graduates will simply not accept working in companies where information is manually collated or shared using email-based or excel based means.
To find out more, visit us at www.boxcore.com or reach out to us at info@boxcore.com and we’ll organize a chat or demo and show how Boxcore's Safety Management Software can make your projects safer and more productive