Disrupting the Construction Industry Through Technology

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McKinsey & Company has recently released a report that provides in sight on why the construction industry is ripe for disruption. The McKinsey Global Institute estimates that the world requires $57 trillion to be spent on infrastructure by 2030 in order to keep up with global GDP growth. The report identified five ways the industry can evolve itself over the next five years, one way is the growth of digital collaboration and mobility.


Digital collaboration and mobility

Process digitization means moving away from paper and toward online, real-time sharing of information to ensure transparency and collaboration, timely progress and risk assessment, quality control, and, eventually, better and more reliable outcomes.

One reason for the industry’s poor productivity record is that it still relies mainly on paper to manage its processes and deliverables such as blueprints, design drawings, procurement and supply-chain orders, equipment logs, daily progress reports, and punch lists. Due to the lack of digitization, information sharing is delayed and may not be universal. Owners and contractors therefore often work from different versions of reality. The use of paper makes it difficult to capture and analyze data; that matters because in procurement and contracting, historical performance analytics can lead to better outcomes and risk management. Mismanaged paper trails also routinely spur disagreements between owners and contractors on such matters as construction progress, change orders, and claims management. Finally, paper trails simply take more time.

Owners and contractors are beginning to deploy digital-collaboration and field-mobility solutions (Exhibit 7). A large global construction firm recently announced a joint development agreement with a software provider to develop a cloud-based, mobile-enabled field-supervision platform that integrates project planning, engineering, physical control, budgeting, and document management for large projects. Several large project developers have already successfully digitized their project-management workflows.

Exhibit 7

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Digitizing workflows has substantial benefits. In an American tunnel project that involved almost 600 vendors, the contractor developed a single platform solution for bidding, tendering, and contract management. This saved the team more than 20 hours of staff time per week, cut down the time to generate reports by 75 percent, and sped up document transmittals by 90 percent. In another case, a $5 billion rail project saved more than $110 million and boosted productivity by using automated workflows for reviews and approvals.

Crew-mobility solutions will have a similar catalytic effect on productivity (Exhibit 8). It’s long been difficult for central-planning teams and on-site construction teams to connect and share information about progress in real time. Several problems have limited the adoption of such tools by field crews: compatibility issues between mobility solutions and central-planning solutions, a lack of reliable and high-speed broadband connectivity, and nonintuitive designs and user interfaces.

Exhibit 8

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The availability of low-cost mobile connectivity, including via tablets and handheld devices, has ushered in a new generation of “mobile first” cloud-based crew-mobility apps that can be deployed, even on remote construction sites, with real-time updates. These are commercially viable for contractors and project owners of all sizes.

In fact, the digital-collaboration and mobility-solutions segment has attracted close to 60 percent of all venture funding in the construction-technology sector. One start-up has developed apps for tablets and smartphones that allow changes in construction blueprints and plans to be relayed in real time to on-site crews; site photos can be hyperlinked to construction plans. This solution maintains a master set of documents with automatic version control and cloud-based access. Other companies offer mobile timekeeping, real-time cost coding, geolocation of workers, and issue logging and tracking.

As frontline users such as project managers, tradespeople, and operators adopt real-time crew-mobility apps, they could change the way the industry does everything from work- and change-order management, time and material tracking, dispatching, scheduling, productivity measurement, and incident reporting.

Discover what the four other identified ways the industry can evolve itself over the next five years by clicking below.

http://www.mckinsey.com/industries/infrastructure/our-insights/imagining-constructions-digital-future

Authors: Rajat Agarwal, Shankar Chandrasekaran, and Mukund Sridhar

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