Thursday, September 19, 2019

Decoding digital transformation in construction

 

 

As blogged on McKinsey.com, after spending five years and countless sums on trialing new software platforms and ways of working, the executive team at a large contractor was nearly ready to call an end to its digital-transformation program. Dozens of attempts to streamline projects with digital solutions, such as 5D BIM, had failed to deliver. A few had succeeded in the pilot phase, but the company had struggled to apply those solutions at scale. Site and office workers grumbled about having to adopt yet more new technologies—before abandoning them and returning to their old ways of working. Overall, projects hit delays and ran over budget as frequently as before, and productivity had barely budged upward.

Scenarios such as this remain all too common in the engineering and construction (E&C) sector, which is one of the world’s least digitized. 1Reinventing construction through a productivity revolution,” McKinsey Global Institute, February 2017. The difficulties are understandable. The typical construction project involves a multitude of independent subcontractors and suppliers, which have little incentive to embrace new methods during the brief periods when they are on the job. Projects vary greatly, so E&C companies often struggle to develop tools and methods they can apply repeatedly. Limited R&D budgets prevent E&C businesses from spending as much on digital as companies in other sectors do. And construction work often takes place in remote, harsh environments that are not well suited to hardware and software developed for the office. It is no wonder, then, that many E&C businesses end up with little to show for their technology investments.

Yet we are also seeing an increasing number of E&C companies overcome these challenges to transform projects or even business divisions digitally. When we assessed construction companies that successfully implemented digital technologies and ways of working, we found that, despite differing conditions, their transformations had five practices in common, from which other E&C companies embarking on similar transformations may learn:

  • Focus on fixing pain points, not installing IT solutions.
  • Implement digital use cases that promote collaboration.
  • Reskill and restructure engineering teams.
  • Adjust project baselines to capture value.
  • Connect projects to unlock impact across the enterprise.

Keep reading this blog on McKinsey.com

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