Not known for making bold investments in ICT, the construction sector is showing signs of rapid change. Pallavi Sharma discovers what defines the industry’s investments and how they’re likely to change.
In recent years, the construction sector has battled a whole host of challenges that have not only constrained their investments and ability to execute on aggressive growth strategies, but have even threatened their very ability to survive.
According to a report published in May 2011 by accountancy firm Wilkins Kennedy, the insolvencies in the construction sector globally increased 19% in the first quarter of this year. With the simultaneous cuts in government spending on infrastructure to plug the deficit caused by years of drawn out recession, the sector found itself in deep water.
“The construction sector, on one hand, lies at the very heart of the urbanisation trend and, on the other hand, has to deal with significant budget cuts and tighter margins to combat drawn out economic turmoil. According to McKinsey and company, in the year 2030, five billion people will live in urban areas and therefore the pressure on this sector to create properties to meet the heavy demand for accommodation is unbelievable. On the other hand, the sector has to deal with budget cuts, to survive amidst economic turmoil,” says Manish Bhardwaj, marketing manager, Autodesk Middle East and Africa.
“The sector is also hugely challenged by rapidly depleting cheap natural resources; energy, water, materials, and land – are diminishing. This is where sustainability and economics intersect and are driving transformation in our industry. The increasing costs associated with the acquisition of these resources not only adds to the cost of operations but is also driving the need to invest in more efficient ways of
constructing and managing buildings and infrastructure,” Bhardwaj adds.
He adds, “Both global recession and the need to make investments in sustainable
operations have in turn affected the level of new construction and changed expectations for the bottom line. Today, this sector needs to achieve more with less, deliver projects faster and with less environmental impact in order to compete and win. While the number of requirements from clients is growing, there are increasingly more stakeholders involved in business operations, which now include governments and various compliance and regulatory bodies. Poor performance is now on the list of potential liability risks associated with a project.”
According to him, this sequence of events is made even more lethal with the addition of increasing competition as a result of the consumerisation of the internet and the resulting creation of borderless organisations.
“The construction sector is fast realising the benefits of investing in technology to track and control inventory and costs, integrate different business functions and enhance operational efficiency. Today, decision makers can implement proactive intelligent strategies based on real time predictive analysis provisioned by capabilities,” says Deepak Mehta, GM, Omnix International.
According to experts, the recent spur in IT investments across the globe is also warranted by the unique needs of this sector to bring together disparate projects
and business functions.
“This sector requires solutions that bring together the different sub contracted projects such as architecture and design, electrical, fire-fighting, construction,
finance, among others. Construction firms require solutions that enable the
visualisation of different projects and helps enhance co-ordination between different
contractors and their independent areas of responsibility. This significantly reduces
complexity in managing the progress of a project through proactive planning and
scheduling,” adds Mehta.
The secret to a successful and smooth technology deployment, according to experts, is the sincere commitment of the organisation’s senior executives to the project. “IT budgets and projects are reviewed by the senior executives of the organisation and without their keen understanding for the need of that technology and their commitment to aggressive implementation, the projects will most definitely fail,” explains Paul Madeira, COO, Causeway.
Sreedhar K Reddy, IT director, Sorouh Real Estate gives testimony to this fact, “Our IT budgets and projects are regularly reviewed by the IT steering committee which includes representatives from all business units. Although, IT budgets are more critically reviewed because management wants to ensure that the money is spent wisely towards operational efficiencies and differentiation, Sorouh’s management has always supported and actively encouraged deserving technology projects and innovations as a result of which we have won a number of awards for our technology deployments such as CNME’s ICT Achievement Award 2011 for best IT implementation in the construction vertical.”
What this vertical has in common with any other is its criteria for vendor selection, says Reddy, “Like any other industry, decision makers in the construction sector look for vendors who have a credible and known local presence and can support technology deployments in the long run. We want to work with vendors who have previous experience with industry focused implementations as this assures us of their ability to understand the challenges our industry faces and the underlying need for the implementation.”
Professionals also say that like any other technology deployment, the construction sector also faces its fair share of obstacles when implementing an IT project and this normally come in the form of resistance to change from the business users.
Mehta says, “Resistance to change is nothing but a result of the inability of business users to understand the need to spend hours engaged in changing their operating style. This is because users are averse to the steep learning curve associated with complex new technology platforms. Either that or they are just used to doing things the way they have been done all along and don’t see the larger business benefits of investing in the latest technology.”
Experts add that the easiest way to address this challenge is to align IT strategies with larger business strategies and have the need for these technologies communicated by business users instead of the IT departments.
“Users are bound to show more interest in using a new platform when they believe that the solution will not only make their jobs easier but will also enhance revenues and save them time and money. Communication can then be supplanted by regular training sessions and implementing the platform in simultaneous phases to make users feel more involved instead of alienated by change,” says Madeira.
As technology has evolved, so has the construction sector. Decision makers say that the kind of investments that are being made today reflect a thought revolution in the minds of decision makers across the construction industry.
“Traditionally companies would invest in application software to support operations such as estimating, commercial and finance. Today, these companies are investing in technology and software that allow for information sharing and decision making on-the-go,” says Madeira.
“In today’s building environment, IT needs to become involved right from the beginning of the building process. Design technology, for example, has a key role to
play from the outset. As the cornerstone of a building information modelling approach, technologies focused on providing design and architectural capabilities allow designers to capture their first concepts and ideas about a new building design, and then develop and maintain their vision through documentation as the project
progresses,” adds Bhardwaj.
At Sorouh Real Estate, Reddy and his team have invested in a cloud-based Web project collaboration system to for document management. “This system provides a common platform to submit, manage, and archive all project documents
by contractor, consultant, PMC and the Client,” he says.
He and his team have also been responsible for putting in place a number of different Web portals, such as a customer portal and a property portal, to provision information sharing across multiple stakeholders.
Decision makers add that the sector is also heavily investing in ERP and other business applications for operational areas in a construction business covering design, estimation, commercial management, procurement and finance. These platforms enable the automation of business operations to save time and reduce room for human errors.
Experts also highlight the distinct interest this sector is showing in mobile technologies and applications.
“Today we have applications like AutoCAD available on a number of mobile platforms such as smart phones and tablets. Once ISPs begin providing reliable high bandwidth connectivity at reasonable costs across construction locations we will no doubt see significant investment in this arena,” says Mehta.
Reddy says, “In the medium term, government regulations and advancements in the areas of sustainability, new building codes, green buildings, and smart communities are likely to drive new technology investments.”
Mehta agrees that ultimately it will be governments and compliance requirements
that will drive IT investments in the construction sector.
“Both regional and international government bodies are driving the need to invest in platforms that are focused on the delivery and maintenance of the properties or what we call facilities management. This will only encourage more vendors to venture into the market, increasing competition which will drive vendors to provide more comprehensive and competent services to this sector. The coming together of government, regulatory bodies and vendors will create an ecosystem friendly to technology deployment across the construction sector to help them sustain growth in a recovering economy and once again become the centre of booming markets across the globe,” he says.
The construction sector is clearly making remarkable strides in its IT deployments and with technology rapidly advancing; there is no doubt that the future will witness many more interesting investments and usage from the vertical, especially in the Middle East.