Welcome to our second deep dive in our Digital Strategy Playbook series. This blog will focus on the second of our seven key performance indicators (KPIs) essential to construction business success: request for information (RFIs). Construction RFIs are a critical component of every project – but for many teams, they can be a taxing part of the project management process. We are here to help and provide you with leading tips and strategies to get a handle on your digital strategy when it comes to RFIs once and for all.
But wait, what is the Digital Strategy Playbook series? If you’re new here, check out our blog introducing the series. You can also see our first deep dive post on construction documents, as well as take your free Construction Health Check – a 15-minute assessment essential to finding out where you stand before you start crafting your digital strategy. We’ll continue to roll-out individual blogs focused on the remaining KPIs over the following weeks. Once the series is complete, you’ll be equipped to craft a robust and winning 2020 digital construction strategy based on project activities most closely aligned with performance and success. Don’t forget to also subscribe to our blog for regular updates on new content.
Are you ready to learn how your company can create a winning digital strategy for construction RFIs in 2020 and beyond? Read on to learn how.
But First, Why Improve Construction RFIs?
The phrase “request for information” might make this seem like a simple process in which a question is asked and then subsequently answered. Unfortunately, it’s hardly ever this easy. A RFI is a formal, and sometimes complicated, process which requires an immense amount of detail.
While requests for information may feel burdensome when they come through–or when you have to submit them yourself–they are critical for allowing the project to move forward in a timely and accurate fashion. Without the ability and platform to ask questions when necessary, projects may either come to a halt or be completed with below standard quality, neither of which are desirable outcomes.
The Current State of Construction RFIs
First, let’s be clear on what exactly we are discussing when it comes to our second essential construction KPI, RFIs. A study from Dodge Data & Analytics and Autodesk discovered that the frequency with which construction professionals log and respond to RFIs affects a project’s overall performance. Furthermore, the report also looked into how RFI information is being compared to past similar projects for proactive risk reduction.
When it comes to RFIs, the results of the “Key Performance Indicators of Construction” report identify some major opportunities for improvement.
The fact that 73% of construction professionals are logging RFIs and responses on over half of the projects is a promising figure. Nonetheless, there is still a large percentage of contractors not capturing information at the same frequency. For the contractors not frequently logging and responding to RFIs, challenges stem from the lack of processes and digital infrastructure to do so.
Contractors not digitally logging RFIs and responses see the value in it, yet they still face an uphill battle. In fact, 68% of contractors see increasing the adoption of processes to frequently and consistently capture RFI data as a massive barrier. Additionally, a lack of buy-in and the cost of investment prevent them from implementing new technology and processes to support these activities.
While we mentioned that nearly three-quarters of construction professionals are logging and responding to RFIs frequently, a gap exists when it comes to general contractors versus trade contractors. The Dodge report identified that trade contractors more frequently report RFIs to senior management as potential sources of risk (75%), compared to general contractors (64%).
And while it’s important to log and respond to issues on current projects, it’s equally crucial to set up processes to compare them to past similar projects. But in reality, few companies (30%) are utilizing historical data to identify the root cause of the RFI and measuring time to receive a response. Doing so is an essential strategy to risk reduction, helping contractors see the potential breakdowns in communication that are occurring between teams, as well as aiding them to implement more efficient practices on future projects.
Beyond the results of the report, it’s important to take a look at project delivery and contract methodology in relation to the RFI process. For instance, a study conducted by Sheet Metal and Air Conditioning Contractors’ National Association (SMACNA), Making RFIs More Effective, noted that design-build projects where the general contractor closely collaborates with engineers and architects tend to have far fewer RFIs and resultant change orders. This is mostly seen in a guaranteed maximum price (GMP) where design intent is communicated, but contractors and trades have the freedom to design for maximum productivity outcomes.
Essential Strategies to Improve Construction RFIs
Most importantly, the Dodge report highlights a desire for improvement when it comes to construction RFIs. By identifying and removing some of the barriers mentioned in the report and industry findings, there are opportunities to improve and fine-tune current processes and create a winning digital strategy for RFIs in 2020.
It’s also important to note that some of the foundational strategies for documentation and data capture identified in our first deep dive on construction documentation will also help to increase the collection and evaluation of RFI data.
If you are not utilizing digital solutions (or effective ones) to capture and respond to construction RFIs, you need to start building buy-in for change. As mentioned above, many construction professionals see the value of digitally capturing RFIs but are met with resistance when it comes to adopting new processes. A supportive culture is essential to the success of new digital processes and strategies. For teams to accurately capture and utilize information to improve the construction RFI process and ultimately reduce risk, a data-driven mindset needs to be a critical component of company and project culture. So what does this culture look like? We highlighted this in relation to construction documentation in our first deep dive here.
When it comes to construction RFIs, there needs to be extra effort to change previously held mindsets. Many construction professionals dread the RFI process, which can further perpetuate a culture of resistance. Instead of seeing RFIs as a necessary evil to just put up with, ensure teams understand how change can make their jobs easier and more efficient. Educate stakeholders about the benefits of new RFI processes and technology to streamline and improve design, engineering, and construction – allowing everyone to go home earlier at the end of the day.
When trying to introduce new processes and technology to improve construction RFIs, many professionals are met with pushback on the cost of investment. While indeed, new technology often equates to significant upfront costs, with the right system, implementation, and processes, the returns can far exceed the initial investment.
First, consider the average cost and time impact of RFIs. Navigant Construction Forum (NCF) found that there is an average of 9.9 RFIs for each $1 million of construction and an average response time of eight days. And for projects lasting longer than five years, that average response time doubles. In total, NCF estimates that on an average construction project, RFIs consume 6,368 hours and $859,680.
No matter how you look at it, RFIs can cost time and money. Any improvement to reduce the administrative burden and quicken response time equates to more project profits. While the figures above are great benchmarks to start, do your own internal research when making the case for new technology at your company. As identified in our previous blog, you’ll first need to find the right technology, leverage champions, and likely implement a solution on a pilot or project basis to start. But once you are up and running, consider the following steps to measure and make a case for a full rollout.
- Establish Benchmarks: To start measuring your return on investment for new RFI processes and technology, establish benchmarks–or how you define success. You’ll need to set both qualitative (subjective) and quantifiable (objective) benchmarks to determine what exactly you type of return you’ll be measuring.
- Determine Total Implementation Costs: With your benchmarks set, next, knowing your total implementation costs is critical to determining your total cost. First, consider your direct costs such as one-time license costs and recurring purchases. Next, calculate your indirect costs such as set up costs and training. Although some solutions might cost less at the start, the implementation costs could add up if a great deal of training is needed. Together, your indirect and direct costs will be your total market cost–a key figure you’ll need to measure ROI.
- Determine Benefits: Determining the benefits involves comparing the before and after. Since adopting new technology, what exactly has changed? Have the administrative burdens of RFIs decreased? Has response time increased? Has your construction schedules been accelerated? Have change orders been reduced?
- Translate New Technology Benefits into Real Dollars: Now you know how much productivity improved or time you’ve saved, what do those benefits actually mean? While there is no standard way to calculate it, Michael Moran, a construction consultant, at Telo has developed a really practical model that’s easy to understand and use:
- Calculate the Return on Investment: Once you know how much you’re saving, it’s time to translate those dollar amounts into an accurate ROI metric. Once you see the final number, you can determine if the technology is actually worth the investment for your company or if it’s time to switch to another solution. There are two easy formulas featured in this ebook about how to calculate ROI from construction tech. While the ebook focuses on mobile technology specifically, the same calculation can be applied to any technology helping with RFI management.
How many different ways and formats have you submitted and received RFIs? If you answered “a lot,” join the club. Having no standard template and form for RFIs is a significant disadvantage. First, it delays the process and creates more disorganization and time waste than necessary. Secondly, without standard formats and data input, it’s nearly impossible to use historical RFI information to compare to similar projects to reduce risk.
The general contractor should drive a standard format based on their preferences. Meeting their expectations and adapting to their processes will improve other stakeholders’ chances of getting an answer. Furthermore, it’s also crucial to set up guidelines for responses to ensure RFIs are answered consistently.
One incredibly efficient way to formalize, track, and standardize the process is by using cloud-based software – hopefully, a solution you’ve made the case for using a process like our ROI calculation above. Certain software will allow you to set up templates to easily submit RFIs and track them throughout the whole process, providing more visibility for all parties involved. This will also allow stakeholders to track and see all RFIs in one view. Overall, this will help improve the frequency of capturing RFI data and the ability to leverage it for risk assessment in the long run.
Another valuable way to improve RFIs is to create formal processes. Instill formal RFI processes project or company-wide, and set standards for all levels of documentation. For instance, what should happen when an RFI is not responded to in time? Establish the process beforehand to keep things moving.
A central repository of project and contract information goes hand in hand with proper documentation standards to empower team members to handle RFIs rapidly, whether they’re on the sending or receiving side of the exchange. At the very least, this database should store crucial information about the request, like the send date and the sender’s and recipient’s information. Maintaining a centralized source of contract information is essential for updating the plan’s schedule and budget on the fly, as change requests, RFIs, and other exchanges occur weekly during the project.
Contract and project delivery methods matter when it comes to RFIs. Traditional design-bid-build contract models often include planning and discussion between all involved parties only at the beginning of a project. By moving to a more collaborative or integrated delivery model, contractors involve architects, designers, and specialty consultants at every stage of both design and build. When equipped with the right technology, this can only further streamline productivity when it comes to the RFI process. Clients also have more opportunities to review ongoing work and request changes before rework is necessary or delays are created.
We do recognize that adopting a brand new delivery method isn’t the easiest strategy (or best use of resources) or every company and project. However, just incorporating more collaborative strategies (and technology) into the entire construction process will be incredibly beneficial to improving RFIs.
Are You Following Our Digital Strategy Series?
We hope you enjoyed our second deep dive for our Digital Strategy Playbook series on RFIs. Next up, we’ll dive into the next key performance indicator essential to construction success–change orders. If you have any suggestions or topics you’d like us to cover in our next post, or any other future blog post, add a comment below!