The challenges in today’s construction landscape are well documented, from supply chain issues and rising inflation to workforce shortages and a potential economic slowdown. Digital transformation is an essential catalyst to counterbalance these challenges and provide the construction industry with opportunities to increase efficiency, productivity, and design. However, adopting new technology alone will not solve our problems. Contractors must leverage a multi-functional digital transformation strategy focusing on innovation and organizational change to improve business value and solve their most challenging problems.
The main goal of digital transformation is to streamline business operations, increase productivity, and reduce costs while providing a safer jobsite for all and quality projects for clients.
What is digital transformation in construction?
Gartner defines digital transformation as anything from IT modernization (for example, cloud computing), to digital optimization, to the invention of new digital business models. However, to advance digital transformation in construction, we must expand that definition to include leveraging innovative solutions that improve the industry’s efficiency and effectiveness. The approach needs to involve changes in the way construction companies operate and interact with stakeholders, such as clients, suppliers, and regulatory bodies and include the implementation of digital communication tools, such as project management software, and the adoption of collaborative processes, such as integrated project delivery (IPD) and lean construction. For examples, research from McKinsey shows that collaborative contractual relationships result in an 8% to 9% improvement in productivity and a 6% to 7% improvement in cost savings.
Current state of digital transformation in construction
According to the McKinsey Global Institute, digital innovation and transformation can significantly improve productivity (about 15%) and reduce costs (around 6%). While the construction industry has made significant strides in digital transformation, industry fragmentation, the complexity of projects, and lack of standardization are a few factors that are contributing to slower adoption. However, advancing digital transformation is imperative to stay competitive in today’s fast-paced, technology-driven world. By embracing technology and optimizing operations, construction companies can reduce costs, improve productivity, and deliver better project outcomes.
Key pillars to a successful digital transformation
People, process, and technology are the three key pillars that are critical for a successful digital transformation.
People: The people component of digital transformation focuses on the skills, knowledge, and culture required to adopt new technology and processes. Digital transformation requires a shift in mindset, and people are at the center of this change. Companies must invest in training and development programs to upskill employees and ensure they have the necessary skills to adopt and use new technology effectively.
Process: The process component of digital transformation focuses on optimizing workflows and business processes to increase efficiency, reduce errors, and improve outcomes. Companies must review their existing processes to identify inefficiencies and areas where technology can improve productivity. Adopting digital technology requires redesigning current processes to take full advantage of the technology’s capabilities.
Technology: The technology component of digital transformation focuses on the tools and platforms required to achieve the desired outcomes. Companies must identify the right technology solutions that align with their business objectives and provide the most significant value. Once the technology is selected, companies must ensure they have the necessary infrastructure and support to implement and maintain the technology effectively.
Overall, people, process, and technology are interdependent and must work together to achieve a successful digital transformation. Digital transformation is not just about adopting new technology; it’s about creating a culture of innovation and continuous improvement that leverages technology to drive business outcomes. A successful digital transformation requires a holistic approach that considers all three elements. Companies that embrace these three pillars will be well-positioned to succeed in the rapidly evolving digital landscape.
Steps for a successful digital transformation
Define the objectives and goals of the digital transformation
- The first step in any digital transformation is to define the objectives and goals. Why are you looking to change? This process involves identifying the business areas that need improvement and the technologies that can help to achieve those improvements. Some common goals for digital transformation in construction include improving efficiency, reducing costs, improving safety, and enhancing collaboration.
Identify the technology solutions that are appropriate for your business
- Once the goals and objectives are defined, the next step is to identify the appropriate technology solutions for your business. Many technology solutions are available in the market, and selecting the solution(s) that align with your goals and objectives is essential. Some examples of standard digital technologies used in construction include Building Information Modeling (BIM), 3D printing, drones, augmented and virtual reality (AR/VR), artificial intelligence (AI), and Internet of Things (IoT) devices.
Build an innovative culture in your organization
- Digital transformation is not just about technology; it also involves changing an organization’s culture. Building a culture of innovation that embraces technology and encourages change is important. This involves training employees to use new technologies, promoting collaboration, and encouraging the sharing of ideas.
Collaborate with partners and stakeholders
- Digital transformation in construction involves collaboration with partners and stakeholders. This includes architects, engineers, suppliers, and contractors. Collaborating with these stakeholders can help to identify the areas of the business that need improvement and the technologies that can help to achieve them.
Implement the technology solutions
- The final step in achieving successful digital transformation in construction is the implementation of technology solutions. This involves integrating technology solutions into the business processes and ensuring employees are trained in using the new technologies. It is important to monitor the implementation process and adjust as necessary.
Digital transformation in construction is essential for companies that want to remain competitive. Construction companies can achieve a successful digital transformation by defining the objectives and goals of the transformation, identifying appropriate technology solutions, building an innovative culture, collaborating with partners and stakeholders, and having a rollout plan when implementing the technology solutions. By taking a holistic approach to digital transformation, construction companies can ensure a successful future in using digital tools.