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Why More Construction Businesses Will Make the Digital Leap for the First Time in 2019

| March 25, 2019

by Kenny Ingram

Global skills shortages, data-driven business models, and new industry entrants are disrupting traditional construction. What determines who wins and who loses in 2019? Kenny Ingram, IFS global industry director for engineering, construction, and infrastructure, shares his top three predictions for the industry moving forward.

Prediction No. 1: 2019 will see growing numbers of traditional construction companies embrace the modular revolution.

From schools in Ireland to prisons and hospitals in the United States, from sustainable luxury apartments to vast workers’ dormitories, 2018 has seen modular construction go well beyond hype. In 2019, it will get even stronger, with housing shortages a key driver.

Modular manufacturing enables affordable houses to be built faster and at higher volume. But as walls, rooms, or even entire office blocks start coming from offsite factories, keeping the supply chain running smoothly, optimizing the assembly process, and maintaining visibility over complex projects will become more demanding. This all adds up to an urgent need for better, more integrated digital management.

Prediction No. 2: In 2019, more construction companies than ever before will start trying out integrated business software — for the very first time.

As we’ve seen, the rise in modular is bringing in new entrants from other, nontraditional, sectors — and this shift isn’t confined to state borders. Taken by revenue alone, even by 2017, Chinese construction contractors dominated the global league table, with four Chinese companies listed among the top 15. In the same list, the U.S. only occupies two positions, towards the bottom of the list. Given all this, who knows, could even digital giants like Amazon or Uber one day see construction as a sector ripe for disruption?

The bottom line is that many construction companies are highly exposed, at risk not only from more agile competitors that are addressing the prefab demand, but also from the limitations of their own legacy planning tools. In 2018, we saw huge ongoing efforts to drive efficiencies, increase productivity, and establish repeatable delivery. In 2019, the need for adaptability has never been more urgent. This is why we will see more firms take their first steps into digital and make their first investments in integrated business systems like enterprise resource planning (ERP), that combine elements of construction planning, project management, and asset management.

Prediction No. 3: Digital asset life cycle management, integrating both BIM and ERP, will emerge as a future need-to-have.

Central to ERP’s power for construction companies is its ability to connect and integrate all functions in a project — from finance to operations to design — enabling maximum adaptability. I’ve always argued that building information modelling (BIM) will be a driver of digital asset life cycle management and integration, and many firms have now started to integrate BIM models into their business.

But building BIM on its own, without an integrated business system, is only a small part of the picture. As a business system, ERP takes all the functions of the business and provides it with one set of data, enabling it to flow through a project’s life cycle all the way from inception to disposal, and enabling any combination of service or asset management in between. In 2019, I believe we’ll see construction companies take their first steps into discussing how to merge and build on the strengths of combining BIM and ERP.

Don’t let disruption pass you by. As pressure grows on traditional construction businesses to repeatedly deliver more integrated, cost-efficient projects on time, the quest for greater productivity will lead them to explore implementing integrated business software into projects for the very first time. Reconsidering the role of ERP as an essential, joined-up system that provides urgent consistency, speed, and efficiency throughout a project will be the first step for many — and it’s a good place to start!

Kenny Ingram

 

 

Kenny Ingram is a global industry director with IFS.

 

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