Strategies for deploying construction
technology at Engineering &
Construction (E&C) firms: The journey to a
next-generation operating model
(Source: Mckinsey)
Although most E&C firms have already deployed
construction-technology software tools for
multiple use cases, many fail to obtain full value
from them. Even when a company successfully
pilots a new tool, large-scale adoption may be
difficult or quickly lose steam. In other cases,
technology initiatives fail to produce noticeable
improvements in key performance metrics. Our
review of data from McKinsey Global Institute’s
Construction Productivity Survey revealed that
three factors may be responsible for these
issues:
Insufficient commitment. Many E&C
companies feel pressured to adopt digital
solutions, especially if their competitors deploy
them, because they want to demonstrate their
commitment to innovation. But leaders often
struggle to sustain their digital initiatives once
they are past the excitement of the launch stage
because their attention and resources are
pulled in many different directions. That means
companies often see lower than expected returns
from their digital investments and thus have little
incentive to keep funding them, especially if
budget pressures increase.
Difficulties with company-wide rollout.
As with any new technology, E&C companies
generally evaluate construction tools in pilots,
determining their impact and identif ying
any glitches before investing in large-scale
programmes. While these pilots typically
proceed smoothly, companies often encounter
obstacles during large-scale rollout because
leaders ask employees to introduce new
tools into work flows without explaining the
benefits or providing sufficient training. On-
site crews and foremen therefore consider
the tools a headquarters-driven imposition
that complicates their jobs. Frontline workers
may have these misconceptions because
E&C software programmes have traditionally
focused on improving back-office functions,
not on-site productivity. In other cases,
E&C companies struggle to move from the
pilot phase to large-scale implementation
because they do not invest in training field
workers, especially general contractors and
subcontractors.
Lack of compatibility with legacy systems.
New technologies deliver the greatest value
when they seamlessly integrate with existing
enterprise systems. For example, field-data-
collection applications that automatically
connect to cost systems can provide real-time
visibility into productivity, allowing managers
to make immediate adjustments. Although
some third-party providers can help E&C firms
incorporate new tools into legacy systems, most
do not provide complete solutions. In other
words, companies must ask different providers
to complete various parts of the integration
process.
To get past these common challenges,
companies should follow a next-generation
operating model that incorporates the following
elements:
A focus on the client journey. Rather than
developing digital solutions for specific functions,
such as back-office workers or front-line
employees, companies should focus on optimizing
the entire customer journey. They should also
ensure their organisations are well equipped to
provide customer support that aligns with how
customers want to interact with the organisation.
This may require redesigning existing roles or
creating new ones.
A full suite of digital levers. Companies
will obtain the most value if they implement
multiple digital levers in combination—for
instance, a mix of digital tools, robotics, and
advanced analytics.
A new management system. An embedded
management system will ensure the sustainability
of the new operating model. Incentives and
digital-enabled transparency are critical tools to
help managers accelerate the adoption of new
technologies.
A cultural transformation. Cultural
t r an s format ion and c ap abili t y - building
programmes enable E&C companies to become
more agile and quickly adapt to evolving client
needs.
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