Digital office deployment – Increase value and return on capital projects courtesy of construction technology
The world has an insatiable appetite for large capital projects, driven by population growth and a global trend towards urbanization. The annual spend on construction is expected to grow by $4.5 trillion to reach $15.2 trillion by 2030. Governments, investors and corporations have responded to this demand by funding large investments in infrastructure and housing supply. Other industries such as oil and gas are making strategic investments in environmental, social and governance projects to reduce carbon emissions and produce cleaner energy.
Despite the levels of investment, capital projects continue to cause major headaches for all participants. The data points to some alarming evidence: average net margin is a mere 2.7 percent for construction industry firms; 66 percent of projects are unsuccessful in terms of budget and quality objective.
Moreover, the cost of construction materials is soaring worldwide. For example, in the UK, construction materials were 46 percent higher at the end of 2022 than in January 2020. In addition to this escalation, the industry is struggling with a lack of real-time and accurate data, hindering effective decision-making. Further, transparency for investors is inadequate; and risk management practices are immature and reactive in nature.
These harsh realities point to a need for substantial changes in the industry. New ways of thinking are necessary, along with better ways of working that can be deployed across the entire capital project life cycle. The creation of a digital office within a capital project presents a catalyst for significant change in the industry. The digital office of the future will use data and digital technologies to provide insights, transparency, better coordination and predictive risk modelling to transform capital project outcomes.
The digital office is not simply an expansion of the traditional technology function within a project. Leveraging low-code/no-code platforms can drastically reduce the time needed to develop and deploy solutions that leapfrog manual processes and activities. To date, technology adoption in the industry has resulted in a variety of bespoke and siloed solutions scattered across organizations and projects. In the past, the cost of sharing technology infrastructure was expensive, and implementation was time-consuming, placing additional burden and risk on projects. However, this is changing with the evolution of cloud computing, the emergence of low-code/no-code platforms and the flood of venture capital funding into the construction technology sector. In fact, more than 1000 construction technology companies have collectively received $11.8 billion, with half of this funding occurring between 2018 and 2020.
Full collaboration and oversight
Simply investing in new technologies will not drive value into the industry. Investment must be paired with an entrepreneurial and innovative mindset and highly collaborative teams able to maximize easy-to-implement technologies such as low-code/no-code platforms and Software as a Service (‘SaaS’) cloud solutions. For example, a small multidisciplinary team of technologists and construction professionals (e.g., planners, quantity surveyors, data engineers, data visualization experts, change managers, technology architects and agile practitioners) can design, mobilize and embed many different ‘light’, yet robust, solutions into the core of the projects. This has the capability of leveraging a project’s entire value chain, right down to personnel in the field.
Can it be done? Yes. But it requires a change in approach.
Firstly, bringing together people with equal measures of technical expertise and business process experience is key. These capabilities combine to ensure that a commitment can be made across the capital project ecosystem to adopt these ‘light’ tools and technologies in a way that is easy to deploy and use.
Structural changes in traditional projects must be made by putting a digital office in the center of the project to manage the data flows and digital solutions on behalf of the project. This involves specific project members carrying out specific roles within the newly-formed digital office. A small, centralized team will need to be mobilized in the early stages of the project, such as during the feasibility phase, to ensure that the data and technology requirements are captured upfront.
Lastly, all major contracted entities will need to feed into the digital office to support office operations, thereby ensuring full collaboration and oversight. The
adoption of more progressive and collaborative project delivery mechanisms such as integrated project delivery (IPD) bodes well for digital office deployment as the interests of all parties can be aligned.
Implementing a digital office in a capital project will result in new standardized ways of working. In turn, this increases productivity, while also reducing the potential for disputes or miscommunication.
Real-time information
Organizations must consider how they select and combine various aspects of digital transformation initiatives to achieve their specified objectives. These aspects include the following:
l The consistent availability of accurate and timely information across the project.
l Having efficient handoffs that ensure compliance with project policies and best
practices.
l Total integration of all data and information from planning and design through to facility construction, activation, and operation.
l Augmenting how people work by ensuring they are informed in order
to exhibit consistent decision-making.
The digital office and its enhanced work processes amongst all stakeholders represents a primary means to achieve a capital project’s objectives. Capital project owners, their contractors and suppliers will significantly benefit by using a digital office to improve operating margins, provide proactive and real-time management of risks, and materially reduce coordination risks and delays. Taking on a large capital project has never been for the ‘faint of heart’, but doing so in 2023 (and beyond) – without the aid of real-time information enabled by a project office – risks repeating the failures of the past.
For a list of the sources used in this article, please contact the editor.
Ian Duncan is Senior Managing Director and Ross Cullen is Senior Consultant, at FTI Consulting. FTI Consulting is a global business advisory firm dedicated to helping organizations manage change, mitigate risk and resolve disputes: financial, legal, operational, political and regulatory, reputational and transactional. With more than 7600 employees located in 31 countries, FTI Consulting professionals work closely with clients to anticipate, illuminate and overcome complex business challenges and make the most of opportunities.
Dr Stephen Mulva is Research Professor at Texas A&M University. Founded in 1876, Texas A&M University is designated as a land-, sea-, and space-grant institution, which reflects its commitment to provide high quality and diverse research and innovation. The Department of Construction Science, the largest construction education program in the United States with more than 1100 students, integrates principles of architecture, technology, engineering, business and project management.