Are your employees also overworked?
Your accountant groans when you want to view construction site results. Your estimator needs two weeks for an urgently needed quotation. Your planner has no capacity for quantity surveying. Your site manager sits in a construction container and writes reports instead of managing the construction site.
I know the processes in construction companies well. I have worked as a construction manager, estimator, sales manager and CEO for over 30 years. I have been responsible for construction companies with 100 to over 6000 employees. I have seen how construction projects are organised not only in Europe, but also in the USA, India and the U.A.E.
A good way out of the vicious circle of overwork, rising personnel costs and poor results is the end-to-end digitalisation of all company processes. You read that correctly: all processes. It is of little use if you have to walk around the construction site with a clipboard and tablet at the same time.
The digitalisation of a construction company is a major change. You don’t just buy software and a few new computers and everything runs like clockwork. It is a transformation of the entire company. The change process must be well planned and executed.
Where does the construction industry stand?
„The construction sites of 2023 could in many ways resemble those of 1923, with manual bricklaying, paper plans and scaffolding towers. With a turnover of 12 trillion dollars, the architecture, engineering and construction (AEC) industry is one of the largest industries in the world, but in the past it has been one of the slowest to digitise and innovate.“ So begins a recent study by McKinsey & Company .1
So our industry is lagging behind in terms of digitalisation. So do you still have a lot of time? If you want to have a competitive advantage, then you should act. There are already companies that are rushing ahead of the industry and celebrating success.
The German construction company Goldbeck has more than tripled its turnover in the last ten years to over 5 billion euros. Digitalisation is an important building block. „With the help of BIM, we are digitising the entire planning, construction and operating process,“ Thorsten von Killisch-Horn, Managing Director of Goldbeck Südwest, is quoted in Die News2. With Blue Buildings, Goldbeck can already tell its customers today, for example, how sustainable their individual hall will be during the construction and utilisation phase.
Overall, there is still a lot of catching up to do. The pwc study from February 2024 „The construction industry in times of crisis“3 draws attention to this. It puts the level of digitalisation in the construction industry at 45%. It is striking that a year-on-year comparison of 2023 even shows a decline of 3%.
In times when many companies only see problems, others see opportunities. Digitalisation and the associated differentiation from the competition is an opportunity that must be seized.
Numerous publications deal primarily with BIM. „Building Information Modelling describes a working method for the networked planning, construction and management of buildings and other structures using software“4 . The main topic of discussion is how processes can be organised more efficiently through the collaboration of all project participants in a data model.
I believe that it will be a very long time before all project participants actually have all the data in a common database. But even this would only help a construction company to a limited extent. The view is limited to one project. However, a construction company is most successful when the coordination between projects leads to good capacity utilisation. Which resources are needed when on which project is not mapped here. Or the consistency of personnel presence on the construction site with payroll accounting and construction site controlling is certainly not facilitated by a cross-organisational BIM.
It is therefore much more important to digitalise and optimise all internal processes while remaining open to customer requirements with interfaces.
What does digitalisation actually mean?
Digitalisation refers to the process of converting analogue information and processes into digital formats. It involves the use of networked computers to make the way people and organisations communicate with each other more efficient. Ultimately, it is also about how processes and activities can be automated and new business models generated.
So it’s about much more than just replacing paper with files on the computer. There are three stages of digitalisation.
In the first stage, the paper is simply replaced by a file. The paper is scanned and saved on the computer in a file format, usually PDF. Many construction companies already store these files in an organised manner on servers. However, this is of little use if not everyone involved in the project – whether on the construction site in the home office or in the corporate office – can access them at any time. Paper files may also be stored in folders for security purposes.
In the second stage, the processes are actually mapped completely digitally. Simple processes that are suitable for getting started are, for example, holiday requests or investment decisions. Even if such processes appear simple, they can become quite complex in larger companies.
When applying for leave, it must be clear that the leave entitlement actually still exists, that the replacement is not on leave at the same time and that the head of department and the boss also agree to the leave. After approval, all parties involved should be informed and the leave days should be booked automatically if possible. If the leave is not taken or cancelled for any reason, it should also be possible to reverse the booking.
This small example shows that even simple workflows need to be organised in detail if they are to function smoothly later on.
The third stage is about changing business models that are only made possible by digitalisation. For the general contractor of single-family homes, for example, it is possible to automate large parts of the plan approval, sampling and selection of options, including additional and reduced prices, online. A great relief and improvement for contractors and clients. Disputes about additional costs, which are sometimes only communicated after construction, are now a thing of the past.
What can we imagine by new, digital business models?
When you think of new business models, you naturally think of ConTech. Start-ups that have set out to revolutionise the construction industry with software and other services.
However, a company that specialises, for example, in using robots to automatically drill dowels into car park ceilings, install sprinkler systems or paint facades would also be conceivable.
Business models that fully automate processes such as formwork construction or reinforcement production are also conceivable. AI-supported planning, construction and calculation of complete buildings is also already being considered.
Isn’t that a bit far-fetched? Don’t you think you could reach new customers if your planning took place entirely in the BIM model in the future? If your customers could not only view the finished result with 3D glasses, but also move virtually through the building and make decisions about flooring, windows, lighting and workstations? And all this before the ground-breaking ceremony. This would also mean that changes during the construction period would finally be history, you could plan your construction process optimally and would no longer have to justify why a disrupted construction process costs money.
Why should I deal with this as a building contractor?
„As digitalisation is associated with major risks, revenue is also possible without digitalisation and digitalisation is not seen as a profit driver, digitalisation is often given low priority,“ can be read in a study by Fraunhofer IESE on the status of digitalisation in the construction industry from 2023. 5
Unfortunately, many entrepreneurs wrongly assume that investments in digitalisation do not lead to higher profits. It is true that digitalisation harbours risks. Like any major change in a company, the process must be carefully planned and implemented. Then the measures will be successful, reduce costs, make construction sites more efficient and take the company to the next level.
Many construction companies have already digitalised all core processes or are on their way to doing so. This makes the ever-increasing administrative requirements manageable and significantly reduces personnel costs for administrative tasks.
Construction companies are becoming more attractive to the younger generation again. Which company do you think a young civil engineer applies to and where does a bricklayer want to do his apprenticeship?
I have seen that in the UK and the USA, for example, customers have been increasingly demanding exclusively digital communication and documentation for years. This will soon reach the European market too.
If you believe that digitalisation can give you an advantage, then you should digitalise your company now. It will no longer be a competitive advantage later.
And how can I digitalise my company?
01 Concept and team
You just talk to your IT manager and he’ll take care of it, right? Don’t think about it for a second! Sure, he is competent and experienced. But he’s not the right person to optimise your business processes. And that’s what it’s all about. If you have a lean management officer, they might be the right person to talk to.
In any case, the digitalisation officer must report directly to the management. Otherwise, such a major change process is doomed to failure. Ideally, the digitalisation officer should be familiar with process management, digitalisation and IT as well as change management. If you have someone in the company who can cover a lot, but not everything, give them a few months to gather information and undergo further professional training. If you are looking for a suitable candidate on the labour market, it probably won’t be any quicker. The digitalisation officer needs a team made up of representatives from all departments who work full-time or just a few hours a week, depending on the size of the company. Don’t skimp on external training for your team members. There are tried and tested concepts for digitalisation in all areas. Perhaps there are also friendly companies that are already further along in one area or another. Take a look at what and how they are implementing digitalisation.
When planning digitalisation, it is important to get a detailed overview of the IT landscape and database structures in your company. You also need to precisely describe all company processes, especially all construction site processes.
Back to the small example of the holiday application form. In many companies today, this is still a form on paper. The employee fills it out and puts it in the basket for the in-house mail. Everyone who receives the form then knows what to do with it. But often it is not written down anywhere what happens with it and where in detail. If these detailed process descriptions do not exist in the company, they need to be created now.
The same applies to the price enquiry process in the quotation phase. This applies, for example, to the calculation and approval of quotations as well as to all other company processes.
For each process, you should then make a note of how you envisage future improvements.
Please make sure that it does not become a scientific paper or a dogma. You can spend years on process descriptions and functional specifications. You should have the courage to leave gaps and the flexibility to change.
You should also consider in good time whether you want to call in outside professional help. This costs money, but significantly reduces the risk of failed attempts and frustrated employees.
02 Selecting the tools
The Fraunhofer study5 points out that the potential of digitalisation is particularly high if we move away from isolated solutions and towards comprehensive networking of systems – from the planning software to the machines.
This should be taken into account during the design phase. In the course of comprehensive digitalisation, you may also have to say goodbye to tools you have grown fond of. The rule should also apply that there is only one software programme for each similar task in the company. Everyone uses the same calculation programme, the same scheduling software and so on.
Choosing the right software is important. Get an overview of the market and evaluate the software. Also talk to previous users of the programmes. Functionality is important, but above all, it should be as easy as possible to learn. This is often more important than the best features!
Don’t forget to involve your IT department at the latest when testing the software.
I think it is better to use only a few software packages for complete digitalisation. Ideally, there should only be one essential package for each workplace for day-to-day work. For example, the project or site manager should have a project management system with which he or she can complete all communication, documentation, task, plan and schedule management tasks.
It is also important that the programmes have modern, intuitive user interfaces and that everyone involved can access the same data at the same time. Be it from an office workstation, laptop, tablet or mobile phone. Open and well-documented interfaces must be available. This includes interfaces to outdated data exchange formats that are still commonly used in the industry today. For example, in Germany, the GAEB formats for tendering and awarding contracts are of particular importance. Bear in mind that international programme packages often have problems generating special German features, such as the „Urkalkulation“ or the popular „EFB sheets“ in tendering. The programmes must of course comply with your domestic and international data protection regulations.
Assume that you will hardly need your own in-house server with the use of modern software, as the data will be stored in the cloud. This change should also be discussed with IT at an early stage. The administration effort should be checked and addressed. Secure access to the various software packages without having to enter passwords each time (single sign-on) is important.
Of course, also pay attention to the prices and the companies behind the software.
03 Communication
As with any change process, communication is a key success factor. Digitalisation must not be a secret matter of command.
Involve the specialist departments when selecting the software. Communicate the planned digitalisation at an early stage with a realistic time and cost framework. Personally introduce the digitalisation officer in a townhall to the company as a member of top management.
Provide regular information about the next planned goals, steps, successes and failures.
Also make it unmistakably clear to employees that constructive criticism is welcome, but that there is no alternative to participation.
Then, of course, communicate the successful introduction with your most important stakeholders.
04 Schedule and introduction
I can’t really give you a time frame here. It very much depends on your processes, the current level of digitalisation, your employees and your goals.
It is important that you plan realistically. Each individual software package should be put through its paces in practice before the rollout. Of course, also in combination with other planned or already deployed software. This will provide you with important insights for organising the rollout process in your company.
Such pilot tests will also provide information about the need for training.
While information by email is probably sufficient for the introduction of a workflow for sick notes, training is certainly required for more complex programmes. Training for key users can be provided by the software provider if necessary. Other training is best conducted on-site, at the workplace or online.
Remember that it is also important not only to introduce the new digitalised process at the right time, but also to consistently end the old way. Otherwise, there will always be employees who want to stick to their old habits until they retire.
05 „Status“ and further steps
There may be situations in which the previously defined timetable has to be changed. The software supplier does not deliver the promised new functions, the employees do not have time for the important training courses or a programme simply proves to be unusable.
You must not allow yourself to be led astray. You have entered uncharted territory with your company and do not yet know your way around perfectly. It is therefore important to allow for the necessary leeway in your budget and time planning.
You will see: After successful digitalisation, opportunities suddenly arise that you would never have thought of. Now that all company information is available online in a structured way, an AI can help you, for example, to find all documents relating to a supplementary offer in a matter of seconds. You can gain insights from your figures and device data that significantly improve the costing of new projects.
Hopefully your site managers will now be able to get back to work on the construction site and won’t be putting in a mountain of overtime.
Don’t make any plans for the future before you have digitalised your company processes. You will be surprised how much creativity your employees can develop for new business models!
Author: Arnulf Christa
info@christaconsult.de
published 2024 in German language by https://www.capmo.de
Sources
(1) From start-up to scale-up: Accelerating growth in construction technology. McKinsey & Partners, 2023. Jose Luis Blanco, David Rockhill, Aditya Sanghvi, Alberto Torres
(2) Article by about Goldbeck in the „Fachzeitschrift für Familienunternehmen“. The News. May 2024. Livia Brans. https://dienews.net/artikel/digital-nachhaltig-innovativ/
(3) The construction industry in times of crisis: Progress in ESG, standstill in digitalisation. PricewaterhouseCoopers from February 2024 https://www.pwc.de/de/risk-regulatory/risk/capital-projects-and-infrastructure/bauindustrie-unter-druck.html
(4) BIM at Wikipedia
https://de.wikipedia.org/wiki/Building_Information_Modeling
(5) Study: Status of digitalisation in the construction industry. Fraunhofer IESE. 12.05.2023. Denis Feth, Thomas Jeswein and Stefanie Ludborzs.
https://www.iese.fraunhofer.de/blog/digitalisierung-baubranche-studie/
Christa Consult 