Construction companies face growing pressure to embrace new technologies and modernize tools and processes. Otherwise, they fall behind rising client expectations or losing bids to competitors. However, according to McKinsey, the architecture, engineering, and construction (AEC) industry has been among the slowest to digitize and innovate.
Many factors make digital transformation in this space complex, but it’s possible with the right approach. True transformation requires changing how construction professionals operate, provide value, and deliver better experiences across projects.
This article will explore the impacts of digital transformation in construction. First, we’ll cover the benefits of these initiatives. We’ll also discuss common hurdles around digital adoption and how to support lasting change. Plus, we’ll showcase real-world examples of digital tools elevating construction outcomes across the project lifecycle.
What Is Digital Transformation in Construction?
Digital transformation in construction refers to the intelligent implementation of technologies, from 3D modeling software to IoT sensors on equipment. Cloud platforms also connect these solutions, offering construction companies centralized access to project data analytics and shared services.
Collectively, these technologies provide visibility across the project lifecycle, from initial building plans to on-site execution. The connected construction ecosystem enhances communication workflows, materials tracking, and productivity benchmarking. As innovative tools like AI and AR mature, they will bring even more opportunities for improvement.
Benefits of Digitalization in the Construction Sector
Here are a few of the most critical benefits for the construction space.
1. Improved safety and risk management
Wearable sensors can detect hazardous conditions in real-time, reducing injuries. Connecting all data sources can go further to help with risk management, as construction professionals can get visibility into potential issues before they ever come up.For example, a study done by one company offering digital transformation solutions for construction shows that usage of their product is correlated with a 40% lower incident rate and a 39% lower lost days rate compared to the construction industry average.
2. Reduced costs
Optimized resource planning, materials tracking, and reporting analytics empower construction firms to keep track of budgets across capital projects. By cutting wasted spend, minimizing errors, and boosting productivity, digitization can help construction organizations protect their bottom line.Anywhere construction firms can cut costs is critical as expenses rise in other areas of the business. Construction machinery and equipment costs increased by 6% year over year in August, and by over 26% since February 2020.
3. Streamlined processes and improved operational efficiency
Digital solutions can refine processes across construction operations, creating better experiences for everyone involved. Research by the McKinsey Global Institute indicates that digital transformation can result in up to 15% productivity gains.
For example, building information modeling (BIM) software enables collaborative design and planning, while integrated project management platforms connect procurement workflows. These tools pave the way for greater visibility and coordination across teams.
During projects, progress dashboards offer better oversight to construction managers. By tracking schedules, equipment, and document workflows, managers can make decisions to optimize resource allocation. These changes to resource use and communication reduce delays and rework.
4. Better customer experience
Digitalization also bridges information gaps with clients, which changes the way they interact with organizations and their experience overall. It’s clear that companies are taking notice, as nearly all CX leaders have invested or plan to invest in data integration, data integrity, or data enrichment technologies.
For example, virtual reality solutions allow visualization at all stages, which gives them visibility into creative or technical details. This connectivity enhances alignment between final designs and client expectations. It also strengthens trust by opening clear lines of communication between the company and the client.
5. Increased collaboration
All participants in the project lifecycle from architects to engineers to customers can connect to the same platforms to exchange insights on progress or creative feedback. This allows construction companies to minimize miscommunication and deliver more projects successfully.This is increasingly important, as one study by Gartner shows that after the first 18 months of the pandemic, 80% of workers reportedly used digital collaboration tools, up from 40% at the start of 2020. These numbers are likely to continue to rise.
Digital Transformation Challenges in the Construction Industry
Digital transformation can drive positive change in the construction space, but it also comes with its own set of pitfalls. Here are some common digital transformation challenges and specific strategies to overcome them.
1. Regulatory compliance
As digital transformation reshapes construction processes, companies must ensure that innovations align with relevant safety, quality, and data governance mandates. This is a balancing act, and there’s no one-size-fits-all answer. Many factors determine what specific regulations impact your operations, including the solutions you use.
For example, many construction companies can benefit from adding IoT devices. However, local data privacy and system security regulations may apply to these tools. Organizations with IoT in their digitization strategy should invest in robust cybersecurity infrastructure, internal training, and third-party risk assessments.
2. Managing decentralized teams
The decentralization and distributed nature of work is a big reason why digital transformation is valuable to modern organizations. However, this also creates complexity around maintaining data quality, access controls, and versioning.
Construction firms must implement robust collaborative software and project governance to synchronize insights across decentralized teams. Adding use guidelines and access policies will also help users embrace change while avoiding confusion, and you can enlist the help of a digital transformation consultant to help you build these guidelines.
3. Reskilling institutional knowledge
As veteran employees retire, valuable experience exits with them, spotlighting skills gaps and the need for upskilling. Due to a lack of qualified candidates available, 68% of construction firms surveyed by Deloitte need help to fill open positions. To meet the incoming demand for work, 69% of surveyed firms expect to increase headcount in the next year.
Construction firms can overcome this by including institutional knowledge in onboarding programs and introducing mentoring initiatives. An approach focusing on preserving existing expertise and adding information into new systems will help organizations adapt.
4. Poor data management
The volume of project information generated on each job demands controlled and secure access to data. Failure to implement reliable data management threatens transparency and exposes firms to compliance risks.
This isn’t something that firms can afford to ignore, as one study from Autodesk and FMI estimates that bad data causes the construction industry. $1.8 trillion in losses worldwide. Integrations with collaboration software, equipment sensors, and other tools should meet strict access protocols and change tracking requirements to avoid this loss level.
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Article source: Digital Transformation in Construction (+Examples) - Whatfix
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