Construction Industry - Progressing Towards A ‘Digital’ Future

A digital approach can effectively address the peculiar challenges faced by the construction and engineering industry.
Sandeep Desai, Afcons Infrastructure Limited

The Indian construction and engineering industry is poised for significant growth with a projected expansion of 6.6% in real terms. As part of the ambitious Pradhan Mantri Gati Shakti Master Plan, worth $1.3 trillion, India’s infrastructure development will play a crucial role in driving economic growth over the next several decades. This presents both opportunities and challenges for players in the industry, as they strive to win bids and deliver quality projects on time in a highly competitive market.


Given this scenario, there is a growing need for digital technologies to support the exponential growth and manage skill gaps in the industry. The global Covid-19 pandemic accelerated the shift towards digital collaboration and work processes, as stakeholders such as contractors, architects, engineers, subcontractors, and suppliers adopt digital technologies for everything from video-call site meetings to online ordering.

This paper presents a comprehensive overview of the challenges faced by the construction and engineering industry and introduces a basic framework of business processes that can be leveraged through digitization. It also highlights the unique challenges faced by the industry in adopting digital technologies and provides practical examples of digitalization in use.

Challenges
The construction industry is the ‘Mother Industry’ of all the industries; it is witnessing many challenges - some relatively new and some as old as the industry itself. Let us go over some of the more significant issues:

Estimation: Every project is unique, and challenges relate to customer design specifications and working out the best estimate as per the budget of the project. This activity of estimation is crucial and at times the estimator may be working on several estimates and accuracy. Speed is also a critical factor in meeting deadlines. Excel-based estimates may not work all the time. Need of the hour is to have a database driven approach to give accurate and on-time estimates. These estimates also serve as the knowledge base for future projects. Risk management is not fully a part of the estimation process.

Managing cost overruns: This is generally caused by poor cost estimates during the planning phase, design change requests, shortages in resources, payment delays to vendors or subcontractors, leading to delay in work execution, which contributes largely to cost overruns. Result of cost overruns are delay in project deliveries and adverse effect on the profit margins. Balancing cost and speed of project is a skill and must be driven systematically (and possibly) with the help of technology.

Keeping up with HSE (Health, Safety and Environment) norms: Any construction site, be it real estate, roads, metros etc. must follow safety norms for both workers at the site as well as the public. List of rules and regulations are exhaustive, all are important and cannot be ignored. They include: maintain a safe and healthy workplace, provide training to supervisors to handle unforeseen conditions, develop and implement a site safety plan, make wearing a safety harnesses mandatory when working at heights to prevent injury from falling, and all must understand and recognize, the presence and/or effects of hazardous substances/materials.

Scarcity of skilled workforce: Many years have passed and we continue to speak of labour shortage in construction as one of the biggest challenges. India’s outlook for construction and engineering industry is extremely bullish, however, shortage of skilled labour is a huge deterrent to its progress. The government and companies are trying to address the issue with upskilling programmes, driving a wellness model to ensure safety and security of workers, and the Industry is resorting to some non-traditional practices to recruit and retain skilled talent. From offering higher pay and benefits to hiring full-time employees (rather than contractors), incentives to improvise / innovate, and at the same time gearing up to automate the processes to speed up execution with optimum manpower.

Business Processes

Business centric processes: Unlike BFSI or manufacturing industries, the construction and engineering industry sees a unique situation of ground level processes that do not have any reliance on IT-enabled processes and may go out of control if manual control is not exercised at the right time.

Standardization of processes: Standardizing the documents relating to sales bills (invoices) and the execution related documents may differ from site to site. The reasons are client formats or the site is a joint venture project with an international player wherein the JV demands certain specific types of documentation etc.

Qualified Manpower: The lack of qualified manpower is a persistent problem in the construction and engineering sector. Reasons include older workers who are qualified / skilled retiring and leaving a skill gap. Younger generation try and fill the gap for some time but can leave to get into lucrative jobs in other industries. Quality manpower is the basic requirement for digitalization of the construction industry.

Towards a ‘digital future’
Exponential growth of the industry as well as stiff competition has driven industry players to the digital platform. Significant focus is placed on field productivity, planning and scheduling, engineering and design, resource optimization etc. Mobility solutions seem to be the clear winners of hosting digital platforms from the point of computing as we move (approval workflows, digging the analytics etc).

1Rise of digital platform in construction world is given in the following phases.

SN	Project Phase	Use-case	High	Medium	Low
1.	Planning, Scheduling, Design and Engineering	BIM Planning and scheduling tool Design tools	√ √		√
2.	Customer relationship	Pipeline monitoring Event management Customer correspondence	√ √	√
3.	Digital marketplaces and Procurement	E-Commerce for Material, Equipment, and subcontractor services Logistics		√ √
4.	Quality control	Optimize waste Quality checks at every stage of production		√ √
5.	Contract and Document Management	Quantity survey Customer interaction on scoping Document control	√ √ √
6.	Field productivity enhancement	Activity cycle Resource productivity and utilization Daily progress and cost incurred		√	√ √
7.	Enterprise Resource Planning (ERP)	Resource costing Activity based costing Supply chain planning	√	√	√
8.	Use of AI	Robotics Processes Predictivity			√ √
1McKinsey & Company: October 2020 Rise of the platform era: The next chapter in construction technology

Conclusion
Although the construction and engineering industry is faced by many challenges, it is seeing good growth in recent times and is set to grow further. To prepare for the anticipated growth, certain processes need to be adopted and digitalized. Industry players are seeing digitalization of processes as compelling steps for overcoming challenges and for taking the industry to new heights.


References

1. Digitalization of the Construction Industry: The Revolution is Underway by Oliver Wyman
2. PWC’s Construction Industry Vision 2025: Towards a Digital Future
3. Digitalization in Construction: A Report 2022 by RICS
4. Accelerating Green Growth in the built environment: McKinsey & Company
5. Building products in the digital age: It’s hard to get smart: McKinsey & Company
6. Road work ahead: The emerging revolution: McKinsey & Company
7. World Economic Forum: Future Scenarios and Implications for the Industry: BCG Collaboration - March 2019-20
8. McKinsey & Company: October 2020 Rise of the platform era: The next chapter in construction technology
9. https://www.globaldata.com/store/report/india-construction-market-analysis/

About the Author
Sandeep Desai completed his Masters in Computer Science in 1982 from Mumbai University; he has worked in the IT industry for 40+ years and has been instrumental in setting up many offshore centers in India for MNCs. He has been working with the construction and engineering industry for 25+ years and has streamlined functions relating to estimation, budgeting, and planning. He was also instrumental in setting up BIM as well as knowledge management as a way of working for the industry. He has authored numerous books on IT related topics and is a guest faculty at NICMAR, SNDT, Mumbai University.