2019 will see many construction companies managing projects digitally for the first time
By Kenny Ingram
2019 will see a digital leap forward as many construction companies explore implementing integrated business software into projects for the very first time. Tighter margins, global skills shortages, and new industry entrants are all ramping up the pressure on traditional construction businesses to deliver greater productivity and more integrated, cost-efficient projects, on time, every time.
Prediction #1: 50% of all construction projects worldwide will include modular content by 2022, driven by the growing global skills shortage.
From schools in Ireland to prisons and hospitals in the United States; from sustainable luxury apartments to vast workers’ dormitories, 2018 has seen modular construction go well beyond hype. In 2019, it will get even stronger, with housing shortages a key driver. The UN estimates that more than 2 billion new homes will need to be built over the next 2 years. Modular manufacturing enables affordable houses to be built faster and at higher volume. Driven by a worldwide shortage in skills and housing, increased modular construction will impact the construction industry massively in 2019.
2019 will see growing numbers of traditional construction companies begin opening modular factories to stay competitive. And, more new players enter the industry—from manufacturing, supply chain and logistics, to local governments, banks and insurance companies. Many will be able to offer flexible finance and service packages, too. The pressure on incumbent building firms to adapt will be huge. They’ll need tighter control and more adaptability over every aspect of their projects. Proving they can, if necessary, partner up with larger networks of suppliers, offer services and maintenance on assets once built, include equipment hire, and yes, even offer or manufacture some modular units or components. It all adds up to an urgent need for better, more integrated digital management of complex, demanding projects. That need is driving my second industry prediction.
Prediction #2: In 2019, more construction companies than ever before will start trying out integrated business software—for the very first time.
Ten percent of traditional construction firms could go out of business over the next 5 years. Competition around delivery and productivity will be fierce. Many companies will find themselves balanced on a knife-edge of opportunity: On the one hand growing urban populations and housing shortages will mean more demand and a higher order intake. On the other, shrinking profit margins and increased competition will mean unprecedented pressure on productivity and delivery.
As a result, 2019 will see more firms moving from being document-driven to data-driven. Many will take their first steps into digital, and make their first investments in integrated business systems like Enterprise Resource Planning, or ERP. Two main drivers will turn integrated business systems like ERP from a nice-to-have into a need-to-have.
The bottom line is that many construction companies are highly exposed. In 2018, we saw huge ongoing efforts to drive efficiencies, increase productivity, and establish repeatable delivery. In 2019, the pressure will be even more intense. The need for adaptability has never been more urgent. 2019 will be the year when many companies finally start considering systems like ERP not as isolated back-office finance functions—but essential, joined-up systems that provide urgent coherence, speed, and efficiency throughout a project or business. 2019 could be the year when construction takes a giant leap forward, embracing digital adoption.
Prediction #3: Digital asset lifecycle management, integrating both BIM and ERP, will emerge as a future need-to-have.
Take, for example, the collapse of Carillion, one of the UK’s largest construction giants. This firm sent shockwaves through the construction industry. The company built and maintained major assets such as schools, prisons, hospitals, and power stations across the UK—before collapsing 1.7 billion euros in debt, overnight, in January 2018. While analysts have endlessly debated how and why insiders point to many systemic faults. Certainly, in a company that size, spread over that many projects, it seems fair to say that without a central, integrated business system it would be all too easy for senior management to not get a full picture of the truth.
Central to ERP’s power for construction companies is its ability to connect and integrate all functions in a project—from finance to operations to design—enabling maximum adaptability. I’ve always argued that Building Information Modelling (BIM) will be a driver of digital asset lifecycle management and integration. BIM is an integral part of moving from a document-driven to data-driven world. In 2019, I believe we’ll see the first construction companies take their first steps into discussing how to merge and build on the strengths of combining the two systems: BIM and ERP.
Many firms have now started to integrate BIM models into their business. But building BIM on its own without an integrated business system is only a small part of the picture. As a business system, ERP takes all the functions of the business and provides it with one set of data, enabling it to flow through a project’s lifecycle all the way from inception to disposal, and enabling any combination of service or asset management in between.
For manufacturers, integrating ERP as a whole business system, rather than a single financial tool, is old news. They’ve been successfully integrating CAD with ERP for years. However, for many companies in the construction industry, that journey remains to be made. But 2019 will see many taking their first, vital steps.
About the author:
Kenny Ingram is the global industry director for the following industries: construction, contracting, engineering, infrastructure, and shipbuilding. In addition, he is heavily involved in other project and asset lifecycle industries including oil and gas, energy, utilities, and defense. Kenny has been with IFS for 16 years and has worked in the business systems marketplace for more than 20 years.
Modern Contractor Solutions, March 2019
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