How AEC can succeed with digital
How AEC can succeed with digital Introduction
Our priorities, of course, should be to stay healthy and do everything we can to help our businesses weather the storm. But we also believe it’s healthy to look beyond the crisis.
Believe it or not, we’re optimistic. Despite all the uncertainty, mid-market AEC businesses enjoyed overall growth. And before the interruption of the pandemic, we saw strong indications that growth would have continued.
The worrisome trend in AEC was the intensifying pressures on the bottom line. A Deloitte report claimed that profitability would be threatened by intensifying competition, supply-chain constraints arising from tariffs, and talent shortages.
In other words, in recovering from the crisis, AEC will face the same pressures it always had, only more so.
There isn’t much any mid-market AEC company can do about all of these problems. But there is a straightforward way to make your business more competitive: streamlining your systems with a comprehensive digital roadmap.
Two things you can be sure of: first, that the recovery is going to be long and difficult; and second, that IT is central to navigating it. The companies who get IT right will see great opportunities. Those who hesitate are in danger of being left behind.
Part I: Streamline systems to control costs
First and foremost, mid-market AEC companies must streamline their systems to improve the bottom line. Here are three places to start.
Project management. It’s a no-brainer: project management is at the core of the AEC industry, and you reduce costs by getting better at planning, executing and managing. In our experience, this is often at heart a reporting issue, a company unable to plan and execute well because it lacks access to straightforward, timely information on scheduling or pricing.
Payment systems. In the AEC sector, we often see inefficiencies in payment systems that drive up cost. For example, a site manager under deadline pressure often deals directly with suppliers, securing a good deal and a quick turnaround. But then the delivery driver can’t find the site. Or the paperwork is inaccurate or lost. Or nobody is quite sure how the delivery fits in with the schedule. Everybody’s doing their best, but the lack of a simple, flexible system creates hidden admin costs, not to mention a lot of frustration all around.
Health and Safety. Many mid-market firms see H&S as a kind of necessary evil. But it’s an excellent idea to reconsider your H&S systems when looking to control costs. It’s critical to have clear, user-friendly processes, systems, and technology for a number of reasons:
- This may seem obvious, but the right systems make it easier to ensure that the staff has the necessary training and that appropriate safety equipment is onsite.
- Chain-of-command. Streamlined systems ensure that all activities are properly authorised and managed.
- Risk mitigation. Again, the primary goal is safety. But at the same time you’re reducing liability risks, and with readily attainable documentation, the risk of fines.
In terms of specific software, much of the AEC industry runs on COINS, Netsuite and SAP. These may not be the best packages for a particular company. Or they’re not used well, so they don’t deliver the promised efficiencies. Either way, don’t assume you’ll have to start again from scratch. The idea is to take a careful look at your company and find the inefficiencies. Look for ways to tweak or repair before letting a salesperson talk you into scorched earth.
If you have questions about how to streamline your AEC company’s systems to control costs—or any questions at all about how mid-market AEC companies can get more competitive through their digital strategies—feel free to get in touch. You’re always welcome to contact us for an informal chat.
Part II: Get onsite IT right
The AEC sector can be chaotic, with multiple projects in various stages from planning to completion. It gets even more complicated with all that goes on outside the main office.
In the past, we’ve seen AEC companies begin and end their jobsite plans with rugged devices. But the temporary office spaces typical to construction sites bring so many more challenges. The sites can be vulnerable from a security perspective, and (as we mentioned in Part I) it’s critical to have H&S compliance. The networks themselves can be an issue, complicating communication between the central office, a home office, and the jobsite.
Even when you get all of the above right, in AEC you learn to expect surprises: our clients frequently have to improvise on-site. One example that comes up a lot: when the site manager has to make a last-minute order to get materials to the jobsite. Often he’ll call a mate, somebody he’s known for decades. They make a verbal agreement, and the job keeps moving.
But then an invoice turns up in accounts payable that nobody recognizes, and now you’ve got people playing detective: who made the order? Who is the supplier? What were the terms? Whole days are lost trying to figure it out.
With better systems, site managers can easily initiate a P.O. from a smartphone. The details are available to everyone, so there are no surprises, and the transaction appears on the next Part.
While every job (and every firm!) is different, overcoming these issues invariably requires flexibility, attention to detail, and a willingness to learn and improve from project to project. IT leaders need to strike a balance between data security, the immediacy of the information, the lack of bandwidth at construction sites, and huge files.
Despite all this complexity, sometimes the simplest preparations can make the difference at a jobsite:
- Ensure that paperwork can easily be scanned, shared and filed
- Don’t forget to allow for printing
- Make it easy to recharge devices
Finally, we can’t overstate that IT leaders must get directly involved and take ownership for getting it right. Without a strong CIO or CTO, you’re guaranteed an inefficient jobsite.
Part III: Building information modelling (BIM)
Architecture, Engineering and Construction (AEC) is a fascinating sector because it embraces such a broad range of skills and challenges. But in one way, AEC is like any other industry we work with: there’s always some new tech trend promising ‘transformation’ or ‘disruption’.
At Freeman Clarke, we feel that it’s all right to be a bit skeptical about trends. We’re always looking ahead, of course. It’s just that we don’t find it necessary to buy into every prediction. Self-driving cars may be on the way, but in the meantime, we’ll hang onto our driver’s license, thanks very much.
So you can believe us when we say that if you’re in the AEC sector, you absolutely need to be thinking about Building Information Modeling (BIM).
What is BIM?
As with other trends, the definition can of BIM can be vague depending on whom you’re talking to (especially if they’re in software sales!). The US National Institute of Building Sciences, which is working on national BIM standards, has a definition:
Building Information Modeling (BIM) is a digital representation of physical and functional characteristics of a facility. A BIM is a shared knowledge resource for information about a facility forming a reliable basis for decisions during its life-cycle; defined as existing from earliest conception to demolition.
Think of BIM as a 5D computer model. CAD renderings, with length, width and height, are 3D. BIM adds the further dimensions of time and cost. What this means is that you have a model useful for both visualizing a structure and understanding the lifespan and costs of its component parts.
With BIM models, architects, engineers, and contractors are planning the design, construction, operation and maintenance of a structure. They can even plan for its efficient demolition, should that ever be necessary.
Why should I care?
Because the potential advantages of BIM are massive:
- Better coordination between architects, engineers, and contractors
- Greatly reduced wastage and errors
- More efficient construction with fewer changes
- Faster comms amongst teams
- Increased client satisfaction due to visibility and transparency
- Increased overall quality
At this stage, BIM simply requires the adoption of standard tools that can handle standard file formats. But it will get more complicated. Either way, as with any new technology, it will require an investment of time and money.
Still, CEOs of all AEC mid-market companies need to embrace this technology — and expect their Board to lead this change in the coming years — or they’re going to get left behind.
As we mentioned above, the US government is already working on standards for BIM, which will presumably be applied to everything from foundations to the tiniest bolt. The companies connected to these standards will move ahead; those who don’t risk getting excluded from systems and suppliers, or government contracts.
What’s my next step?
We believe that IT leadership is the key to adopting BIM — a Board-level CIO or CTO with experience in both business and technology. BIM will become a standard business practice before long, and it will be the key to any number of lucrative contracts. But with the right leadership, you can implement it in any that makes commercial sense for your company.
If you’d like to discuss how Freeman Clarke can help your midmarket AEC firm develop its BIM capabilities — or any other kind of technology — feel free to get in touch for an informal chat.
Part IV: Next-gen technology
All our advice about technology and the AEC sector boils down to three points:
- Have a roadmap.
This means understanding where you are now in terms of IT, and where you want to get to. (See our free CEO’s Briefing on creating a technology roadmap for growth.)
- Recruit people who want to use to technology to grow.
More on that in our next post.https://www.freemanclarke.com/en-us/2019/03/12/it-roadmap-for-growth-a-ceos-briefing-2/
- Stop thinking about cost and start thinking about opportunities.
We understand that margins are tight. Still, remember IT is an investment—a way to get ahead of the competition and improve your bottom line.
Let’s look at that third point and consider more specifically what’s coming. Many aspects of AEC tend to change incrementally or slowly, if at all. But a number of major changes enabled by technology are emerging which will radically change the industry.
The Internet of Things. As you know, this is a buzzword to describe a variety of networked, tracked or ‘smart’ devices. It promises endless potential to track efficiency and usage, to reduce theft and waste, and to improve health and safety. Just a few examples of how it may work:
- Hard-hats. Imagine a helmet—or any kind of safety equipment—that ‘knows’ when it’s being used properly. The data can have a real effect on your health and safety compliance records and thus your insurance premiums and exposure to liability.
- A ‘smart boiler’ will remind you of regular maintenance and even alert you to potential performance issues before they happen, greatly reducing the cost of running a building.
- Scissor lifts. Or any other piece of large equipment! Imagine if you’re accustomed to renting five lifts for a certain-sized job. But the data suggest that you only need three, saving you a packet. Imagine dashboards showing you utilization graphs and maintenance schedules for all your equipment, so you know who’s using it—and if they’re using it right.
In terms of buzzwords, ‘the Internet of things’ is getting on a bit. Nevertheless, the technology is already showing up in the AEC sector, with a lot more to come.
Drones. Unmanned Autonomous Vehicles (UAVs) are already in use for promotional footage and the like. But surveying is where you’re going to see the biggest savings in spending and time. Drones can collect extremely accurate data—and they’re especially useful for assessing hard-to-reach or potentially dangerous job sites.
One of our clients is already integrating drones with maps for an archaeological risk assessment. In this way, they’re reducing the risk of uncovering artifacts that might create costly delays or damage something of historical significance.
Bear in mind that drone surveyance will generate huge amounts of data that will need to be processed and shared with the relevant professionals and site managers. So you’ll need the IT systems to match.
Virtual Reality (VR) and Augmented Reality (AR). New visualization technologies are becoming particularly useful to architects and surveyors. Clients will increasingly expect to ‘experience’ proposed designs using immersive technologies rather than simply look at a printed plan. And 3D surveying tools will create data that is hugely valuable but difficult to understand without 3D goggles.
This technology is in use for training right now. For example, you no longer have to take a cherry picker off a job to train someone; VR allows for quite realistic training in the classroom—how much weight it can lift, how far it extends before it get top-heavy, how to get down if you’re stuck!
3D printing and fabrication. The fabrication of building materials is about to leap ahead as well. More large and finished assemblies will be fabricated off-site—if you’re building an office-block bathroom, for example, the basins will come pre-bolted to the same board; all you have to do is connect the plumbing. It will be the same with electrics. And more specific items will be fabricated on-site as needed—no more calling around at the last-minute because you’re out of cinderblocks.
These new techniques will drive BIM into the heart of the process and will change the mix of skills and trades onsite. Expect to see more just-in-time manufacturing, less constrained by the weather.
There is surely much more coming to AEC than the above examples. We don’t recommend that CEOs add to their own stress by trying to keep up with all of it. We do recommend asking yourself the larger questions:
- Where is the value for your business? Which applications of technology will keep you ahead of the competition and help the bottom line?
- How can you foster a culture of innovation, rather than seeing change as something to be avoided?
Because as we keep saying, there are a few things that you can be absolutely sure of. First, that changes are coming. And second, that IT is central to navigating them. The AEC firms who get this right are seeing great opportunities. The rest will struggle to survive.
Part V: IT leadership
We hope to provide solid advice on how mid-market CEOs in the AEC sector can grow their companies with technology. But we’ve yet haven’t touched on one crucial aspect: leadership.
Historically, the AEC sector has not offered careers for senior IT leaders. Instead many companies, especially in the mid-market, have an ‘operational’ approach to IT, seeing it simply as a line item, rather than a source of growth and value.
Often these IT managers are overworked and lack the time to really own innovation. Perhaps they have grown up with the business, and while they’re extremely reliable and competent, they lack the strategic thinking necessary to drive transformation. Or, since they report to the COO or CFO, they don’t have the authority to implement it.
We understand the need in the AEC sector to keep overheads lean. There will be capital for investment in IT for a project, but too often IT staff costs are slashed, resulting in an inadequate digital infrastructure and systems not fit-for-purpose.
We wouldn’t suggest that there is some fundamental problem in the AEC sector. We mean to stress the difference between operational competence and strategic vision. According to what we’ve seen, the AEC firms that really want to grow must have an IT leader who can develop and implement a digital strategy that matches their company’s overall vision.
Freeman Clarke specialise in IT leaders that take ownership of innovation for your company—our CIOs and CTOs combine real-world business experience with technological know-how. And since we work on a fractional model, it’s affordable. In fact, the fractional model has worked quite well in the mid-market AEC sector, with its intense deadlines and varied demands.
If you have questions about how Freeman Clarke can help your AEC company grow—or any other questions about this series—feel free to get in touch. We’re always up for an informal chat.
To find out more about how mid-market Architecture, Engineering & Construction (AEC) companies can get more competitive through their digital strategies or how to streamline your company’s systems to control costs, please visit our AEC Knowledge Center.