Tech Talks: How Owners are Using Construction Technology
Based on the findings in the Dodge SmartMarket Brief: Optimizing Construction Technology for Owners
Avidahn Levin
President
Avicado Construction Technology Services, Inc.
Steve Jones
Senior Director – Industry Insights Research
Dodge Data & Analytics
Listen to the entire conversation:
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Current State of the Construction Industry
Steve:
This is the biggest industry on planet earth, but it’s so fragmented that hardly any practitioner knows what’s going on outside their own front yard. When you look at any other big industry that’s investing capital to build anything, they don’t build physical prototypes anymore. They’re able to completely virtually design something. So to what degree can working digitally mimic what some of these other industries have been able to do by saying, “Ah, we can learn from what other folks are doing”, and apply that to our practices. And we have a central theme of getting more and more digital because that also helps you get more predictive and gives you great data for operating these assets for decades to come in an ongoing fashion.
Owners are the fastest growing adoption quadrant right now. They have finally come to realize that they can bring more uniformity to how people on their teams are implementing the tools to the owner’s benefit and collect the kind of information they need for long term benchmarking, predictive analytics, and long-term management.
Avi:
What I like about the SmartMarket brief is that it solely focuses on “What are the owners’ problems?”. When you see the information in the report there’s a couple of things that really stand out as to why digital transformation of construction owners is behind farming or manufacturing. How did we let ourselves get to that place? More importantly, how do we not stay there moving forward? And the report does a really good job of outlining that from a cultural perspective.
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How Owners Are Currently Using Technology
Steve:
The SmartMarket brief covers 8 key processes and how owners are using technology for each. What’s interesting is that the things which are most digitized now are the things that the owners are really held accountable for to the board of directors or senior management. Number one is portfolio planning, which really didn’t exist in technology until recently.
It’s the most digitized process, but has the least experienced users because it’s relatively new as something you can get technology to do for you. But it’s so critically important when somebody on the board wants to know “Where are we with that program?”.
Something I really liked from the brief was, we correlated the number of processes owners are digitizing and the benefits owners are receiving, and there was a direct correlation. The more processes you’re digitizing, the more benefit you’re going to receive.
Avi:
I think it’s really interesting that the closeout process is so far behind. Unfortunately, only 26% of owners have digitized them. The report highlights that the processes that have the hardest path towards integration with other systems will be the most challenging to digitize. So why is there this disconnect in the closeout process? Because who are you giving the closeout process information to and where are you getting it from? Usually it comes from the general contractor, and what do they do with that information? They’re entering in their system and they’re giving you a report.
So you don’t have that data to then go to the facility operations team and say “Here’s your warranty information. Here’s where your insurance is expiring.” You don’t have any of that. It’s in the general contractor’s system. That’s a process that integrations and digitization is going to really help the issues that we’re seeing 10-12 years into the life cycle of the building.
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The Problem With Construction “Platform Wars”
Avi:
We’re seeing a lot of the “platform wars” of construction management software. It’s not good for the industry because part of the reason why adoption isn’t faster in this industry is because their data is not flexible. I think the vendor that’s the most open and willing to integrate with other tools is the one that’s going to win, not the one that’s trying to build their own ecosystem. It works for Apple because you have over a billion people on it. But in construction, it’s not going to be that way. There’s the speciality tools that integrate that are going to be the ones that have the greatest adoption.
It’s really insightful to be able to bring this to our owners and say “What you’re investing in needs to be something that you can think long term towards and have that open environment and great API architecture.” Only then will you see the increase of speed, which the SmartMarket brief does a really good job of highlighting.
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Closing the Construction Technology Generation Gap
Avi:
When we go to a client or construction owner, one of the things we talk to them a lot about is creating a “data culture”. It’s not just building dashboards. Everyone needs to be thinking about “what data can I get from this process?” and “How does that data then go to a different part or different program and map it out on the life cycle?”.
51% of owners have 1-3 years of experience using technology for key processes. Their focus should not just be on implementing the tool, but also on building a data culture so that owners can have the data.
What do you get with a culture that’s driven by data? With a program and lifecycle that have access to all this information? You get predictability. You get performance statistics on your contractors. You have access to all of that. It’s exciting to see the potential of these companies that are just a year or two into their technology adoption journey.
Currently 37% of project engineers are doing double data entry. If you’re having trouble preventing your project engineers from leaving, give them meaningful, fun, tech-forward jobs and make them responsible for the data culture. As more exciting, better software comes out as we drive a better data culture, these project engineers are going to close this generation gap of technology.
Steve:
We did a study on pending retirements and it was 30-40% in the next five years. This is a great opportunity to bring in digital natives who are completely facile in this technology world. They don’t want to live in any other world than this.
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Homegrown Systems vs. External Platforms
Avi:
The SmartMarket brief shows that only 19% of owners are leveraging Microsoft 365 for their key processes. That’s really telling because I bet most owners have Microsoft 365 and aren’t maximizing the use of it. They don’t even know what they could do with it. So you’re seeing a lot of owners continue to build internal tools, which 15 years ago was probably the right direction because this commercial stuff wasn’t available yet so you had to build your own tool. The SmartMarket brief shows that 96% of owners are still prioritizing improving that internal tool they’ve created. Look at all the resources that are spent on this internal system.
I worked with a large developer who used an Excel sheet that took 35 minutes to open to manage all of their projects. So in the morning they’d come in, open the file, and take their “Excel coffee break”. The company’s since implemented a PMIS system and they’ve digitized, but it just goes to show that they could have instead spent maybe three times the money improving their Excel sheet, rather than switching to a more efficient solution. These large owners are starting to see that and they’re saying “Why are we building it ourselves?”, “Let’s have a vendor and hold them accountable and invest money in their developers making these enhancements.” Because you can get 85% of what you need off the shelf. So do you want to build the 85% yourself? Or do you want to get a head start and just build the extra 15%?
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Data Silos in the Construction Industry
Steve:
So much of the construction industry is siloed in every possible way. Look at how many companies it takes to build a building. It takes 60 companies to do a big project. There’s this idea of this kind of point solution, single fix, without this idea of an ecosystem of information. That’s why Avi’s point about data culture is so critical. Yes, we have to build this building. But I’ll say it’s equally as important to get the information out of this process so you can make sure you’re going to meet the schedule, quality, and cost constraints and then flow it into your facilities management to be able to learn “What do we know about this project?” and “What can we do better next time?”.
This allows you to benchmark and become more predictive and analytical about how something’s likely to turn out if you do something. You can’t do that unless you’re flowing information seamlessly between these very useful, powerful applications.
Avi:
What this really highlights is that owners are not looking for additional platforms. Owners are looking for easy access to information and easily integrated information. You talk about “Why is the construction industry so far lagging behind some of these other really bureaucratic, tech-heavy industries?”. They’re looking for a data community. And I think integrations is really the key to making that community. And with that comes predictability, insights, and advantages.
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Contrasting Vertical & Horizontal Construction
Steve:
Unfortunately there’s a lag with civil as opposed to buildings. It’s not uncommon in a lot of these studies that we do. The civil folks have been a little slower in terms of aggressively adopting and taking advantage of technology. An awful lot of times they work in a public environment where they’re publicly bidding and they’re more reluctant to mandate the use of data-oriented processes. But we’re seeing much more growth in that recently. There’s a lot more use of BIM in civil. There’s a couple companies out there who are really working hard every day to try and help people get more engaged in these sorts of tools.
We’re doing more studies all the time that focus just on civil and how it is that the use of technologies can actually advance those projects. It is so important right now as we’re about to spend a boatload of taxpayer money on big infrastructure projects, which are badly needed. The worst thing we could do is spend all that money in a poor way and get the same old suboptimal results. Let’s get ahead of that curve. Fortunately, there is some money in that bill to invest in some technologies, but the idea of being able to do this in a way that creates sustainable assets going forward is going to mean we don’t need to spend that big money nearly as frequently down the road.
Avi:
I was interested to see the shift in the infrastructure bill. The economy currently reflects that building owners are actually more worried about costs than civil owners right now. And that’s an interesting flip from maybe 10 years ago when it was hard to come by infrastructure funds. And the building owners had access to 0% interest rates. And so now that’s flipped and shifted. It’s good that building owners care about costs because technology is going to save you money if you do it the right way.
If building owners are worried about the dollars they’re spending, maybe they’ll evaluate where they’re spending that money and stop building homegrown systems, stop buying things they don’t need or maybe already have access to, and invest in their culture. Those are all things that cost less money than going out and building your own tool.
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Data-Related Challenges to Adopting Technology
Steve:
The SmartMarket brief took a look at the top data-related challenges owners are facing when it comes to technology adoption, and the number one challenge was that data needs to be more complete. The data is there. It isn’t that the data doesn’t exist, it’s that the data didn’t all get to the place it belongs.
Avi:
This challenge goes back to that data culture. Are you capturing data at every point? Are you talking about data in your contracts with your contractors? That’s where the evolution needs to come, not just from the system you’re using. What data are we producing? Who owns that data? A lot of this data exists from a contractor. The contractor may not be incentivized to share all this information in real time. We’ve all had a potential change order that we want to be very cautious about before the client knows about it, and those are hindrances. But as you’ve seen, the contracts of these large owners evolve with their contractors to being more transparent and collaborative.
I think the data behind it is going to also become a lot more available. If the systems, people, and contracts can line up together, we’re going to have a greater impact. How do we make sure data is transparent and accessible so we have real time insight into actions? It’s interesting to see this is such a big hurdle, because it’s a solvable one.
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Organizational-Related Challenges to Adopting Technology
Avi:
The SmartMarket brief also took a look at the top organizational challenges owners were facing with achieving the greatest benefit from their technology adoption. 50% of owners reported poor internal processes for technology implementation being the biggest challenge. And 46% of owners reported lack of senior management support for technology being a challenge.
Steve:
And the third biggest organizational challenge owners are facing is lack of qualified users in their organization. Are these organizations tending to keep the technology responsibility with a single specialist? Another thing the SmartMarket brief looks at is the number of people in the organizations who are able to use the technology. And the numbers weren’t nearly as strong as I was hoping to see. A lot of companies don’t have somebody in every group who is competent with it. If you’re going to be a digital company, you have to make sure there’s a lot of people who are really comfortable using the technology and doing what they need to do, because the tools are actually built to support that. You should have job requirements in writing for every single employee. If you’re going to be a digital company, you can’t tolerate people who only use the technology if they kind of feel like it some days. You’re going to be graded and judged and rewarded on your ability to embrace these tools that we’ve invested in for you and the training we’ve provided for you.
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Capturing Real-Time Data from Your Assets
Avi:
Once the building’s turned over, what is the data that you’re losing by not having the data from your construction process? I look at warranties, building information models, all your asset information – those are things that you can be collecting during the process of construction. And if you’re currently doing that today, chances are, and the SmartMarket brief confirms it, that you’re entering that information at least three different times. During planning you might have the list of all the assets that you need to buy. During construction you have a list of all the assets you need to install. Then in operations you’re building that list of all the assets you need to maintain and operate.
There’s this really interesting concept of live warranties where you buy an asset, it goes into a system of information as an owner that you can use. And by the time you install it, by the time you maintenance it, that warranty is probably expired. When you have live warranties, the data exchange as the manufacturer is, if you buy my equipment you have access to that data. And as we update the warranties, as we update the specs, as we update the maintenance procedures, all of that will live in a live binder that the owner has access to. And that’s kind of this picture perfect world I see. And I think you forget a lot about it when you focus on just construction. What data can you capture that helps you manage the building better, cheaper, and faster?
Steve:
I like your phrase “live binder” because I keep coming back to the fact that this is a human business. Its people. And if you come on too strong with data tech, it’s asking people to move to a whole other country, whereas they all know what a binder is. They’ve been getting binders for years. But this “live binder” is different and going to serve your needs better.
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Bringing Data Into the Planning Phase
Steve:
This is a real emerging art and science right now. Owners only recently have become comfortable putting in actual contractual requirements for anything to do with technology because they felt like, well, now I own having to train you, and I own any problems that you incur with it, so I’m going to stay away from it. They have evolved to realize it’s in their benefit to control it and they’ve got to do more than just say, in the instance of BIM, just go to your RFP and erase the word CAD and stick the word BIM in and see what you get. No, that’s the role of the BIM execution plan. Here’s exactly who is going to produce what and when and at what level.
This now needs to shift into things that relate more to project management information. Be very specific as to exactly what it is you’re going to require, when you’re going to require it from who and to whom. It has to get shared and it has to meet a certain level of reliability and accuracy and completeness in order to be acceptable or it’s going to get booted back. This is a great role for technology because it can say yes or no, and a lot of this stuff can be collected on the fly and delivered through integrated digital workflows between players. That’s what the future looks like. It doesn’t need to be technology-specific, it can be brand agnostic. It’s about the value of what is getting exchanged.
Avi:
You’ve got to have those upfront conversations and map it out. It’s not enough to just conceptually talk about it. But rather, let’s map the data flow of this project before we start leveraging these bond funds. Let’s get data culture to be part of programs and part of the conversation.
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Construction Career Opportunity for Younger Generations
Avi:
One big constraint is knowledge of these systems and tools. You look at this next generation of people that are joining the workforce, and they are looking at the construction industry and seeing that it is a laggard in digitization.
I would say to them that you want to join an industry that needs your help, not one that’s saturated. There’s a huge opportunity here for people coming out of college to get experience with construction technology, learn the tools, and then make an impact in the industry.
Steve:
The great thing about the construction industry is you’re building a real tangible case. You can see it, you can eat in it, you can stay overnight in it. There’s just nothing like being in the built environment. It’s a great place to be.
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