Construction industry SMEs: Achieving digital transformation…
A large portion of my career has been devoted to working with Small and Medium Enterprises (SMEs) in the construction sector, either consultants, developers, or contractors. One of the common productivity hurdles almost without exception, particularly for contractors, is their inability to streamline their workflows and their business operations, working most of the time in an unsystematic manner. The results, as one can easily guess, include lack of real-time visibility of the projects’ finance, problematic delivery and, even worse, panic attacks when they take stock, post-handover.
But why SME contractors fail to solve the riddle of organising effectively their own processes? Living in the era of Industry 4.0 I shall try to explore the main reasons this is still happening and how digitalization can assist SMEs plan for the future, or even better, shape it!
Acknowledging the need for change
Surprisingly enough, the main cause is psychological and not technical; Digital transformation is all about change and change creates fear. It is a dive into the unknown, a walk out of the comfort zone of traditional ways of “doing things”, amplified by the misconception of a high price tag. But this misconception is just about knowledge; or better, lack of it. Change is always intimidating when it is amplified by ignorance.
Before going further, let’s define what “change” means. Change involves getting rid of old habits, having the wisdom and open-mindedness to see the novel out there and, eventually, the courage to admit that your business model is not delivering the value it should to your audience, i.e., your clients. Can you imagine driving your new, shiny car out of the dealer and a few miles down the road realising that oil leaks all over, rainwater comes into the cabin or the doors do not sit well in their frames? Well, I don’t think so…
Contrary to the manufacturing industry the construction industry still believes that delivering a half-finished, or mediocre product is acceptable. Crude techniques, malfunctioning services and numerous human-induced errors are involved in the process of producing a building or a structure. The results are usually obvious and, literally, traumatic; leaks, cracks, thermal bridges, energy-devouring spaces and the list goes on… This must not be the case anymore, things have to progress radically, and this will happen through the redefinition of the processes the industry follows.
Digitization versus Digitalization
Despite the bazillion digital apps and the social media that dominate our lives, the construction sector still struggles to implement digital tools to do business and manage projects, remaining desperately antiquated. How can contractors use digital technology to achieve this progress and improve their product? One key aspect is to gain a better understanding of what is currently happening in the world and embrace the right digital attitude; in other words, “digitalize” rather than just “digitize”.
Let’s stay for a minute in this subtle but substantial difference between the two terms. All contemporary construction SMEs have accomplished a degree of digitization, but they still find it difficult to embrace digitalization. So, let’s see briefly what the main difference is.
In essence, digital tools that help to convert analogue to digital, shifting manual admin and paperwork to smartphones or any digital device, such as Excel, WhatsApp, emails, pdfs and everyday “static” applications belong to the former. As such, they are not necessarily “intelligent”, but only as good as their users; remember the old motto about software “garbage-in-garbage-out”? In this case, people still have to do repetitive work which is, largely, prone to errors. The transition to such tools has started in the late eighties, so using them is nowadays the norm and it is certainly not considered “innovative”. On top of this, the industry has now come to the realisation that the use of “dumb” digital tools (as opposed to smart) creates a new breed of problems, mostly related to data sorting and data management, especially for large-scale projects.
Digitalization, on the other side, is a fundamental shift of the business’ core operations towards a new model of work, i.e., a structural change of operation and process. Digitization is a prerequisite for digitalization since a degree of familiarisation with the basic “language” is needed in order to utilise technology to exploit the ocean of data, collected from past and during current projects. This translates to the automation of tedious or repetitive processes that consume a considerable amount of time, as well as being able to make informed decisions about project risks, delays, potential cost overruns and contractual (mis)management. Lately, the matchmaking of neuroscientists and computer scientists with built environment professionals has resulted in a rapidly increasing number of startups that explore intuitive ways to achieve the long-awaited project optimisation.
Getting back to the initial question, however, SME owners and decision-makers feel somehow threatened by new technologies and notions they cannot comprehend. This is particularly frustrating when one realises that a great deal of smart and creative people work in the SME construction industry; engineers, architects, project managers, quantity surveyors, to name a few. It seems that these experts’ collective skills, training and knowledge are not able to bring the fresh air of change the industry needs… And it is disappointing that the current status of construction is nowhere near the revolutionary progress that other industries have achieved, in a fraction of the time that is needed to finish a typical building project.
Finding the “right recipe”
So, what SMEs should do to embrace and harvest the benefits of the digital revolution?
Take some time to understand your business. Habit can make SME business owners blind to improvement. Seek examples that substantiate the benefits your business may achieve when you utilise digital technologies. Read industry journals and case studies, educate yourself. Find more about the digital collaborative ecosystem that allows your people to focus on the actual job than just the process and, eventually, save time and money for your business. Eventually, this will offer substantial extra value to your client which will differentiate you from the competition. On the contrary, when you do not make the effort to understand technology and the huge benefits digital transformation brings, you will remain in the Mesozoic Era of construction. Eventually, you’ll become extinct!
Find an expert to guide you through the process. There is a “new” breed of experts out there, with considerable experience across both fields, construction and digital technologies. As an SME you stand more chances to succeed when you employ someone who’s done it before, possesses the right skill set and the ability to listen to your specific problems, which, guess what, are very common among construction businesses. As Nasa’s Steve Shapiro suggests in his always relevant TED Talk, if you’re desperate for change don’t just look for one more person with the same skillset; she won’t make the difference. Hire someone different, a person that will be able to infuse new ideas, plant the seeds for a novel vision! Hiring out-of-the-box is probably the best investment you will ever do for you and your business.
Talk with your team, identify your team’s IT literacy. The moment you start mapping your SME strengths and weaknesses you are one step closer to implementing the right tools. The cliche “you are as weak as your weakest link” is not true in this case, since you do not have to apply blanket policies and demand everyone to upskill simultaneously. Identify the level of familiarisation each of your team members have with technology and roll it out in waves. Having a sensible implementation strategy will make things more digestible for your people and will help them buying into the idea of change, rather than rejecting it outright as another management caprice! Above all, talk to your people. Communicate the rationale behind the change and project the future business modus operandi, so they are able to see the big picture.
Nurture an organisational culture. I have come across a number of business owners whose prime motivator is sheer profit. Having as an objective to make money is not a business culture! Culture means passion, quality, vision, integrity, respecting your client, finding and promoting talent, acknowledging that you need to find people better than you in order to make your business thrive. Take some time and write down your mission statement, first as a person and then as a business. This is always a good starting point, which puts things into perspective and helps you understand where you are and where exactly you want to be in x years from now.
Decompose complexity. A complex process will be intimidating and discouraging even for the most aspiring adopters of technology. If the new process, or technology, is cumbersome, especially in a moving mechanism as a working SME is, no one will engage with it for long and will eventually abandon it. As such, your digital implementation plan needs to assess the specific tools that are directly compatible with your team and scale up as you go.
Manage time. Due to the nature of construction projects, there is hardly ever a case where time is of abundance. It is the upper management’s responsibility, however, to “create” time, promote self-improvement (both for themselves and their people) and provide incentives and opportunities for upskilling. As mentioned many times already in this article, when people are busy they tend to go back to their comfort zone instead of investing precious time to learn new tools and methods.
Adopting a digital mindset is definitely not about a one-off, off-the-shelf, purchase. It is a tailor-made investment and should be treated as such if one wants to build an enduring organisation. Sooner or later the construction industry is going to be disrupted by non-industry players; oh wait, it’s already happening! That’s a fact and only well-prepared SMEs will be able to stay afloat when the new model is in place.