The global engineering and construction (E&C) industry is expected to be worth $4,562.6 billion by the end of 2017. In 2012, total revenues were $3,357.8 billion1.While the industry is going through a phase of measured expansion, I see a lot of volatility too. Projects are getting larger and more complex, but turnaround times are shrinking. Contract clauses are becoming more stringent. Electronic handover has become the norm.
Meanwhile competition has spiked up and material costs are anything but stable. Regulatory compliance has also become difficult owing to tighter Health, Safety & Environment (HSE) requirements. Then there are issues like massive paper-based documentation due to the large volumes of data churned out, which is impacting costs, productivity and the environment.
The E&C industry is looking to technology as the magic wand for overcoming these challenges and easing the squeeze on margins and the changes are already visible. Aren’t we all seeing the mobile, the cloud, and digitization drastically altering the way work is done in E&C businesses? Technology companies are offering several mobile-based solutions for activities such as viewing and editing engineering drawings, project progress updates and performance reporting, inspection, progress monitoring, workforce tracking and scheduling, materials and asset management, fleet and equipment tracking. With ERP solutions now available in the cloud, E&C businesses can benefit from the lean IT set-up, and avail automatic upgrades at a fraction of the cost.
Much more however needs to be done on the technology front. As project teams have to collaborate with multiple specialized disciplines within the company as well as external stakeholders, a collaboration tool can help for boundary less interaction, which can enable audio/video interaction, information exchange, collective problem resolution, and decision making and sharing best practices.
Digital Information Management tools can help in consolidating data and improve data quality, reducing costs and enhancing productivity considerably by real-time secured information access, ability to make quick decisions and digital handover of project lifecycle data.
The vision of integrated project delivery lies with the effective use of integration technology across the core systems of the enterprise that includes ERP, project management system, procurement systems, information management systems etc., exposing business functionalities as services akin to the manner in which Internet systems are exposing their APIs for end user application consumption.
The E&C space is already seeing an increased adoption of cloud technology to host non-core and non-data sensitive applications. Cloud hosted services are widely seen in HR, Marketing, CRM areas and being extended to ERP, Project and information management domains as well. Cloud technologies will help speedy delivery of IT services at much lesser cost.
Despite the improvements possible with technology, IT spend as a percentage of E&C industry revenues was only a little over 1% in 20122. I think it’s time technology went mainstream. Already having harnessed IT, large companies should now work on consolidating their existing applications, adopting the latest innovations and implementing IT on a larger scale while smaller companies should overcome the challenges related to escalating costs.
What are the barriers you have come across in technology adoption? Can you think of other possible areas of innovations in the E&C space?