“Not just improvement, but a once-and-for-all solution”.
In Part 1 of my series on Digitally Transforming engineering/construction companies I talked about quality and how transformation starts with a change in mindsets. In this concluding part I will talk about how transformation affects the business bottom line.
The E&C industry has been battling the time/cost conundrum for decades. It’s only now, with digital technology, that they stand a chance at winning.
A project’s success depends on two factors – time and cost. Did it get completed on time? Did it stay on budget? Simple parameters, but so delicately balanced. A small deviation can throw off an entire deliverable. The more the deviation, the narrower the profit margin. Delays, errors, rework prove so expensive for construction organisations, yet they are the norm rather than the exception. Digital Transformation is the way to reverse that – make deviations the exception rather than the norm.
On paper, delay/deviation seems avoidable and is rarely planned for, but smart project managers and owners know that planning for failure means planning for success. The combination of highly technical work and highly manual processes is already a dubious proposition, and when you add distributed teams in multiple locations working in different work cultures and time zones and platforms, the wonder is not that most projects fail but that any projects get completed at all. And that is why the wave of digitization and automation brought about by software technology (which we’re calling Digital Transformation) offers such a bright hope. It promises not just an improvement, but a once-and-for-all solution to the age-old problems that plague this industry.
I’ll touch briefly on two parameters that get affected instantly and dramatically: Planning and Manpower.
Planning.
Here’s what a typical day at the planning office could look like in the post-digital age: Log in and glance at your smartphone, tablet, or computer to check the status of any drawing or document or model. If you need to, check on the ‘weightages’ assigned to each activity and see how those are faring. If no serious deviations, report back to your boss and make his day. Or, step back and glance at the project S Curve, to get that all-important birds-eye-view of progress before that important meeting with the client. Or get down to a little serious number-crunching by cross-checking payment schedules against receivables and budgets and purchases and cash flow statements and so on. All this without a single phone call or email, yet with complete confidence that every bit of data you’re looking at is accurate.
How? Your planning system (MSProject or Primavera) exported schedules and deliverables into the project control system and from then on it updates fresh data coming in continuously throughout the life cycle of the project.
Sounds good, doesn’t it? This is not science fiction, this is reality today. Digital technology made it possible.
Manpower
For an engineering or design firm, manpower is the biggest cost. Again, imagine a day at the (digitally-transformed) office: Log in, click on a deliverable to see what resources have been assigned to it and what the associated time-sheets look like. Wondering whether you’re still within budget? Simple. Check the time-spend per resource – per package or per role or in total – and compare it with the budget. Check the efficiency of the resource in terms of the FTE (Full time equivalent) across your project portfolio, ie projects under execution or projects you have recently won or projects in bid. Use this data to create an accurate predictive model of your resource status – with the current load of work or the expected orders in hand. That will give you a clear picture of whether or not you’re getting optimal value from your resource management plan, and help you hire more efficiently. Do you need more full-time resources? Would it be more profitable to outsource? What about hiring a team for the duration of the project only? Such decisions are now easy because you have all the necessary data ready to hand.
To conclude, what I want to say to the E&C industry is this: Digital Transformation is more than just marketing hype. Sure, it’s the trending buzzword of the moment thanks to marketing but that doesn’t reduce its validity. You see, like it or not, there is no escaping the fact that information technology has been transforming our world for almost a century now. Every industry has profited greatly from that transformation.
Isn’t it about time E&C stepped up for its share?