Reliance on outdated processes, inconsistent information sharing, fragmented use of technology are up for major revamp in the post-COVID-19 era.

A survey of 400 construction leaders in France, Spain, Singapore and Japan exploring digital transformation in the industry has showed that the typical profit margin on a construction project averages only 2% across the four regions.

The study also revealed that a lack of digital transformation has left many companies reliant on manual and paper-based workflows.

These findings come at a time when the slowdown from the impact of the Covid-19 global pandemic is showing how important it is to digitalize operations and support remote-working. Further, any lag in digitalization is significantly damaging companies’ ability to collaborate and having a direct impact on the bottom line, with 62% of respondents saying that a lack of collaboration is the single biggest cause of construction project delays.

Lack of information sharing consistency

The survey also investigated how universal tasks such as defect management and health and safety inspections are carried out. The findings show companies have several different methods and channels in place: more than half (51%) are using a combination of in-person, telephone, email, and/or paper to inform the people responsible for repairs during the quality process of the next action. Of notable concern, 53% are using unreliable text/SMS or instant messaging (e.g., WhatsApp) to document a safety incident or hazard. The lack of consistency in how this important information is recorded and shared leaves a considerable margin for errors and miscommunication, which can lead to broader safety risks, delays and cost overruns.

Commented Frank Le Tendre, CEO, Finalcad, the company that commissioned the study: “The construction industry’s continued reliance on outdated processes—both on- and off-site—is causing significant inefficiencies. This is not sustainable in a sector where slender margins are a persistent issue. Construction has fallen behind other global industries like finance and retail when it comes to digitalization, yet this research shows us many of the daily processes that take place on all projects are prime targets for transformation. From snagging to safety, there is no area that cannot be improved by optimizing operations. In addition, as regions emerge from the downturn caused by the Covid-19 pandemic, those that have digitalized will be able to act quickly to get back to business as usual.”

Another consequence stemming from the failure to digitalize is the difficulty in documenting and capturing data, resulting in invoices being unpaid when a contractor cannot prove work has been done; a majority (90%) of respondents across all regions said this ‘free work’ was a common problem. Moreover, construction companies are guilty of ‘reinventing the wheel’ on new projects; 59% said they create new templates for existing workflows some, most, or all of the time—a clear waste of time and resources. Both results should be a major driver of digital transformation for construction managers, CEOs and developers—a centralized digital process enables continuous improvement and makes it far easier to proactively record extra work, as well as creating repeatable models.

“As with all other industries, construction is set to face a challenging time in the short term with the impact of Covid-19 hitting global economies,” continued Franck Le Tendre. “However, in the long term, construction has huge potential for growth. The United Nations predicts two-thirds of the world’s inhabitants will be living in cities by 2050, and we are seeing the smart city trend accelerate fast. If they are to capitalize on these opportunities, construction companies need to digitalize now. Digital transformation removes existing silos and simplifies the challenges that construction companies face in juggling people, plans, skills and materials against a shifting schedule—improving profitability, while increasing the satisfaction of final customers.”