Despite being the largest industry in the world, construction has historically underperformed when compared to other industries.
In fact, the construction industry had a 1% yearly productivity growth vs 2.8% for the global economy over the last 15 years. Additionally, 80% of projects overrun their budgets and the construction industry has the highest rate of insolvencies of any industry.
Perhaps some of the industry’s struggles are down to its resistance to change. Considering, construction isn’t just the biggest industry, it’s the least digitised, registering at 1% on the digital index.
Today’s engineering and construction (E&C) players are navigating long-standing, sector-wide challenges of:
- Poor profitability
- Low customer satisfaction
- Cost overruns
- Lagging productivity
As the world increasingly turns to digital solutions to stay connected in a post-COVID-19 world, it’s clear that expectations for service have changed rapidly.
For E&C businesses, the time to face the future of construction is now.
The construction stimulus marks a moment of opportunity
“There’s now an increasing focus on sustainability and using our resources more wisely, responsibly, and effectively. We need to design a more user-friendly infrastructure that’s better aligned with our current habits and needs,” says Antonio Sciuto, Senior Vice President in charge of Global Business Development at Salesforce.
New demands in the construction industry are typically driven by:
- Urbanisation
- Population growth
- Climate change
- Historic underinvestment
Construction businesses need to capitalise on this moment to build a better future. Especially in the wake of construction stimulus packages in America and Europe. The introduction of a $1 trillion+ infrastructure stimulus by Joe Biden’s administration heralds the dawn of a new frontier in the US. And the €800 billion EU recovery plan could lead to a building boom in Europe.
For today’s construction businesses, limitless opportunity glimmers on the horizon of the next normal. But how can they seize it?
The future of construction is powered by tech
E&C companies have traditionally been faced with productivity and budgeting problems, on top of:
- Fragmented ecosystems
- Labour shortages
- Complex projects
- Shifting regulations
Companies working on public infrastructure projects that impose stiff penalties for building delays face even greater challenges. In a post-COVID-19 landscape, disrupted supply chains and supply shortages are common.
To offset some of these issues, today’s construction businesses are turning to digital solutions. Here are some of the ways that digitisation is empowering today’s E&C operators:
- Uniting data to provide an integrated view of the customer, project, employees, and third parties.
- Providing bidding tools as part of an integrated commercial process, from business development to tendering. Businesses need to be able to bid on the right project, at the right time, at the right price. Saint-Gobain leveraged digital solutions to make bigger deals and close them faster, resulting in an 11% reduction in time to quote, a 79% reduction in days needed to close a deal and an 85% increase in quote value.
- Leveraging data for risk assessment. With razor-thin margins of 3-5%, construction companies don’t have much room for error. So it’s no surprise that one bad decision or poorly executed project can lead to insolvency. Minimising risk is the #1 priority for E&C companies. Better data helps them make smarter decisions.
- Driving productivity and improving the employee experience. Digital solutions can help optimise resources, automate tasks, and drive employee productivity, making sure that the right people are assigned to the right jobs. This is critical in an industry where employee costs can be 50% of the total cost.
It’s clear that digital solutions are helping forward-thinking E&C operators integrate data. They also help to minimise risk, drive productivity, and improve project execution.
Construction trends reveal a digital future
It’s been said that data is the new oil. So it’s somewhat surprising that much of the construction industry is still taking a wait-and-see attitude to digitisation. Recent trends show that the landscape is shifting, though the sector still has a lot of catching up to do.
Top construction trends for 2021 and beyond:
1. Customer expectations are changing
The construction industry has long struggled with disappointing customer satisfaction numbers. So finding a way to meet rising customer expectations is a priority. Digitisation helps E&C companies evolve their offerings to keep up with the needs of today’s customers.
New research shows how construction firms are growing revenue during the pandemic.
2. Modular construction is on the rise
The industry is increasingly focusing on products not projects, as it moves towards offsite fabrication and modular construction. Additionally, digitalisation and new materials are leading to a rise in the industrialisation of design and construction.
3. Construction companies are going green
We’re seeing more conscious planning around environmental impact and the materials being used. Green may not yet be the new normal for E&C players. However, more and more companies are prioritising sustainability and the creation of healthier spaces:
- Chalmers creates building materials that can kill SARS-CoV-2
- Cushman & Wakefield develop the 6-foot office
- Dalmia Cement set a goal of becoming carbon-negative by 2040.
Smart materials are becoming more common as well as a rising concern around managing embodied carbon emissions. Digital solutions are crucial for tracking and reducing Co2.
4. The demand for digitalisation is increasing
The industry has traditionally been a slow adoption. Yet, digital is moving from being a ‘nice to have’ to a ‘must have’ for staying competitive. E&C players are now leveraging digital to:
- Reduce risk
- Drive productivity
- Deliver better customer experiences
The pandemic is also driving investment in digitalisation, as a McKinsey survey reveals that 69% of leaders believe end-to-end digitalisation has been accelerated by COVID-19.
These construction trends show that E&C businesses are moving towards more data-driven, less wasteful processes. Risk is reduced, customer-centricity is praised, and digital platforms empower the workforce to build a better future.
The future of construction depends on strategic partnerships
When it comes to digital transformation, today’s construction companies need a strategic partner who can understand their business’s pain points and solve them. And that’s where Salesforce excels. “We look at the whole value chain across the board”, Antonio Sciuto explains.
Salesforce can help E&C companies:
- Better manage resources
- Use AI to optimise operations
- Increase customer satisfaction
- Improve bid competitiveness
- Enhance accuracy
Keeping up with new construction trends starts with breaking silos, getting connected, and managing risk. The future of construction starts with Salesforce.
How have construction firms adapted their business development processes during a crisis? Read Trends in Architecture, Engineering, & Construction to find out.
