COVID-19 government restrictions set on the construction sector have caused a massive blow to the economy, with many projects experiencing budget blowouts and delays.
The recent lockdown of Victoria’s building industry stood down tens of thousands of construction workers, with an estimated industry loss of $455 million daily. In New South Wales, similar closures have contributed to an estimated loss of $1 billion to $2 billion per week.
Budget and schedule overruns are par for the course in the construction sector. According to InEight’s Global Outlook survey, less than half (45 percent) of project owners and 51 percent of contractors deliver on or under the original approved budget. However, the pandemic’s fallout has put greater emphasis on the need to improve productivity, profit and value for project owners and contractors.
One of the hardest challenges in preventing project cost and schedule overruns is the ability to accurately forecast future outcomes, including project competition date and total cost. As we look to recover from the delays and impacts of COVID-19 globally, gaining visibility and insights into projects backed with accurate data has never been more crucial in forecasting the lifecycle of a project and ensuring they run on time and on budget.
Data-driven technology and digital adoption key to accurate forecasting
The traditional practice of isolated, static estimating, planning and scheduling is not adequate in the current environment. There must be a fully informed, agile flow of data points to inform decision making. Equally manual, labour-intensive data collection and reporting processes must be replaced by digital, automated and collaborative solutions. At InEight we have witnessed an uptick in solution adoption. With remote work for many and dramatically reduced job site occupancy, the last 18 months has forced adaption in processes, including more prevalent adoption of technology.
While there is growing appetite to invest in digital transformation, adoption barriers remain, including issues with integration and implementation, capital and return on existing investments. However, the shift in how projects are being procured to essentially “share the risk” between owner and contractor has had positive implications for project certainty. There is also increasing recognition of the value of combining historical project data with risk assessment technologies to set more realistic expectations for project delivery upfront.
At a time when certainty has become a precious commodity in the world, and construction and engineering initiatives offer a dynamic stimulus that is so greatly needed. It seems prudent to take advantage of all technology can offer to deliver better project outcomes. For everyone.
The adoption of modern tools and best digital practices will enable all stakeholders to have better insights and better visibility to risks, which leads to better planning and execution, more predictable outcomes on large capital projects, ultimately supporting a strong and viable economy.
One of the most exciting applications of technology is with artificial intelligence, AI applied to scheduling software. In practice, with InEight Schedule, it is augmented intelligence, a sub section of AI. Taking data points from past scenarios, utilizing machine learning to identify trends and inference engines to provide suggestions. Planners are then able to make making informed decisions within InEight Schedule. This is a dynamic, agile approach. It enhances the classic project planning methodology, of critical path method (CPM) schedule, facilitates the incorporation of engineering and construction work packages, and in doing so also accommodates short interval planning, where work is broken down into manageable scopes of work by discipline, otherwise referred to as trades or crafts.. By ensuring planners, contractors and subcontractors are on the same page, owners can promote greater collaboration, mitigate risk and drive greater project certainty.
Innovation raises the bar today and into the future
Technology advancements available today provide a sophisticated level of insight to inform decision making for capital construction projects, end-to-end through the project life cycle – from approval workflows to improved forecast accuracy.
Innovation is an enabler, the introduction of innovations such as the internet of things (IoT), artificial intelligence (AI), and multi-dimensional modelling in virtual design (connecting layers of data to 3D models) , all allowing project managers to leverage connected data to deliver the efficiencies needed to secure improved return on investment.
Through digitisation and adopting smart technology, project managers can more accurately track when contractual obligations are met and scope changes are made, enabling real-time progress updates and workflow approvals, as well as facilitate more timely payment processing, subcontractor scheduling and document sharing.
As organisations begin to leverage historical data, valid, objective benchmarks can be formed for continuous improvement. Not only does this provide what-if scenarios, but also helps create a complete picture of an entire construction lifecycle, to help learn from past mistakes, promote future successes, and save money, time and resources. By having a holistic view or a project powered by connected data, project managers can ensure efficient and effective use of resources while building resiliency.
Whilst the pandemic has posed numerous investment and project productivity challenges, the project pipeline in Australia is strong and construction is well-positioned to support and shape the economic recovery and increase our quality of life overall. To ensure resilience of the sector, the industry leaders must now embrace technology and insights to drive processes and practices, to deliver better project outcomes.
By Rob Bryant, Executive Vice President of APAC, InEight
Robert Bryant Executive Vice President of APAC, InEight, a global leader in integrated project controls software across infrastructure, public sector, energy and power, oil, gas and chemical, mining, and commercial. InEight has powered more than $400 billion in projects globally, including more than $100 billion worth of Australian-based projects.