Construction industry lagging behind in adopting digital technology

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Ottawa and Toronto, ON — The Canadian construction industry is falling behind in the adoption of smart digital technology. According to a November 2020 survey conducted by KPMG, a Canadian consulting audit company, and the Canadian Construction Association (CCA), more than half of respondents said their organization needs to adapt their digital strategy moderately or considerably.

“Now is the time to catch up,” reports the survey titled Construction in a Digital World. “New technologies are being developed every day to improve construction work, and a growing number of companies with the industry are integrating them into their businesses.”

The report is broken down into five separate subcategories:

  1. The current state of digital maturity;
  2. How to get the “right” people to the table;
  3. Where construction companies are putting digital investment dollars;
  4. What hiring, upskilling, and building a digital team looks like; and
  5. Risk management threats and concerns.

“The industry is on the cusp of digital transformation with leading firms already adopting technology – from analytics to drones, robotics, 3D printing, and augmented reality – to yield improved productivity, safety and decision-making,” says Mary Van Buren, president of the CCA. “Our survey reveals, however, that smaller and medium-sized firms are not yet capitalizing on the benefits technology can bring. For many contractors, the low bid model simply does not allow for innovation or to invest in new technologies.”

The first part of the survey, the current state of digital maturity, found that 25 per cent of those surveyed said they are in a considerable or great digital-maturity position relative to competitors. While overall, most respondents rated their company’s digital capabilities as fairly low. The majority of respondents described their adoption of this type of technology as “experimental” or said they were not leveraging them at all—specifically in the areas of the demand-driven supply chain (65 per cent), big data (66 per cent), additive manufacturing (73 per cent), and robotics (82 per cent).

“That is not to say construction companies have completely avoided technological innovations,” reports the survey. “Selecting among the most popular new technologies, construction firms have increasingly adopted cloud and cybersecurity.” Of those surveyed, 73 per cent indicated that they have already implemented or plan to implement cloud technologies. Sixty-two per cent have implemented or had a plan to implement cybersecurity solutions.

“Digital innovation is a continuing process, not an end game,” says Lorne Burns, KPMG’s national industry leader, building, construction and real estate. “Many construction entities rely on legacy systems, and those that improve their competitive positioning will use this time as an opportunity to integrate disparate systems and adopt new ways of operating.”

Reaching the right people

The support for digital transformation is a bit mixed at the highest levels of most of the companies surveyed. More than 60 per cent of respondents said that CEOs (41 per cent), CFOs (14 per cent), and CIO/CTOs (nine per cent) are their company’s primary tech decision makers. “While executive support is important, it is even more critical to hire leaders who know how to implement technology and to make sure those leaders are at the table,” according to the report.

“Technology is not a project or an initiative; it must be intrinsically linked to the business’s overall objective, and to the business process. A successful digital strategy needs executive sponsorship, financial commitment, engagement and integration with the business, a leader who has the authority to act, as well as the talent to both lead and implement a technological transformation.”

The size of the company doesn’t need to be a limiting factor.  Specialized firms are available to give companies access to a broad range of expertise and can help them down the right path, according to the report.

Digital investment dollars

A digital transformation strategy will clearly address three areas; lifecycle supply chain integration, a future-enabled workforce, and data-driven project delivery. For those surveyed, most companies have not implemented a wide-reaching strategy.

Overall, companies’ responses were mixed regarding which technologies and applications would yield a competitive advantage. Currently, the most common investment areas are integrating systems to reduce redundancies, improving back-office support, reducing back-office costs, and improving the employee and customer experience.

“These findings are encouraging, as there is a considerable upside in digitizing these areas,” according to the survey. “That said, to see the biggest impact on their day-to-day, construction firms need to also explore technologies that help improve productivity and safety, reduce lead time and reduce the cost of goods sold.”

This could mean artificial intelligence, BIM, wireless monitoring, augmented reality, and cloud-based services. Cloud and cybersecurity are the most widely adopted digital technologies in Canadian construction companies, reports the survey.

When asked whether or not the COVID-19 pandemic has been a factor in their technology investment efforts, more than half said only a little or not at all.

Hiring and upskilling

The report suggests that construction companies build a separate digital team to lead the initiative, ensuring it isn’t viewed as extra work for existing employees. Challenge and empower traditional internal thinking and create competition, according to the report. Seventy-three per cent of companies said they possess the necessary competencies for digital transformation to a little or moderate extent.

Risk management

Incorporating digital technology can increase risks that need to be addressed. Seventy-three per cent believe their total IT world is moderately or considerably secure, while 66 per cent are moderately or considerably concerned about privacy breaches and potential risks associated with private data. “Just as investing in digital technologies requires investment in people, it also required an investment in processes, particularly surrounding risk assessment and security.”

In addition to the final report, the document wraps up with an assessment tool regarding digital innovation adoption. To participate in the survey, visit www.digital-maturity.kpmg.ca/survey.

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