Engineering and construction industry playbook has been saved
Perspectives
Engineering and construction industry playbook
Implementation guide for the engineering and construction industry
Most engineering and construction firms have been slow in embracing digital technologies. While some are using digital as a tool to create new business opportunities and improve margins, many are missing out. Our guide identifies a path forward to help accelerate progress toward connected construction sites.
Explore content
- Unlocking higher efficiencies with connected construction sites
- The ecosystem approach: Amplifying collective network strength
- Providing access to unique vendors and capabilities
- Pathways to an ecosystem approach
- The future of the construction industry
Unlocking higher efficiencies with connected construction sites
In October 2020, Deloitte and the Manufacturers Alliance for Productivity and Innovation (MAPI) jointly launched the study Accelerating smart manufacturing: The value of an ecosystem approach to identify the ways in which ecosystems can potentially accelerate connected construction initiatives.
Ecosystems for connected construction
The study found that engineering and construction (E&C) companies are increasing their digital investments, allocating 39% of their overall operational budgets to digital initiatives, including an average of more than 10 smart construction use cases. However, few participants have these use cases operational at one or more location. How were certain E&C companies able to achieve faster progress and better returns on their investments?
In the study, while 73% of E&C companies indicated value from their external alliance partners, they may not be fully leveraging the power of the network to which they are connecting. This is where an ecosystem approach can help to move the needle and dial up results.
To capture the full value of advanced digital construction technologies, firms should take a holistic approach towards integrating their internal and external value chains. Deloitte and MAPI’s 2020 Smart Manufacturing Ecosystem Study has identified a path forward that can accelerate progress toward connected construction sites.
The ecosystem approach: Amplifying collective network strength
The ecosystem approach for engineering and construction brings several independent stakeholders onto a common platform. This enables higher collaboration, reduced project risks, more efficient portfolio management, and improved outcomes for all stakeholders.
An ecosystem approach can not only enable true interoperability throughout the supply chain, but also respond to disruptions better.
Four primary types of ecosystems support connected construction site initiatives:
- Job site
- Supply chain
- Customer
- Talent
Providing access to unique vendors and capabilities
Ecosystems are generally driven by a convener, who initially brings all participants together to develop capabilities and service offerings.
Instead of reaching out directly to vendors, E&C firms can approach these conveners and gain access to specific technologies or enable certain use cases more quickly and efficiently. For instance, health and safety insights can be at the fingertips of workers, who are likely to take quicker action in case of emergency.
Digital technologies enable many siloed networks to converge and form a large single network or ecosystem. This converged ecosystem is designed to be more secure and agile and can deliver value at a larger scale.
Ecosystems can thrive when they foster the interconnections of people, processes and equipment, and their virtual counterparts. The study shows firms investing and participating in ecosystems are likely to see higher strategic benefits.
Pathways to an ecosystem approach
The ecosystem approach can work, but it’s not easy. It requires a deliberate method and typically involves an executive commitment and the creation of a road map with important milestones.
To support the road map, E&C companies often reach out to their ecosystem to build an enabling platform with an enterprise architecture. Firms need to identify the use cases and undertake a cost-benefit analysis. Companies can then accelerate their initiatives while determining which specific advanced capabilities to cultivate in-house.
A connected construction site implementation framework to consider:
Key questions that should be kept in mind while developing the road map:
• What is your vision for the next three years for digital?
• What use cases or business opportunities are you most interested in solving for or enabling?
• How can you accommodate for varying levels of maturity across your footprint?
• What do you need to do right now (capabilities) that will lead to bigger things in coming years?
• How can you identify initiatives that positively affect margins and return on investment (ROI)?
An executive team needs to be in place to drive the digital strategy road map that represents operations and key business areas with board-level remit. The team should focus on unlocking easier and faster access to capabilities to help mitigate the inevitable disruption.
Executive team leaders should also allow for flexibility to help cater to division- or location-specific nuances. For instance, the cloud provider or data platform can be decided at the corporate level, but the committee can allow for flexibility at the geography or division level for different equipment—depending on the need.
Building a digital platform in line with an enterprise architecture for smart construction can be critical to support strategic goals.
The strategies should include necessary core capabilities, but also reflect the use cases and the corresponding technologies that drive them.
The approach here is driven by a layered method to use cases wherein the underlying technology platform remains consistent, thereby helping E&C companies expand beyond current or include new use cases in future.
E&C companies should consider applying the philosophy of strategic sourcing for their ecosystem approach, but frontload the approach with strong relationship development. Other aspects to consider:
• Collaborate and form relationships with partners that share your values and passion.
• Focus on forming bidirectional relationships, where you are bringing your challenge or opportunity to them, but they also bring things to you—making sure there’s a give-take dynamic.
• Agree how value will be measured from these relationships.
While external partners can provide faster access to smart use cases and technologies, upgrading select in-house talent and capabilities can likely help engineering and construction firms to scale those benefits.
Determine which capabilities differentiate your business and support your long-term vision. Consider sensing and responding to them through the ecosystem. Identify the best vendors to provide the support.
Be deliberate about which capabilities make more sense to continue to source through the ecosystem’s partnerships.
The future of the construction industry: Start your smart construction ecosystem
- Define scope. Don’t build capabilities you don’t need. If you understand the nature of the business issue, the scope of the solution becomes easier to understand.
- Act with speed. Speed is one of the key benefits of tapping into an ecosystem.
- Scale fast. It’s easy to do a proof of concept in an unscalable way. The ecosystem is ready to scale your test case. It brings scalable capabilities that are ready to respond.
- Systemize the process. Create repeatable steps so that, as you continue to activate new business use cases, you can tap into the ecosystem more readily.
About the study
The study included an online survey of more than 1,000 executives at manufacturing and E&C companies across three key regions globally: North America, Europe, and Asia. It also included executive interviews with more than 30 leaders from manufacturing companies and ecosystem participants.
