The Digital Black Hole: Impacting the Construction Industry

The Digital Black Hole Impacting the Construction Industry A Hilti report / ASSET AND EQUIPMENT MANAGEMENT

Introduction Let’s face it, for an industry ‘digital black hole’ has formed that uses increasingly cutting- in the construction industry. edge technology to execute It’s a widespread problem their clients’ complex projects, that attributes to some of the companies in the construction inefficiencies that cause large industry still struggle to projects to run on average embrace tech that provides 20% longer to finish than the same level of precision for scheduled and up to 80% 1 the internal workings of their over budget. businesses. Moreover, construction In fact, the McKinsey Global companies are spending an 90 hours Institute’s Industry Digitization average of 90 hours each per month are spent Index, rated construction as month searching for assets searching for assets the second LEAST digitized across construction sites. sector in the world. And yes, that can add up fast. With relatively few construction One elevator company found $200,000 companies digitizing their that it was spending $200,000 spent annually searching assets, business processes USD annually in time and cost for assets and working practices, a for asset management. Labor; material and 4% Profit Top costs for consumables; and tools and 6% Other 15% Subcontractor a construction equipment are a construction 15% Tools & Equipment company’s top three 20% Mtrl & Cons company 40% Labor expenditures. They’re also the most difficult to manage – especially when using a patchwork of paper-based systems, sticky notes, and spreadsheets. This way of working is baton if a key person is out neither transparent nor of the office. accountable, and it’s easy for asset management to Such systems also have become dependent on negative cost and efficiency specific individuals – meaning implications for managing both it’s difficult and complex for physical and administrative anyone else to pick up the assets. 2 ASSET AND EQUIPMENT MANAGEMENT

Labor in the It’s no secret that labor costs To calculate labor and labor shortages in the productivity in your construction construction industry are on construction business, sector an upward rise. One survey you could ask yourself found that 80% of construction the following questions: companies can’t find the workers 2 they need. To combat this trend, ▶ How much work can a firms need to improve jobsite group of 20 workers get performance and become even done in a day? more productive. ▶ If the number of workers is Labor efficiency is the basis fixed, how many days do of most tender estimates, as you need to complete the well as the yardstick by which job? performance is measured and monitored. However, labor ▶ If the days you have to 44% efficiency is very closely related to complete the job are fixed, of firms report increasing physical resources and ability in how many workers will you construction prices due terms of knowledge and skills. need to finish in time? to labor shortages.2 Advancements in technology are ▶ How much time can you making management of labor save on finishing one part 80% productivity more predictable by of the job if you invest of construction companies exposing business inefficiencies. in equipment that works can’t find the workers This can help improve planning faster? they need.2 and overall profitability. Tool and Mending the digital black hole in Prioritizing digital technology the construction industry; and, creates data – a lot of data. equipment more specifically in an individual Key data items can then be construction company, starts usage identified to enable quick action. with prioritizing digital technology. In turn, this creates data – a lot of data. Key data items can then be location, usage information, and 65% identified to enable quicker action maintenance status. of companies have for potential problems or applied difficulties tracking to cultivate positive outcomes for Smart batteries are equipped with tools and equipment future projects. built-in battery diagnostics that sync with a connected tool to In construction, the industry’s relay information that provides a 7k digital adopters are harnessing holistic view of the item including is spent annually on IoT with the help of smart the battery performance levels, lost tools, materials, batteries – to prevent issues location, and usage data. and equipment like not knowing an asset’s This provides key information to 33 HUMAN AUGMENTASSET AND EQUIPMENT MANAGEMENTATION

team members in real-time, which users key insights (e.g. battery health, enables more informed tool crib location, usage information) decisions. Connected tools Smart batteries a tool that is equipped with a battery equipped with built-in technology (e.g. software, and battery diagnostics that is capable sensors) to collect the tool’s data of syncing with a system to provide and connect it to a system Material & At a time when profit margins Final Thoughts... are getting tighter, and cost of Consumables materials are rising (10% increase Inventory in construction material costs in While the digital black hole may 3 2019), the use of paper-based be common in the construction Management inventory management systems industry, digitizing asset that are dependant on people are management is an opportunity. An impossible to justify. opportunity to better control costs, reduce losses, and keep projects A digital asset management running on time. software connected to smart batteries and tools allows for Digital solutions like smart leveraging predictability by batteries, connected tools monitoring inventory through and digital asset management a cloud-based platform. Since software are increasingly easy to it efficiently tracks inventory use and relatively inexpensive to and the usage of materials and implement. With the right choice of consumables (such as nails, bolts, construction technology will more and tool inserts), better estimates than pay for itself very quickly for ordering can be made before – by cutting costs on physical a project ever breaks ground. assets, by freeing up staff time This can prevent duplicate assets for more productive purposes, by 10% and decreased productivity due eliminating the delays caused by a increase in to waiting around for the right paper-based system. construction materials. Psst – an astonishing material costs 35% of construction time is spent in 2019.3 on non-productive activities.4 REFERENCES 1. “Imagining construction’s digital future” https://www.mckinsey.com/business-functions/ operations/our-insights/imagining-constructions- Digital asset management digital-future 2. Eighty percent of contractors report difficulty 35% software also helps control loss finding qualified craft workers to hire as firms give low marks to quality of new worker of construction during an ongoing project by pipeline https://www.agc.org/news/2019/08/27/ eighty-percent-contractors-report-difficulty-find- time is spent on monitoring consumables usage ing-qualified-craft-workers-hire-0 3. “Construction material prices increase stead- non-productive and any unauthorized removal of ily in June” https://www.bdcnetwork.com/con- struction-material-prices-increase-steadily-june 4 4. Plangrid https://constructionblog.autodesk.com/ activities. equipment or tools. construction-industry-statistics/ FIND OUT MORE 44 ASSET AND EQUIPMENT MANAGEMENT Hilti US | Hilti Canada US Customer Service 1-800-879-8000 | CA Customer Service 1-800-363-4458