Digital disruption in the world of contracting has begun but the construction sector faces barriers from traditional working practices. Here Aysegul Sabanci, group head of procurement and supply chain at construction company ISG, explains how her company has reacted.
The future of construction is increased collaboration and integration between customers, contractors and their supply chain specialists. Construction companies need to cease operating within silos and break down the redundant practices, which fail to embrace their supply chains and bring them to the top table. For this vision to come to fruition, there needs to be a transformational shift in how clients procure, how contractors engage and how the supply chain accelerates its uptake of technology and digital principles.
As with many other professional services providers, digital disruption in the main contracting world has already begun. Breakthrough technologies, including digitalisation, automation and advanced analytics, are enabling main contractors to add value at every stage of the construction cycle. By reviewing procurement processes and allowing for technological solutions to be introduced, the procurement function can untap sources of value.
The Latham report in the 1990s identified the construction industry as “ineffective”, “adversarial” and “fragmented”. The advancement of technology and innovative work methods break down barriers between the different parties in the construction process. However, the biggest challenges are traditional working practices and an industry that has not been disrupted.
Talent acquisition of the digitally-savvy future workforce will bring innovative thinking from a broader mix of perspectives. When we look at the introduction of technology and greater digitalisation within construction’s supply chain, main contractors need to invest in the capabilities of our delivery partners. We see this as a journey for many of ISG’s supply chain partners, a partnership of support and learning for the long term. Some of our employees have already embarked on their journey into the digital age whilst others, reticent to the change to digital procurement and delivery practices, will ultimately fail to meet our clients’ expectations.
So, what does this expectation look like? Well, if we look at Building Information Modelling (BIM), this technology is transforming our industry and providing, amongst other things, a digital asset register that is the one source of truth for our supply chain partners. This is great when clients fully support and invest in BIM, however we are far from seeing complete commitment to BIM methodologies across every client and every project, and this helps drive a culture that BIM is a “nice to have” and not a fundamental requirement. If digitalisation is to be fully embraced, we need to ensure our partners are fluent in the concepts and processes of this keynote technology.
Once our suppliers are fully BIM capable, we open the doors to a wealth of digital technology that will further transform the capability and performance of our industry. Blockchain is emerging as a technology with multiple applications in the procurement arena. Potential benefits can range from speeding up the payment process to validating the ethical sourcing of materials. Blockchain is helping us to assign responsibilities, record, audit and track information, make agreements quicker and negotiate more effectively – all in a “real time”, digitally-secure environment. Combine blockchain and BIM, and you have a dynamic digital encyclopaedia or internet of things (IoT), that provides a material passport for each of the components of a building and an invaluable tool for deconstructing the asset using circular economy principles once the structure has reached the end of its life.
Technology has an essential role to play in eliminating wasteful and inefficient processes, as well as addressing quality issues within the supply chain. A simple example of this in action is ISG’s creation of a smart form linked to the BIM database. The development of the form has eradicated the need for our supply chain to enter the same data multiple times – cutting down administration and reducing inaccuracies. The legacy of the smart form is that when the BIM dataset is handed to the client at practical completion – their facilities management team has a simple way to keep the asset register 100% accurate, by simply recording any replacement components subsequently installed in the building. This is merely the tip of the iceberg when it comes to the benefits digitalisation, in the form of BIM or blockchain, can deliver. It strengthens relationships, rewards collaboration and increases transparency, with the ultimate goal of delivering better for our clients.
As the industry continues to move towards greater digitalisation, those suppliers that embrace and invest in their technological credentials can expect to see greater demand for their services. Seamless integration between supplier and contractor will become the gold standard of procurement practice, automating administrative tasks and enabling specialists to devote more time and energy to developing creative and innovative solutions that bring real value to the relationship.
☛ Aysegul Sabanci is group head of procurement and supply chain at ISG.