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Construction industry needs to embrace digital revolution

Construction led the technology revolution in business when it drove the adoption of the first "brick" mobile phones. It's now driving the trend for closer integration among suppliers and contractors, helping to address some of the structural challenges in the sector such as a low economic growth environment.

"There is a lot of collaboration happening between prime contractors and sub-contractors in the construction sector and technology is driving this," said Michael Priestley, business development manager, Sage Business Solutions.

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For instance, it's now simple for prime contractors to access information about a sub-contractor for inclusion in a potential tender document remotely, add that information to the document and set the supplier up in the accounting system to ensure payment is made further down the track. All this can be done on-site electronically, without the need to go into head office, vastly improving productivity.

The upshot is improved margins in an industry where profits are always thin and input costs are variable as a result of volatile commodity prices.

"Being able to track and link everything from the point of estimating the project through to project management and ongoing cost forecasting is essential," Priestley said.

"Technology can make the difference between a project making or dramatically losing money. In the past, estimating, project management and forecasting has been done on independent systems, with no integration or visibility across the whole project. Now, technology can give an overall view about where a project is at."

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The key, Priestley said, is having all the information required to make a decision. "In the construction industry businesses often run multiple projects, across many different teams and locations. So having up to date information in one place is a huge productivity improvement."

Decentralising this is a major change for an industry in which decisions have typically been made in head office. Now, people close to the action are making these choices out in the field.

As a result, electronic document management is becoming more important within construction, which is important from a warranty management perspective, on top of the productivity improvements it delivers. 

It allows resources like people, machinery and cash to be deployed to where they are required, to ensure deadlines are met. Other benefits include better audit trails and delegated limits of authority around approvals. 

"Being able to track cash, payments, costs, creditors and sub-contractors means businesses are able to produce very accurate cash forecasts, and an improved understanding of ongoing financial obligations," Priestley said.

Businesses that have a technology platform that enable this aligns with client expectations for construction firms to react to their needs.

Moreover, construction companies that have properly integrated technology can incorporate changes in a project as it evolves, delivering significant competitive advantage.

Let's say an organisation is building a manufacturing facility and halfway through building, a new version of the plant and equipment to be used in the facility is released. This requires a change in the layout of the factory. The construction business must go back to the drawing board with the layout of the factory to accommodate a new manufacturing process. A construction business that has an integrated technology platform will be able to accommodate these changes more easily, leading to a better outcome for the business and its client.

While construction may not appear to be a high-tech business, in reality the best firms have embraced the digital revolution, allowing them to more accurately forecast building inputs and ultimately produce higher profits. In an era in when the pace of technological change defines the best businesses, few companies can ignore this opportunity.Â