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Digital Transformation within the Engineering and Construction industry

Driving digital transformation in the core operational processes in engineering and construction companies can deliver significant value, benefits and margin control.

The narrative around Digital Transformation in the Engineering and Construction industry has principally been focused around the usage of BIM, Geolocation Devices, Drones, etc. There hasn’t been much debate and discussion around how digital transformation can occur in driving efficiencies in the core operational and management processes within the company.

From an operational point of view, the construction industry is fraught with numerous challenges arising from:

  1. Staff Turnover
  2. Diverse and remote project locations
  3. Inter-agency communication – the number of agencies such as client, partners, vendors, subcontractors etc. involved on a single project
  4. Change control and management
  5. Inefficient supply chain collaboration

The direct and consequential cost suffered by the industry due to inefficiencies arising from these factors is huge.

We conducted an internal survey conducted amongst Xpedeon customers, which comprise General Contractors, Specialist Contractors, Trade Subcontractors, Property Developers across a cross-section of business size (large public enterprises to small family-owned businesses) and further across multiple geographies.

We observed that in the perception of the management of these enterprises, costs due to these inefficiencies could be anywhere in the range of 8 – 15% of total project costs. This could result in the entire project margin being eroded, on the basis that the average margin in the industry being in the range of 2.5% to 4.5%.

Given below, is a tabulation of the key concern areas where Digital Transformation can play a major role.

FactorProblem AreaIssues and InefficiencyCost/Consequential Effect
Staff TurnoverNon-constant staffUsability / Time taken to learn the system and businessTraining hours expended
Inaccurate / delayed transaction entryDelays in follow on transactions and delayed decision making.
Diverse and remote project locationsRequisition ProcessingRequisitions received by buyers in timeProject delays resulting in delayed billing and cash flow, delay damages
Time spent clarifying requirementsPerson hours expended and delays in to and fro communication to clarify requirements
Visibility to supplier communicated changes to delivery scheduleIdling time of resourcesCosts incurred in idling time
Work plan disruptionProject delays resulting in delayed billing and cash flow, delay damages
Inter-agency communicationCoordination on RFIs, changes, and clarificationsDelayed decision making resulting in project delaysThe hidden cost of resource idlingProject delays resulting in delayed billing and cash flow, delay damages
Change Control & ManagementBi-directional change control mechanism between clients, contractors, and subcontractorsScope variations or design changes can originate from Subcontractors or Clients. Visibility and efficient coordination between the parties results in work delaysProject delays resulting in delayed billing and cash flow, delay damages
Lack of control over Hidden VariationsWork performed at variance from scope is obfuscated within the larger contract works in the absence of strict scope controlHidden Cost which directly results in margin erosion
Early visibility to changes arising from SubcontractorsVariations raised by subcontractors isn’t visible for raising with the client in an efficient mannerHidden Cost which directly results in margin erosion
Inefficient supply chain collaborationInvoice ProcessingMissing/inaccurate invoice matching information (e.g. GRNs)Person hours expended and delays in to and fro communication to clarify invoice issues
Internal and External Queries and Exception ResolutionTime is taken to resolve invoice level exceptionsPerson hours expended and delays in to and fro communication miss in query turnaround times
Enquiry and RFQ ProcessingTime spent on reprographics, emailing and missing elementsPerson hours expended and inaccuracy related cost
Effective communication with external agenciesCost of Person hours expended
Non-availability of Audit TrailsAccuracy of information available for site-based personnel post handover
Supply Chain Information ManagementInaccurate / out of date compliance informationPotential for the issue of orders at variance from corporate compliance standards for vendors and subcontractors

How can Digital Transformation using Xpedeon create efficiencies and value?

Xpedeon provides the right mix of technologies and functionality to address these challenges and drive efficiencies and control within organizations. These are:

  • Core business applications with rich functionality and efficient handling of a wide variety of unique business cases that occur within the industry.
  • Tablet and Smartphone based applications for use by an increasingly mobile staff. The Xpedeon mobile applications are designed to ensure that users do not make mistakes and ease the adoption without much time and effort being invested in learning.
  • Enterprise Collaboration Portals that helps streamline communication between external agencies and the company, saving time and effort for all.
  • Electronic Invoicing and Trading that enables speedy and expeditious processing of invoices and payments.

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