Information Technology: As a value creator for Construction Industry:

Information Technology: As a value creator for Construction Industry:

Satish Pendse, Group CIO, HCC Group & President for Highbar Technologies (An HCC Group Company)

Information Technology has created value to various industries including early adopters like banking, manufacturing, etc industries. Infrastructure industry is not the exception. Although being late for IT adoption, Infrastructure industry witnessed high value through software usage. For any infrastructure company, the projects are located in extremely remote areas & many such projects are executed concurrently. For the business decision makers to have end-to-end visibility of the entire business, these projects need to be connected with an integrated platform with centralized information to be referred. Information Technology provides an integrated platform to connect all businesses & have single set of information across projects to get uniformity in operations. The industry competition has increased from the domestic as well as the international players so as the expectations of the customers. To cope these needs the infrastructure companies need to constantly innovate and upgrade the business processes to the ‘next practices’ level to continuously improve the business efficiencies & competitiveness.

Construction software solutions to enhance business efficiency and project productivity

The software solutions like Enterprise Resource Planning (ERP) manage all the information and business functions from a single centralized database on a single platform. The world class ERP solution like SAP helps to provide a comprehensive platform to manage business processes from project acquisition to project completion effectively and efficiently.

All functions such as planning, estimation, execution, procurement, contract management, equipment handling, accounts & finance, HR & payroll, treasury management, internal audit, etc are seamlessly integrated using ERP. The major use of ERP solution is to have better control over projects, effective project management assuring high level of quality & reduction in cost & time. Such world class software solution helps to provide end-to-end visibility to the projects, offers one set of figures for right decision making, better controls over processes, reduction in cost and wastages and increased level of governance.

Similarly business intelligence is another tool which provides intelligence in the form of dashboards, customized reports to the top management to enable timely & effective decision making.

In addition to above Customer Relationship Management (CRM) is another tool to manage customer life cycle effectively. In infrastructure business the customer life cycle spreads over years. During this period various numbers of key people need to shake hands at various management levels. While approaching senior level people for new project acquisition, the organization need to give holistic view of the status of existing projects & the scope for the new project.CRM captures this information centrally & enables business development team to work effectively. It also helps to monitor and review prospects effectively with better hit ratio.

Some software solutions like supplier portal can be very effective for maintaining a healthy relationship with the supplier/ sub-contractor ecosystem. This portal enables company’s suppliers and sub-contractors to collaborate with various project requirements by providing them partner specific access through internet. The Supplier portal helps to enhance the vendor base providing opportunity for better negotiation in procurement. The next level of similar software solution which is used globally is Ariba which can integrate suppliers for various project locations of the infrastructure companies to minimize time and optimize the purchase process.

The software tools like Employee Portal enable geographically distributed project site employees to connect each other and develop feeling of a community facilitating knowledge and experience sharing. Another software tool, Rebar (which enables reinforcement steel optimization), helps to reduce the wastages of reinforcement steel significantly at various project sites.

Infrastructure business is also document intensive & needs documents to be referred over the years. A Document Management System can enable the project sites to access the documents centrally. Certain documents like engineering drawings with latest versions, claim documents, contract documents, various agreements with customers, contractors, suppliers, legal documents need to be available across project sites & over the period of time. An effective DMS can enable organization to track the change history documents. The Document Management Solution can be integrated with SAP ERP for seamless access of the documents.

Equipment is one of the most critical fixed assets and IT can help managing equipments across their lifecycle resulting in higher return on assets. IT can ensure optimum utilization of the equipments across projects. With the help of SAP ERP the construction equipments can be tracked for their performance and maintenance.

Efficient logistics plays an important role in infrastructure business. Any infrastructure project comprise of fleet of hundreds of vehicles. The optimum utilization of these vehicles is crucial as it affects the project performance and delivery. An effective vehicle tracking system can track vehicles with locations using GPS (Global Positioning System) & take corrective actions if the fleet is deviating or not performing as per schedule.

With developments in mobile applications the ERP solution can be integrated using the mobility platform & make access to the system using mobile apps. The various business dashboards, workflow management system can be accessed using mobiles and reduce time in decision making.

Such software solutions can add tremendous value to the construction business resulting into business efficiency and project productivity improvements.

Major challenges in using construction software:

The construction software we mentioned till now seems good for productivity and efficiency improvements for the infrastructure/ construction projects. The implementation of such software in the organisation is a task and major challenge for any infrastructure industry player. The challenges in using construction software include followings:

  • Difficulty in ensuring timely, accurate and complete data: The information Technology can be enforced in any organisation if the right control mechanism is established at right point in the process. E.g. in manufacturing/ FMCG/ Pharma industry the product can’t go outside the factory without documents like challan/ receipt through any gate. To take material/ SKU outside the factory you need to have right document which enforce the organisation to establish a control mechanism with a discipline to be followed. The right control sets the system in place & enables IT to work for system. In construction business such control mechanisms can’t be established as it is difficult to ensure timely, accurate and complete data capture due to the nature of the infrastructure business.
  • Change management in adopting IT culture:

In infrastructure companies the project data is entered at project sites and at head office. The manual entry of the data leads to reduced accuracy & delay in reporting. When new IT initiative is enforced, the project people are not used to provide information or fill the data with a desired discipline. To adopt to new IT initiatives people need to change. It is possible by involving, communicating and engaging them to train for the new system with proper change management in organisation. This is one of the crucial challenges as the success of the IT implementation depends on how effectively & smoothly this adoption takes place.

  • Lack of IT push to drive IT as competitive advantage in industry: IT has played the role of game changer in many industries such as banking and automotive. For these industries, IT has become a differentiator as well as a source of competitive advantage. The concepts like JIT (Just In Time) has changed the automobile industry & given competitive advantage to the player who adopts it. Similar benchmarks are established in banking industry due to adoption of IT. This has influenced other players to adopt those IT best practices. Lack of push for the IT in infrastructure industry is a major bottleneck as no one has adopted IT to the extent to get the industry competitive advantage influencing other players to compete.

Opportunities ahead for the Indian construction software market:

Lack of Infrastructure development is the major bottleneck for our country’s growth. We are witnessing a slow growth in first half of this decade but the second half would be very challenging & exciting for the infrastructure industry. As the Indian government stabilizes it triggers for the massive expansion for the infrastructure growth. There will be enough opportunities for every infrastructure company to grow as everyone will look for the infrastructure development in country. This will certainly transform the small size companies to grow mid-size and mid-size companies to grow large size.

Apart from this, in most of the infrastructure companies the next generation has taken over the infrastructure businesses. This generation is IT savvy & can’t eliminate IT usage in their growth strategy. This would be another reason driving IT in infrastructure business.

As the numbers of projects are going to increase, the opportunity exists for the effective project management, efficient time cycle reduction, and better controls over projects. The opportunity for the construction software increases as the skilled manpower which will be in shortages in future will lead to increased dependency on information technology.

As country is gearing up to execute new smart cities and smart buildings there is tremendous opportunity for the project management, city management, building management, effective Geographical Information System, timely & smooth land acquisition, effective knowledge mining, etc. To handle such exponential growth without use of Information Technology is very difficult as it demands higher level of efficiencies in project executions. All these things will trigger for the Information Technology dependency and provide tremendous opportunities for the people to cater the same with software solutions.

As the consumer is becoming smarter with the use of smart technologies like smart phones, he will demand the smarter living through the highly developed infrastructures like smart cities and smart buildings. This will put pressure on the government to offer the smarter living to the consumers triggering higher scope for the infrastructure development. The new technologies like mobility solutions, apps for smarter living interacting the government and citizens for better city management, etc will definitely add value to the infrastructure industry and even to the smart consumer helping him to become smarter. So a huge opportunity can be foreseen ahead for the construction software companies to provide efficiency improvement solutions to the infrastructure industry.