41% of Engineering and Construction sector leaders are unclear on the economic benefit of digital investments. Why is that? More flexible pricing and less restrictive contract terms could enable wider adoption of new software tools throughout the supply chain.
By Steve Arnold
41% of Engineering and Construction sector leaders are unclear on the economic benefit of digital investments. But is the statistic that follows this one the reason why?
When I read PwC’s 2016 Global Industry 4.0 Survey, I was shocked. For me, the efficiencies that software technologies can bring are obvious. Without thinking too hard:
- Reduced labour costs by automating repetitive tasks
- Fewer defects using clash detection software
- Improved resource efficiencies by using digital planning tools
- Cost reduction through better health and safety monitoring
- Forensic data analysis to spot KPI trends
So, how is it possible that technically-minded, professional managers cannot see the obvious?
Puzzled by this survey result, I kept coming back to the next inhibitor on the list. Over a third of the sector’s respondents felt the high financial investment requirements needed to introduce the technology was a major challenge for their business.
Software licensing often involves a large upfront commitment from the customer – both in terms of cost and contractual tie-in. It’s a huge leap of faith in to a technology that might take years to deliver any tangible return, in an industry notorious for its wafer-thin margins and high working capital requirement.
Unlike a large investment in plant or machinery, software rarely forms part of a construction firm’s core business operation; typically it’s a support function.
Different proprietary software and the difficulties of exchanging data between systems (a true Common Data Environment means more than just a shared file location) can mean a contracted party in the supply chain must purchase additional software to become part of a new project. Or, as is more often the case, use existing software and accept data exchange efficiencies are lost across the project.
When we decided on the pricing structure for Kapio, we felt it was important to understand the nature of a construction project’s population. And to make sure the solution was priced in a way that made it accessible to everyone – without undue contractual risk.
From the relatively few contracted parties involved in the concept and feasibility stages, through the active bulk of execution, to the lighter numbers at handover, the community expands and contracts over the lifetime of the build. But this fluidity in licensed software users is rarely reflected in software pricing – except upwards (unless you re-use licenses and accept the data security can of worms).
We also recognised the transient nature of some of the specialisms, many of whom may only be attached to the project on a short-term basis and very often on a self-employed contract – consultants, for example. Clients and main contractors may be large organisations but often, the supply chain is made up of multiple smaller firms where high, up-front licence costs may simply be too prohibitive.
More flexible pricing and less restrictive contract terms could enable wider adoption of new software tools throughout the supply chain. If the initial cost of implementing new technology is less of an obstruction, perhaps the economic benefits will start to become more apparent as the economies of scale set-in.
Software developers in the construction sector must stop expecting this change of mindset from their customers – they must change their own mindset first.
Kapio includes cloud-based storage of data
Kapio has developed an integrated, BIM-compliant, Common Data Environment (CDE) for the storage of all your project drawings and other files. Files can be shared in the cloud with your project team throughout the entire life-cycle of your construction.
- The digitally aware owner’s reporting system.
- Flexible and easy to integrate with existing software
- Created out of the E&C industry’s need
- SaaS service
- Starting at €1.99 per user per day.
For more information call +45 7875 0100 or contact Kapio.Cloud for a demo at firstname.lastname@example.org
Managing Director Steve Arnold, Optimise International, tel. +44 7534 713008, email@example.com