McKinsey’s Global Purchasing Excellence Survey describes the construction industry as one of the least sophisticated sectors in procurement and supply-chain practices, with poor management accounting for, on average, 10% to 30% of the cost and time overruns.
For starters, managing a complex project while leaning heavily on email is a challenge. From invitation to tender and beyond, you will struggle if you are using email to send documents back and forth between the project manager and suppliers. The result? Information gaps and way too many emails until the invoice is sent and payment made.
With low email capacity also comes the tendency to send sensitive documents via third-party file hosting services, putting information security at risk. Accurate tracking and auditing become complicated when this occurs across multiple tenders as you interact with countless suppliers.
The bespoke nature of this process also makes managing the contract process—for NEC3/NEC4 and other contract types—both difficult and time-consuming.
How will you ever collate all contract data in a single, simplified view to see if the project is running as planned? Plus, this lack of transparency and inability to plan creates issues further down the line.
Implementing a CDE creates a central and secure repository for managing your supply chain. As such, all preferred suppliers can be notified of new tender opportunities, all receiving the same information simultaneously. Here, suppliers can register their interest, saving the procurement team time on costly follow-ups.
Interactions between project owners and the supply chain become streamlined as the tendering process, and all subsequent engagement occur within the CDE. Not only does this enhance productivity, but it also mitigates risk.
As seen in other industries, introducing standard procurement tools help to optimize the entire process. These tools and processes—such as clean-sheet cost models, robust clean sheeting, and “should-cost” models, alongside forward planning and standardized specifications—can enhance transparency across procurement and improve communication between supply chain members.
Integrating these tools and processes within a central procurement management system and adopting an integrated approach will improve project efficiency and reduce costs.
According to McKinsey, if you implement strategies to solve collaboration issues and improve procurement and supply chain management, you could see productivity grow by 7% to 8%, with a cost-saving of between 3%-4%.
Typically, a construction project will bring together multiple stakeholders, widely dispersed supply chains, and large delivery teams—all of whom are working together for the first time.
Even worse, it may be centered around one-off projects and temporary relationships. The result is fragmentation, incoordination, and isolation—leading you to repeat errors if you never transfer knowledge from one project to the next. This is often the case when a wealth of knowledge remains with individual project members and is not widely shared.
An engrained lack of collaboration is complicated when disconnected systems don’t talk to one another. The industry relies on bespoke software tools, which means stakeholders across the asset lifecycle use different platforms, which do not share information. Here, teams frequently use tools that don’t always produce information in an open format, increasing your risk of making decisions based on outdated or inaccurate data.
This lack of collaboration creates information chaos where no single source of truth is established. This fragmentation has a significant impact on productivity and prevents the critical mass required to enact real change.
As it stands, an estimated 10%-25% of project costs, equal to £20 billion a year across the UK sector, are thought to come from avoidable errors and unmeasured and indirect costs, according to the Get It Right Initiative (GIRI). Improving collaboration could help to reduce this avoidable waste, thus creating a huge cost saving.
To improve collaboration and prevent costly errors, you need a platform your entire team—design, procurement, and supply chain—can use. Instead of using their own systems, a central system—a CDE—can provide a single source of integrated project information and simplify a complex ecosystem.
Even better, a CDE can be cloud-based and mobile—linking those in the field with those in the office—so information can be shared bi-directionally and be accessible in real-time. All tasks are housed within one single, secure environment with open information sharing regardless of location.
Using a CDE, your company can centralize its knowledge base, record analytics, and allow all project members to feed into a central hub. Dependence on a single project member is eradicated, so lessons learned on one project can be used on the next. By utilizing such analytics, your project teams can benchmark current work against previous projects to improve their quality of work.
According to one of the biggest infrastructure groups in the UK, Balfour Beatty, increasing collaboration overall leads to “better project outcomes, the more efficient delivery of schemes, improved business performance and greater client satisfaction.”
Using collaboration tools across the asset lifecycle could result in you saving 20% on your overall project cost.
Despite proven examples of construction companies using digital technologies and achieving significant productivity gains, businesses are consistently underinvesting in the technology and digital tools to increase productivity.
If your digital tools do not share information, you will find information quickly goes missing. Documents will get lost in an impenetrable maze of shared folders, never to be seen again, or updates to an asset model will fail to get accurately communicated to those on-site.
Part of this issue is due to a reliance on paper. Traditionally, many in the construction industry have relied on 2D drawings, which are inherently prone to human error and do not include the same level of data as models provide. BIM—3D, 4D, and 5D—is a more cost-effective, consistent, and efficient construction tool.
4D BIM allows you to add an additional layer to your 3D model in the form of time. It enables you to visualize your model over a set period. As gradual layers are overlaid onto the model, you can see the different stages of the building process, ranging from the building’s structural foundations to the roof, and every stage in-between.
Meanwhile, 5D BIM allows you to incorporate cost management onto the model. Here, you can automatically pull quantities and elements directly from the model, removing the need for expensive and time-consuming manual counting.
By making 3D BIM universal across your business and supply chain, you can ensure all stakeholders work within the same collaborative environment. This means a single source of truth is facilitated, enhancing collaboration and visibility.
Mobilizing 4D and 5D BIM across the asset lifecycle will help to add “extra layers” to the typical 3D representation. With cost and schedule overlays, models become a powerful visualization and project management tool throughout the asset lifecycle.
When you implement digital technologies on a project, an increased amount of data and information is collected. As such, advanced analytics can be applied to this data to enhance decision-making, create more advanced procurement systems, stamp out waste, and prevent a wide range of issues from cropping up—such as identifying bottlenecks or delays.
These advanced analytics can then be visualized within a CDE. With the right tool, workflows, reports, and dashboards can all be created. Here, information from the various tools and software can be collated to provide better visibility across the project. This makes it easier for you and your stakeholders to monitor project progress and make informed decisions.
When you increase digital uptake and implement construction technologies throughout the asset lifecycle, McKinsey predicts you could improve productivity by 14% to 15%, with a cost-saving of between 4% to 6% on a typical project.
Let’s recap. A single construction project occurs across an extended period and has many different stakeholders and processes—some efficient and some not. Unfortunately, these different players tend to work in a variety of formats, such as Revit and 3D Repo.
This produces a vast amount of data and information, often unstructured, uncoordinated, and inaccessible. This lack of efficiency could add 20%-25% to the cost of a project. For example, a project with a construction value of £250 million could see an increased cost of between £50 million and £62.5 million.
The key to saving time and money is to transform your data from disorderly to well-structured. Not only does a CDE help achieve this, but it also enhances productivity—helping stakeholders to work in a more streamlined and collaborative manner—while having tangible benefits to your bottom line. It is also easy to see the ROI considering how technology can improve productivity and increase revenue while having little to no impact on cost.
With a CDE, everyone from the architect to the estimator to the site foreman can work from a single source of truth with all information stored in a secure and interoperable digital environment—not a dusty old filing cabinet. The benefits to you and your supply chain are immense—from streamlined processes to stronger collaboration to shared project visibility.
In addition, your CDE can support ISO 19650 compliance—the international standard of good practice, which name CDEs as the gold standard for managing project information when multiple parties are involved.
If you’re ready to say goodbye to playing phone tag, wading through oceans of emails, and inefficient systems
that don’t speak to one another, you may be ready to evaluate how a robust CDE can help your organization’s productivity and profitability.
Download our 10 questions you can ask when considering the value and benefits of a CDE below.
Over the last 20 years, Asite has been a leader in construction technology innovation, and as the industry enters what McKinsey is dubbing the “platform era,” we will continue to make noise in this space.
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