Are construction companies that are slow to switch to digital less profitable?

Finalcad, a software publisher in the construction industry, has published the results of a study of 400 construction executives in France, Spain, Singapore and Japan to study digital transformation in this sector.

The study determined that the average profit margin for a construction project is barely 2% in these four countries. It also reveals that the absence of digital transformation makes the work of many paper companies dependent, at a time when the slowdown due to the global COVID-19 pandemic shows the importance of digitizing activities and resorting to telework.

In addition, the lack of digitization greatly hinders the ability of companies to collaborate and has a direct impact on their turnover. In fact, 62% of those questioned cited the lack of collaboration as the main cause of delays in construction projects.

The study also analyzed how certain missions are carried out such as fault management and health and safety inspections. Its findings show that companies have implemented a variety of methods and processes: more than half of them (51%) use several means of face-to-face communication, telephone, e-mail and / or paper to inform the person responsible for repairs as part of the quality process.

Worryingly, 53% of companies use an unreliable tool such as text messages, SMS or instant messaging like WhatsApp to report an incident or danger. This lack of consistency in capturing and sharing important information has considerable room for error and misunderstanding, which can lead to increased security risks, delays and budget overruns.

“The dependence of the construction sector on obsolete processes, in offices or on site, is a major source of inefficiency. These practices are not sustainable in a sector where low margins are a persistent problem ”says Frank Le Tendre, CEO of Finalcad. “The construction industry has lagged behind other sectors such as finance and distribution in terms of digitization, but this study shows us that many daily processes present in all projects are important targets in terms of transformation. From fault control to security, no area can escape improvement by optimizing operations. In addition, when countries emerge from the recession caused by the COVID-19 pandemic, those that have made their digital transition will be able to act quickly to resume their normal activities. "

Failure to digitize leads to other consequences for businesses, in particular difficulties in obtaining information and retrieving data making it possible to draw up unpaid invoices when an entrepreneur cannot prove that he has accomplished a mission: a majority of respondents (90%) say that the "Free work" is a common problem.

In addition, construction companies suffer from duty " reinvent the wheel " with each new project: 59% of those questioned claim to create sometimes, often or most of the time new models of documents, however already existing: a real waste of time and resources.

These two results should represent a major factor of digital transformation for managers, directors and promoters of construction companies: a centralized digital process allows continuous improvement and considerably facilitates the entry of additional work as well as the creation of duplicable models .

"Like other areas, construction will face a difficult period in the short term due to the impact of COVID-19 on world economies", continues Franck Le Tendre. “However, over the long term, construction has enormous growth potential. The United Nations predicts that two-thirds of the world's population will live in cities by 2050, with the trend of smart cities accelerating. ^[1] Construction companies wishing to seize these opportunities must go digital now. The digital transformation removes existing silos and simplifies the difficulty they face, juggling staff, plans, skills and materials to meet a changing schedule, while improving their profitability and satisfaction of end customers. "

L'Finalcad 2020 study: Global digital transformation in construction is the first of two parts in a series aimed at analyzing the digitization of construction. The second report will be published in the fall of 2020.

Consult the full results and download the study, here.

* The study was conducted in February and March 2020, commissioned by Finalcad and conducted by Coleman Parks, an independent market research company. The total sample includes 400 people, including 200 site managers / managers managing on average 10 sites, and 200 managers / headquarters managers. The interviewees were on-site project managers and directors of operational units responsible for construction at headquarters who work in commercial and residential construction companies with turnover of more than $ 51 million per year in France, in Spain, Singapore and Japan.

For more details, see the Demographic Information section.

^[1]The United Nations : Predictions say 68% of the world's population will live in urban areas by 2050, says UN, May 16 2018