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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:
- Staff Turnover
- Diverse and remote project locations
- Inter-agency communication – the number of agencies such as client, partners, vendors, subcontractors etc. involved on a single project
- Change control and management
- 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.
| Factor | Problem Area | Issues and Inefficiency | Cost/Consequential Effect |
| Staff Turnover | Non-constant staff | Usability / Time taken to learn the system and business | Training hours expended |
| Inaccurate / delayed transaction entry | Delays in follow on transactions and delayed decision making. | ||
| Diverse and remote project locations | Requisition Processing | Requisitions received by buyers in time | Project delays resulting in delayed billing and cash flow, delay damages |
| Time spent clarifying requirements | Person hours expended and delays in to and fro communication to clarify requirements | ||
| Visibility to supplier communicated changes to delivery schedule | Idling time of resources | Costs incurred in idling time | |
| Work plan disruption | Project delays resulting in delayed billing and cash flow, delay damages | ||
| Inter-agency communication | Coordination on RFIs, changes, and clarifications | Delayed decision making resulting in project delays | The hidden cost of resource idlingProject delays resulting in delayed billing and cash flow, delay damages |
| Change Control & Management | Bi-directional change control mechanism between clients, contractors, and subcontractors | Scope variations or design changes can originate from Subcontractors or Clients. Visibility and efficient coordination between the parties results in work delays | Project delays resulting in delayed billing and cash flow, delay damages |
| Lack of control over Hidden Variations | Work performed at variance from scope is obfuscated within the larger contract works in the absence of strict scope control | Hidden Cost which directly results in margin erosion | |
| Early visibility to changes arising from Subcontractors | Variations raised by subcontractors isn’t visible for raising with the client in an efficient manner | Hidden Cost which directly results in margin erosion | |
| Inefficient supply chain collaboration | Invoice Processing | Missing/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 Resolution | Time is taken to resolve invoice level exceptions | Person hours expended and delays in to and fro communication miss in query turnaround times | |
| Enquiry and RFQ Processing | Time spent on reprographics, emailing and missing elements | Person hours expended and inaccuracy related cost | |
| Effective communication with external agencies | Cost of Person hours expended | ||
| Non-availability of Audit Trails | Accuracy of information available for site-based personnel post handover | ||
| Supply Chain Information Management | Inaccurate / out of date compliance information | Potential 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.
To know more about Solutions for:
- General Contractrs Click here
- Housebuilders and Developers Click here
- Engineer to Order Projects Companies Click here
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