Harnessing the Power of Data and Analytics in the E&C Industry
By Clay Gilge, Construction Executive
The engineering and construction (E&C) industry is starting to make significant strides in the timely delivery of capital projects. Innovation through technology is playing an increasing role in improving project delivery strategies and enhancing processes and controls for safety, risk management, budget, scope of work and schedule.
E&C industry professionals are bullish about the potential of technology, with the majority believing that the industry is ripe for disruption. Technological innovation will significantly change the business in less than five years, and the use of data will prominently determine strategic plans. However, even though technological disruption is seen more as an opportunity than a threat, engineering and construction professionals have yet to fully harness the power of technology. Furthermore, performance can only improve by investing in the right technologies and then aligning the proper digital business strategies.
There are three key principles that can drive the effective deployment of technology and performance improvements, and consequently close the performance gap:
- Evolve by rationalizing governance and controls: Asses governance, risk and control procedures, determine if they apply to younger generations and align them with the organization’s business objectives.
- Innovate through investment in technology: Evaluate the current state of the organization’s data systems and overall technology, identify areas where technology is improving performance and is visible with younger generations, and create a clear digital strategy and roadmap.
- Integrate by optimizing human performance: Overcome generational barriers by creating a culture with targeted communications that embraces technology and works for everyone. It is important to balance hard versus soft controls, while managing employees’ expectations.
E&C companies are already collecting a large amount of data that they can leverage in keeping with the growing demands of their clients to deliver complex projects quickly. It has become paramount to find ways to properly structure and analyze data to improve productivity and performance, while achieving a distinct level of differentiation in the market place.
E&C executives continually need to answer difficult questions about resource allocation, including which projects to pursue, which industries are most profitable, as well as whether to reduce staffing and supervision costs. Data and analytics allow E&C companies to answer difficult questions, while identifying strategic advantages that may lead to higher productivity and improve business results.
Up-to-the-minute data on project performance facilitates the rapid response to changes in a project, and helps to keep them on schedule by properly sizing manpower and keeping ahead of procurement.
With corruption and billing fraud being frequent schemes in the industry, E&C executives can analyze costs against controls and other data for any red flags as part of risk and compliance efforts.
Most E&C companies struggle with integrating data from disparate systems to streamline information and reporting in order to produce results. Usually various software applications are being used to collect data from different sources, such as costs, procurement and scheduling, making it challenging to compile all the information into one useful tool that can be used in their decision making. Creating a system with some longevity that can consistently produce results is also a major challenge. New teams formed under new projects that have different sizes and complexities, means that standardized methodologies will often not apply. It takes years to collect the data needed to create a viable cost benefit analysis to determine the true value of analytics. Also building trust in the data collected to drive business decisions can be a difficult task.
In order to get most of their data, E&C companies need to clearly define their goals and objectives and develop a plan to achieve them. If E&C executives determine the end game early on, before investing in data and analytics, they should expect the greatest return on investment. Initial assessment key considerations include:
- establish goals and objectives for program;
- understand existing enterprise framework;
- identify existing data sources and users;
- compare organizations within the business;
- examine existing tools and systems capabilities and usage;
- clearly define KPIs and benchmarks for use by organization; and
- develop a roadmap with defined timeline for implementation.
The right team that can develop and conduct detailed analysis of project attributes is also necessary. Team members need to have the analytical capability to extract, evaluate, interpret and summarize the data. There may be a requirement to normalize or transform the data, whether the data is structured or unstructured, to allow for consistency during the analysis. The next step — choosing the right tools and methods to analyze the data — is a critical one. Automation of the analysis may allow for easier future updates. A peer review after the analysis is complete will help verify the results.
When presenting the analysis, the data processing teams may consider using software that focuses on visualizing large amounts of data. How data is presented may stimulate more creative thinking and lead to more effective ad intelligent decisions on how to run the business. A repeat of the analysis on a regular basis will allow E&C organizations to develop internal key performance indicators (KPIs) and benchmarks.
In today’s competitive world, E&C companies need to evaluate any opportunity that will drive business results, and applying analytics to available data is one of those options.