Productivity gains through embracing technology to improve efficiency is the way of the future for savvy contractors. Jim French, Heavy Construction Specialist, Teletrac Navman.
PRODUCTIVITY AND SLIM margins have long been issues in the heavy contracting industry, and there are challenges ahead in 2017.
The earthquakes in Kaikoura and North Canterbury will put further strain on the industry, which was already stretched from the Canterbury rebuild, as will demands from Auckland for housing and infrastructure investment, and from weather-tightness remedial work.
Currently productivity in heavy and civil construction here is generally lower than in other construction sectors, and construction productivity growth here is about half the rate of our neighbours, and Australian construction costs are amongst the highest in the world.1
The Building & Construction Productivity Partnership aims to deliver a 20 percent increase in productivity by 2020 – a very ambitious target. I think the only way to achieve this is for contractors to embrace new technology and new products.
The basic tenet of productivity is doing more with less, which has clear financial outcomes for the business through greater profitability. Although there are ongoing issues around inefficient operations, there has been a reluctance to utilise new technology to achieve greater efficiencies, so there is huge opportunity in this area.
Traditionally the construction sector has been less likely to implement new technologies than other commercial sectors and there has been a low level of engagement with innovation and change. But what we’re seeing now is contractors changing how they work in order to pursue higher margin work. For example, contractors are moving away from large excavators in favour of small to medium excavators.
Savvy contractors are focusing on how they can better compete and how they can improve productivity in order to win the high margin work. If you think about a complex project in the CBD, the job must be planned and managed so people can still go about their work and move about the city. There are lots of constraints around such complex, high margin projects, including noise pollution rules, restrictions around times of day work can be carried out, and of course, the work being carried out cannot damage existing infrastructure.
We’re seeing more contractors realising that in order to efficiently manage such complex jobs with higher margins, they need a lot more information. They need data, lots more data, and they need it on a day-to-day basis to help them make decisions.
Putting data to work
Making sense of data and using it as an asset is one of the core functions of the software component of GPS fleet management systems. Heavy construction firms can either drown in a deluge of data, or harness it to gain competitive advantage for their business. Such systems draw the data together to help organisations measure and manage things like fleet expenditure and help them leverage their data for KPI based decision-making and generate insights into future trends.
In the heavy construction industry, there is a need to capture data from both plant and people. What’s needed are systems that can enable enterprises to further drill-down on data and draw out informative insights. A telematics systems allows a heavy construction company to monitor and manage heavy assets and their operators as well as service vehicles and their drivers to ensure efficient and safe usage. The ability to observe the distribution and use of all assets in real time across every single job site regardless of geography, helps companies ensure that utilisation is maximised. It also helps companies pinpoint areas of inefficiency such as excessive idling, poor operator behaviour, or machines sitting idle.
Through reporting, such as on fuel usage patterns, asset utilisation, job-site usage or maintenance needs, telematics systems can make sense of the data, and assist managers to operate jobs as efficiently as possible. Maintenance schedules can also benefit from the data-driven approach, allowing companies to determine whether they have over serviced and/or underserviced vehicles, and enabling them to remedy this.
Remote management and monitoring
For some of the more complex, high margin work, contractors also need the ability to manage the job remotely and make data-based decisions remotely. I think that remote management of jobs will become more and more important, as contractors choose to take on more complex jobs.
Measurement will also be an issue in 2017. Expert industry commentator David Chandler, OAM, said it well when he commented that: “Construction is often dismissed as being measurement resistant. The reality is that construction companies resist measurement. The institutions of construction make measurement comparison more difficult that it needs to be. This need not be so.”2
In my experience, construction companies often don’t want to be monitored, but if you turn that on its head – by monitoring you can demonstrate what you’ve done, so this is a positive thing. Being able to prove the amount of time worked (through measuring ignition on/ignition off, for example) helps contractors to respond with hard data to any disputes over invoices.
The role of government
Another challenge for 2017 is for the industry to reduce the time taken from inception to completion of work. How to go about this? I think that government and local authorities need to be faster to approve works. But contractors also need to be smarter about processes and products.
I think it’s useful to look at the Australian Productivity Commission, which recommended that the provision of data should become a requirement in the funding of major infrastructure projects. Will this country head in this direction? It’s too early to say, but I think that our heavy construction firms should take note.3
Taken together there are many challenges for the heavy construction industry in 2017, but I’m seeing a clear shift amongst contractors toward embracing technology to improve efficiency. Only time will tell how tell how long these initiatives will take to flow more widely through the industry.