PwC teamed up with Oxford Economics to produce a revealing research article into workforce productivity in the engineering and construction sector1. Covering the past decade, from 2010 to 2019, its most illuminating find reveals why that particular sector is being so slow to embrace digital.
And why it’s doing it so clumsily.
Engineering and Construction v Manufacturing
The study has two points of comparison. The 2010-15 period, with the 2016-2019; and the manufacturing industry with the engineering and construction (E&C) sector. By looking at job listings over those two periods, they were able to show that digital had been hugely important for manufacturing in the former period but became much less so in the latter.
But it only became important for E&C once we move into that latter period.
In other words, E&C has been much slower in making that move to digital than the rest of the business world. Which is pretty much what we all suspected. But then they start delving into why.
Shortage of skilled labor
There’s a widespread acknowledgment from senior stakeholders in E&C that, all too often, digital is being used as a quick fix for pre-existing problems, the shortage of skilled labor being a case in point.
“This is part of the industry’s digital strategy, to deal with the Big Shift— the retirement of experienced engineers and field and craft labour, with no apprentices or industry newcomers to replace them.”
But that’s not a problem digital is necessarily designed to solve. And instead of fixing that particular problem, all they ended up doing was having to re-hire experienced employees to teach the new hires, and the software, what to do.
So they were investing in digital, but without reaping any of its promised rewards.
Back to front
Instead of thinking carefully about what their problems were, and which ones digital might be able to help fix, too many organizations simply assume that, whatever their problems, digital will be the answer.
In other words, they are looking at their business through the wrong end of the telescope. PwC’s Tony Caletka2 summed it up as follows;
“End-to-end processes need to be leaned out and streamlined first, and then you can gain efficiencies from digital and emerging technology — your bots, devices, tools and automation. But we saw a lot of folks do it the other way.”
Begin with organizational structures
E&C firms then are faced with two challenges. Yes, they each need to radically speed up the process of digital transformation. After all, innovation and the efficiencies that follow are as fundamental to E&C as they are to every industry. And, according to the IDC 3;
“65% of global GDP is expected to be digitalized by 2022”
And if you’re not part of the future, you become, necessarily, part of the past. But that’s the second of their challenges.
Before that, and first of all, they need to identify what the structural and organizational problems are that need fixing.
Choosing the right digital tools
So the questions that anyone working in E&C needs to ask are, what are the organizational roadblocks that are constantly slowing your business down? And how can digital help to speed all that up?
Only then will you know which tools you need to start improving your outcomes.
- Construction’s digital past and future: ‘Where do we go from here?’
- Tony Caletka, Principal, Capital Projects & Infrastructure Energy Leader, PwC US
- IDC FutureScape: Worldwide Digital Transformation 2021 Predictions