Reimagining governance, people and technology in the construction industry
The moment of truth
How can the engineering and construction industry overcome fragmentation, external competition and inconsistent performance by reimagining its approach to governance, people and technology?
Achieving change in a hesitant industry
Over the past decades, owners and contractors have made considerable strides in improving the delivery of capital projects. We've seen a host of advances in the form of new construction techniques, project delivery strategies, and enhanced processes and controls for safety, risk management, budget, scope and schedule.
But the industry's overall performance during this period continues to tell a discouragingly different story, replete with a continued inability to increase productivity, raise performance levels and reduce project failures -a record that pales against the achievements in other sectors.
KPMG's 2017 Global Construction Survey-which reports the views of engineering and construction companies and project owners -reflects this apparent contradiction. More than 80 percent of respondents report confidence in their organization's ability to deliver projects on time and within budget. An even bigger proportion (92 percent) say their systems produce timely and accurate project and portfolio reporting.
Yet half admit that, in the past 3 years, adverse project performance significantly impacted their companyrising to nearly 60 percent for contractors. Additionally, just a quarter believe the industry as a whole has reached an acceptable level of performance in delivering capital projects on time and within budget.
Which begs the question: Can we make the kind of step change needed to bring performance in line with stakeholder expectations? With the industry under threat from the inevitable disruption caused by innovative and agile outsiders, it's imperative to swiftly address this issue.
Missing links in the transformation story
To achieve a step change in performance, engineering and construction companies and owners alike need to reimagine governance, people and technology. Currently, despite significant investment, the industry is not integrating these three performance drivers sufficiently. It's not enough to address these components independently-we have to find new ways to make them work together in an integrated fashion. Our survey delves deeply into each of these critical areas to take a more holistic view of their impact upon project performance.
Only by investigating and addressing these missing links can we attain the kind of improvements that other sectors have achieved. Standardization and optimization are worthy goals, but they are unlikely on their own to produce transformational progress. In the future, successful owners and contractors are likely to be those with a strategic vision that can expediently innovate and adapt, and cultivate a workforce and culture that embraces new technology while respecting the proven effectiveness of sound project management.
In the following pages, we discuss how, by assessing, rationalizing and rethinking governance, focusing more on developing exceptional people, and creating a truly integrated digital strategy, we can start to make the kinds of changes that have thus far eluded us. We would like to thank all survey participants who gave their valuable time and insights to our latest annual Global Construction Survey.
"To achieve a step change in performance, engineering and construction companies need to reimagine governance, people and technology. It's not enough to address these components independently -we have to find new ways to make them work together in an integrated fashion."
02. Reimagining governance, people and technology
How do the main performance drivers interact?
04. Rationalizing governance
What's working and what isn't? Should you be shredding those ancient manuals and rationalizing your governance, risk and controls?
- Only 8 percent of respondents have what they call "push one button, real-time, full PMIS reporting'; and just 31 percent have integrated systems for project reporting.
10. Maintaining the human touch
With several generations of people under one roof, how can owners and contractors attract and motivate a diverse range of individuals for their project teams - and ensure these people have the capabilities and the supporting structure to achieve high-performing projects?
- Forty percent of employees are Gen X and 37 percent are Millennials, but 24 percent of respondents say Millennials do not understand the fundamentals of project delivery.
18. Waiting for the technology breakthrough
Placing the right bets - and seeing the benefits from your investments.
- Ninety-five percent of respondents think technology/innovation will significantly change their business, but a mere 5 percent view their organizations as "cutting edge" when it comes to technology.