November 2018

by Jeff Burmeister, Kahua

Construction-related spending today accounts for approximately 13 percent of the global GDP. The industry provides the accommodations and infrastructure in which we live, work and play, and also accounts for 40 percent of the solid waste produced globally and 25 percent to 40 percent of both the energy consumed and the carbon emissions produced. With the growth of urban population in developing countries and an aging infrastructure in developed regions, even modest improvement in productivity in the construction industry holds the potential for enormous economic, social, and environmental impact.

Unfortunately, productivity in the construction industry lags that of other sectors and the economy as a whole, with productivity growth over the last 20 years of only 1 percent. To make matters worse, according to a study by the McKinsey Global Institute, it is the fragmented specialty trades that drag down the productivity of the sector as a whole. While this is not an encouraging situation, there is strong reason to believe that this trend can change dramatically in the coming years.

Construction Technology—A Driver of Change

One of the critical drivers for change is always technology, and there are a host of emerging technologies that are reaching maturity today and stand to deliver significant value. For example, the potential of 3D scanning and printing, BIM, autonomous equipment, advanced construction materials, IoT, and drones are all extremely exciting.

But one of the industry’s most critical and potentially impactful technologies is collaboration. Improved collaboration and communication lets you work more efficiently, save time, reduce error in entering data, and connect with other project participants to share valuable information.

A recent study conducted by the World Economic Forum and The Boston Consulting Group defined collaboration as one of eight critical capabilities that form the framework for the transformation of the real estate, design and construction industry. The Boston Consulting Group states “collaboration is, or should be, a hallmark of the construction industry itself: the industry’s future success will rely heavily on effective collaboration among all stakeholders.” According to this study, the industry’s future success will rely heavily on effective collaboration, and our industry as a whole has a responsibility to improve existing forms or establish new forms of collaboration.

So … big impact on a big problem … Seems like collaboration is something we should all be interested in.

Challenges with Collaboration

When you talk to subcontractors today about collaboration, there is not a lack of interest, but several key challenges seem to percolate to the top of people’s list:

1. Data Ownership: By only accessing project data in someone else’s system, you can’t own your data and have no project record when a project is complete.
2. Inefficiencies: By having to log-in to multiple systems to operate, you suffer inefficiencies from duplicate data entry when trying to collaborate with other parties.
3. Data Aggregation and Management: Working on multiple projects on multiple systems, you can’t effectively aggregate and manage data across multiple projects.
4. Integrations: General contractor systems don’t integrate to your internal core systems. In order to manage your internal practices effectively, you are faced with duplicate data entry.

As a result, we seldom see value delivered by project management and collaboration solutions to all project participants, particularly subcontractors.

These challenges are actually symptoms of a deeper underlying problem in the industry today. Our industry takes a 20-year-old approach to collaboration. As a project begins, an influential owner or GC selects the collaboration technology for that project and mandates its use to the project team. This works well for the owner of that system but is highly inefficient for everyone else. Subcontractors are forced to update the collaboration system as well as their own system for every transaction. This duplication of effort is generally accepted and absorbed by the overall project budget.

Network-Based Collaboration

What if, instead of the traditional project centric hub and spoke model, we established an entirely new form of collaboration? Imagine a model where a company could join a network, where they could immediately collaborate with every other company on the network. No one would have to log onto anyone else’s system. In this industry network, every member could:

• Own their own data and project record.
• Manage their own unique internal business processes.
• Integrate with their core systems, such as accounting.
• Enter data once and share it with any other network participant.

With modern technology and infrastructural advances in cloud-based technology such a network becomes possible. We are able to move beyond project centric tools, toward a more effective form of collaboration, and the potential for improvement in industry productivity and more importantly, subcontractor productivity, could be significant.

The idea of embracing network collaboration to improve productivity is not unique to the construction industry. In fact, several industries have successfully adopted effective network models which embrace the full force of connectivity and communication.

In 2018, networks are all around us. You probably connect with old friends on Facebook, Twitter, or Instagram, but did you know two-thirds of Americans get their news from social media? These social platforms are actually networks, connecting media providers with us, the general public.

Several industry-specific networks also exist to create extensive value for all parties involved. Ten years ago, if you traveled to a new city, you probably took a taxi from the airport to your hotel, and called the few restaurants you knew, hoping for a 7:00 p.m. reservation. Today, with the help of networks, you hop into a rideshare, go to your nearby Airbnb, and book your dinner reservation with the click of a button on Open Table.

These niche networks have not only transformed our abilities to connect, but actually provide ease, cost savings, and improved productivity for each party. Rideshare companies like Uber and Lyft provide cost-friendly transportation to riders and allow drivers to benefit from flexible hours and earn back money on the cars they already own. Airbnb lets travelers stay in affordable places and travel like a local, while homeowners earn money on their spare and unoccupied rooms. Open Table lets users see all nearby restaurants to easily book reservations, and helps restaurants fill up faster and market to new eaters.

In each case, a network was introduced that significantly improved communication and connectivity between individuals and companies and allowed them to create compelling value for each other.

Preparing for Network Collaboration

When you consider that a 1 percent improvement in industry productivity would be worth $100 billion annually, the concept of adopting a network-based approach to collaboration is clearly worthy of our attention. However, as is always the case, there are challenges in adopting this new paradigm. Just as quantum shifts in technology were required to transition from the company centric LAN world of the ’90s to the project centric Web-based world of the early 2000s, a similar leap will be required to enable the network centric model. There also must be a willingness to change. In the ’90s the industry was very slow to change, but in the past five years change is happening at a more rapid pace.

To help you overcome these challenges and start benefiting from improved collaboration, we’ve included our top tips for embracing Network Collaboration:

1. Hire Millennials: The idea of a network is second nature to millennials. This generation depends on the use of connected networks in their everyday life, and even expects the use of a network in the workplace. Having a millennial presence on your team will help you easily transition to this new technology. Plus, they will be a great resource in helping your senior workforce get up and running on your network.
2. Connect Field and Office: One of the main foundations of a network is connectivity. This means you can communicate directly from the field. Use mobile technology to enable your people in the field to get answers and quickly take action, so you can work productively and get paid faster.
3. Manage All Projects In-Network: Imagine if you had to have 12 different Facebook log-ins to connect with different friend groups—don’t need to treat your projects this way. Migrate to a system built for network collaboration. Use a single log-in to access everything you need. Invest in a system that supports your internal business process, provides access project data, and manages your personal tasks in one place. Make sure it is flexible enough to meet your current and future needs. Finally, make sure it will deliver on the promise of Network Collaboration.

Jeff Burmeister is director of the Subcontractor Network for Kahua. Burmeister is responsible for Kahua’s connection and conversation with all subcontractors. Kahua offers a simple project management and collaboration platform which is leveling the playing field for subcontractors. Kahua’s Subcontractor Project Management suite connects field to office, organizes documents and streamlines communication to improve efficiency, reduce risk and deliver superior project outcomes profitably.

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