Kenny Ingram, Global Industry Director at global enterprise application company, IFS, has gazed into his crystal ball for the construction, engineering and infrastructure industries and made some bold predictions for 2019.
Mr Ingram believes that 2019 will see a digital leap forward as many construction companies explore integrated business software into projects for the very first time.
“Tighter margins, global skills shortages and new industry entrants are all ramping up the pressure on traditional construction businesses to deliver greater productivity and more integrated, cost-efficient projects, on time, every time,” he stated.
50 per cent of all construction projects worldwide will include modular content by 2022, driven by the growing global skills shortage.
IFS reported that in 2018 they saw four times greater customer activity around modular construction than in any other year before it.
Across the globe in all areas of construction (e.g. schools, prisons, hospitals and luxury apartments), 2018 saw modular construction really explode onto the scene.
Mr Ingram predicts that new entrants next year will make modular construction even more essential.
“2019 will see growing numbers of traditional construction companies begin opening modular factories to stay competitive. And more new players will enter the industry – from manufacturing, supply chain and logistics to local governments, banks and insurance companies,” he forecasts.
Due to these companies offering great incentives such as flexible finance and service packages, there will be a huge pressure on building firms to adapt.
“They’ll need tighter control and more adaptability over every aspect of their projects. Proving they can, if necessary, partner up with larger networks of suppliers, offer services and maintenance on assets once built, including equipment hire, and yes, even offer or manufacture some modular units or components,” Mr Ingram predicts.
“It all adds up to an urgent need for better, more integrated digital management of complex, demanding projects,” he adds.
In 2019 more construction companies than ever before will start trying out integrated business software – for the very first time.
Some reports are stating that 10 per cent of traditional construction firms could go out of business over the next 5 years.
Mr Ingram states that because of this, competition around delivery and productivity will be fierce.
“Many companies will find themselves balanced on a knife-edge of opportunity: On the one hand growing urban populations and housing shortages will mean more demand and a higher order intake. On the other, shrinking profit margins and increased competition will mean unprecedented pressure on delivery,” he said.
As a result, 2019 will see more firms moving from being document-driven to data-driven.
Mr Ingram foresees that next year many building companies will take their first steps into digital and make their first investments in integrated business systems.
Digital asset lifecycle management, integrating both Building Information Modelling (BIM) and Enterprise Resource Planning (ERP) will be needed.
The collapse of one of the UK’s largest construction giants, Carillion, sent shockwaves through the worldwide construction industry this year.
The company built and maintained major assets such as schools, prisons, hospitals and power stations across the UK – before collapsing 1.7 billion euros (roughly $AU 2,681 billion) in debt, overnight, in January 2018.
While analysts have debated how and why this could happen, insiders point to many systemic faults. In a company that size, spread over several projects, Mr Ingram says it seems fair to say that without a central, integrated business system it would be all too easy for senior management to get a full picture of the truth.
“Central to ERP’s power for construction companies is its ability to connect and integrate all functions in a project – from finance to operations to design – enabling maximum adaptability,” he said.
As a business system, ERP takes all the functions of the business and provides it with one set of data, enabling it to flow through a project’s life cycle from inception to disposal.
For manufacturers, integrating ERP business system (rather than a single financial tool) is old news, but for many construction companies, that journey remains to be made. Well… until 2019 that is.
In addition, Mr Ingram says that he’s always argued that BIM software will be a driver of digital asset lifecycle management and integration.
“BIM is an integral part of moving from a document-driven to data-driven world. In 2019, I believe we’ll see the first construction companies take their first steps into discussing how to merge and build on the strengths of combining the two systems: BIM and ERP,” he comments.
More information on Mr Ingram’s statement and other details can be found here.