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Digital Transformation in the Engineering, Procurement and Construction (EPC) Industry

How EPC Companies Can Turn to Technology to Deliver Projects in the Face of Labor Shortages

Planning, People, and Procurement are the three P’s forming the operational backbone of EPC companies. However, the onslaught of the pandemic disrupted this backbone bringing operational sites to a standstill in many places.

To become more resilient and agile in the face of disruption is a capability all organizations want. The focus on digitization and the following digital transformation of the entire enterprise thus has emerged as a silver bullet to recent disruptions.

The challenge with the EPC industry is that external market factors, fragmented and complex industry dynamics, and a lower desire to take risks coupled with a complex operational ecosystem have, made digital adoption slow and difficult. The EPC sector is one of the biggest industries in the world and its broader ecosystem is the foundation of our economies and vital for our everyday lives. It is time for this sector to develop capabilities to take important, strategic decisions to reshape the industry for better outcomes.

Given the times ahead, the EPC industry has to look at rapid digitization of processes, to automate and strengthen collaboration, and information sharing. They have to look at technology to cut costs, increase efficiency, drive productivity, optimize outcomes and improve profitability. This move to improved technologies is also necessary to add more agility and resilience to the organizational capabilities so that they can adapt to disruptions and recalibrate faster.

Changes in the EPC industry had started even before the pandemic. However, because this industry has been complex, fragmented, and generally change-averse, the initiatives on digitization had been slow to catch on. Implementing complete digital transformation in disparate and traditionally disengaged ecosystems tends to introduce inefficiencies and aggravate business challenges. The blame then goes to the technologies and the industry gets a bad rapport for not being able to leverage tech-enabled business transformations.

So, while the EPC industry wants to use AI-driven automation, powerful IoT solutions running the operations, and robots running the shop floor, before it gets there it must fix the smaller problems first to gradually enable complete business transformation.

Some compelling reasons why EPC companies have to increase their focus on digitization in 2022 are:

Growing gap between field workers and offices

Construction operations are individually broken down into business divisions that operate independently. Slow collaboration between these departments and divisions increases lead times, introduces communication gaps and challenges, and impacts the overall efficiency of the project.

Using technology solutions such as construction management technology facilitates smoother exchanges between the field and office in real-time. It can capably simplify complex construction needs by fine-tuning processes and automating back-office and job site processes.

Enhance processes to drive productivity

The EPC industry is riddled with outdated processes. The reliance on labor-intensive, manual processes impedes the productivity and efficiency of this sector. The demand for construction services is only going to accelerate and increased efficiency and higher productivity are going to be immediate mandates.

Field-ready technology solutions that help the industry augment its capabilities are going to be essential for the industry. It will be imperative for those operating in this industry to adopt solutions that digitally link the people and processes to the organization with improved visibility, which leads to better decisions. Better project outcomes and improved project predictability then become natural outcomes of these efforts.

Starting small at this time can make a big difference. Looking at smaller processes for example, such as improving HR and payroll using the right software can lead to big dividends. The right software addresses the complex payroll needs of this space and addresses the challenges of managing union, certified, or non-certified employees with self-access and easy management services. Daily log and attendance, is another example, where digitization improves field operations complexity, helps streamline project progress, provides site observations, quality checks, and attendance.

Improve predictability and control costs

The focus on the EPC industry to improve project predictability and control costs has been ongoing for a while. This focus will continue into the coming year especially as the industry, like others, tries to weather the pandemic-induced storm of economic crisis and poor industry outcomes.

Achieving this is not possible without the help of data. And this data has to emerge from fine-tuned processes that connect the relevant data points to present insights to drive impactful change. Solutions like project service automation, for example, become important in this context. Comprehensive project service automation solutions provide deep insights and help EPC companies manage, control, and deliver project-based work within time.

By simplifying the management, tracking, and submission of estimated project times, developing the capacity to monitor and manage the project, clear visibility into project status, deliverables, and dependencies, and reducing manual errors, such solutions add velocity to project management and significantly improve project performance by capably linking processes and people in the organization.

Be it construction software, solutions to minimize errors and protect themselves from undue claims, or turnkey solutions for large complex projects, digitization has to enter the EPC industry in the coming year at an accelerated pace. The EPC industry has to shed its image of one that is stuck in the past and has to embrace the digital avatar to not only meet business objectives but to become future-ready.

The road ahead

The conversation about digitization in the EPC industry is almost always dominated by the formidable applications of trends such as Industry 4.0. It is assumed that unless we have IoT-enabled everything, the digitization efforts thought of are as good as naught. It almost seems like unless there are machines and technologies running the space, digitization is not complete.

Undoubtedly, the EPC industry has to look at advanced technologies and IoT-enabled equipment and devices to drive the wave of efficiency these technologies promise. But unless they first develop an IT environment that can capably connect data points, employ processes and systems that leverage data to drive decision making, digitization of the industry will continue to seem like an impossible task and digital transformation will remain a bridge too far.

A quote attributed to St. Francis of Assisi provides some insight into how to tackle the digitization beast in the coming year. This proverb says, “ How do you eat an elephant? One bite at a time”.  We need to start by doing what is necessary, then move to do what is possible and then you suddenly realize that you are doing the impossible. It all starts with that one bite.