Digital Transformation in Construction: How to Get Started

Want to boost productivity, reduce costs, and minimize workplace injuries? Then, it’s time to embrace digital transformation in construction. Here’s what you need to know.

Jonny Parker
December 19, 2023

The construction industry is one of the world’s largest industries, accounting for 13% of the world’s GDP. It’s also one of the least digitized, relying heavily on paper-based processes. These systems are hugely inefficient, costing companies time and money while also impeding growth.

Unsurprisingly, more and more forward-thinking construction companies are using digital technologies to streamline operations, which is driving a wave of digital transformation. In fact, 75 percent of construction companies plan to increase their investment in digital transformation.

In this guide, you’ll learn what digital transformation is, how it can help your business, and how you can get started. 

What is digital transformation in construction?

Digital transformation in construction refers to integrating and adopting digital tools and technologies to improve efficiency, collaboration, and productivity in the construction sector.

It’s not limited to a specific technology but signifies a broader shift away from traditional paper-based processes to integrating digital solutions in construction processes. 

Different companies typically prioritize and implement their own unique combination of technologies, depending on their needs and goals.

Examples of technologies in the construction industry include: 

  1. Inventory management software (IMS): software designed to track, manage, and optimize inventory. A centralized system replaces paper-based processes and gives construction companies real-time visibility into materials, tools, and equipment while providing better control over procurement processes. Unlike manual inventory tracking, an IMS uses automation to minimize manual input, reduce errors, and improve efficiency. 
  2. Building information modeling (BIM): a digital representation of a building. 3D models are created, which include information on the structure, materials, and various other components. BIM improves collaboration among all stakeholders (architects, engineers, and building contractors), helps with project visualization, contributes to more accurate project designs, and ultimately improves project outcomes.
  3. Project management software: a digital platform that helps individuals and teams create, plan, execute, and manage projects. Teams can manage tasks, allocate resources, and track project status from a centralized platform to ensure everyone is on track. 
  4. Mobile technology: technology used on the go, which includes hardware (e.g., smartphones) and software (e.g., mobile apps). This technology allows for real-time communication and data sharing from virtually anywhere with an internet connection. Field workers can access project plans, submit reports, update information, and communicate with others from the same app.
  5. Robotics: the use of automated machines for tasks like bricklaying and concrete pouring. Robotics improves accuracy and efficiency as machines handle labor-intensive tasks, which speeds up task completion.
  6. IoT: a network of physical objects like wearable devices embedded with sensors and software that facilitate communication and information exchange among themselves. These devices can track equipment health, optimize processes, and monitor resource usage.
  7. Drones: small unmanned aerial vehicles used to survey, map, and monitor construction sites. They provide real-time data about site conditions for better decision-making, enable more efficient surveying by reducing the need for manual labor, and improve site safety by helping identify potentially hazardous areas.

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What are the benefits of digital transformation?

While the construction industry has been slow to embrace digital transformation, more and more companies are recognizing the benefits of making the shift. 

Here are five key advantages of investing in digital transformation. 

Better communication and collaboration 

An FMI Survey of 600 construction leaders found that 48 percent of all rework on construction sites in the United States results from poor communication and poor data. It’s no secret that successful construction projects depend heavily on all stakeholders working closely together to create projects that meet their clients’ needs.  

Digital technologies like project management software help improve communication, allowing individuals and teams to communicate and collaborate on projects remotely in real time. And, because these platforms are usually cloud-based, they’re accessible from any device with an internet connection. Individuals can easily share project data and updates on the go.

Great efficiency and productivity

According to the McKinsey Global Institute, digital transformation has the potential for productivity gains of 14 to 15 percent. This is unsurprising, considering that technology helps automate time-consuming manual tasks like data entry, reducing the need for manual labor and minimizing human error. 

This, in turn, frees up time to focus on high-value activities like building client relationships and generating more leads. It also helps improve overall operational efficiency. For instance, with project management software, you can streamline workflows and speed up communication between stakeholders for timely and more efficient decision-making that drives projects forward.  

Cost savings

Labor costs and inflation continue to drive construction costs higher. As a result, many construction companies are scrambling to find ways to control these costs

The McKinsey Global Institute highlights how digital technologies contribute to cost reductions of 4-6 percent. Again, this shouldn’t surprise you. Investing in digital transformation minimizes project delays that lead to costly overruns and helps avoid rework. It also optimizes resource usage, reduces material waste, and leads to fewer costly data entry errors.

Improved safety

With construction work renowned for its physical demands, companies have consistently prioritized on-site safety to minimize injuries. Digital technology can help in this regard.

For Instance, IoT devices like wearables can be used to monitor construction sites and improve safety. Drones, in turn, can provide real-time data about site conditions, helping identify potentially hazardous areas to prevent accidents and compliance with any safety regulations.

Data-driven decisions

Digital technologies allow construction companies to collect and analyze large volumes of real-time data, improving the quality and timeliness of decisions. For example:

  • Integrating financial and project management software allows you to track project expenditures against the budget and make adjustments in real-time. For instance, if costs are running high, you can make decisions around cost control measures.
  • Integrating real-time data from suppliers, partners, and inventory software lets you optimize the supply chain. Project managers can quickly be notified if there are delays in material deliveries so they can find alternative suppliers or adjust the overall schedule.

What are the steps for successful digital transformation?

With an understanding of what digital transformation is and what the benefits are, here’s how to get started:

Step 1: Focus on business needs 

Many construction companies mistakenly take a tech-first approach to digital transformation, installing the latest and greatest technology without fully understanding if and how these tools can improve operations. The result is usually a lack of adoption among employees.

So, the first step to successful digital transformation is to assess current processes to understand what operational changes are needed. Maybe on-site injuries need to be reduced. Perhaps there are communication gaps between stakeholders that require closing. It could even be that paper-based processes require digitization to improve document management.

Step 2: Get employees and leaders to recognize the need for change

The odds of successful digital transformation are significantly reduced without genuine buy-in from leaders and employees. Jeff Bullough, Fishbowl’s Director of Implementation, explains with reference to new software implementation: 

“What we often see with our customers while implementing the software is that while they have ‘support’ from their leadership on paper, they do not have the true ‘buy-in’ support. Big changes will cost time and money; unfortunately, some leaders think that paying for the software is the extent of that cost. Without the internal support and resources from those leaders, the project managers we work with are destined to fail.”

So, getting everyone to recognize the need for change is crucial. Involve relevant stakeholders like project managers and field workers and explain how digital technology can benefit them directly. If there are sources of resistance, it’s your job to identify and overcome them.

Step 3: Create a digital transformation roadmap

The third step is about answering two key questions:

  • What do you want to achieve? 
  • How will you achieve it?

What do you want to achieve?

Define your objectives like greater efficiency, higher productivity, fewer workplace incidents, improved collaboration, and reduced rework incidents.

How will you achieve it? 

You’ll need to create a digital roadmap for achieving your objectives, consisting of:

  • Clearly defined success criteria that align with your objectives. What metrics will help you assess the success of your digital transformation efforts? Examples include reducing rework incidents by 20% or aiming to reduce communication-related delays by 25%. The idea here is to get as specific as possible.
  • A change management team that oversees the digital transformation. Who is the project leader? Who signs off at each phase?
  • A detailed project plan with milestones, timelines, and deliverables.

Deliverables will include: 

  • Identifying the right combination of digital technologies to achieve the desired outcomes. Depending on your business needs, these could include: 
    • An IMS for greater visibility into materials and control over procurement and purchasing processes.
    • BIM for more accurate project visualization to reduce rework incidents.
    • Drones to identify potentially hazardous areas on site to improve safety.
    • Robotics to handle labor-intensive tasks and improve efficiency.
  • Choosing the roll-out plan for implementation.

Step 4: Implement digital transformation 

It’s now time to execute. The implementation phase for digital transformation may look something like this:

  • Procure the right combination of digital technologies that meet your needs.
  • Integrate the chosen technology solutions into business processes gradually. Consider starting with a small group of people so they can test out specific features and give feedback. Then, iron out kinks and scale as needed.
  • Train employees on how to use the technologies.

Take note: Be sure to monitor and evaluate the implementation phase, adjusting your strategy as needed. Changing business needs and real-time feedback from stakeholders will guide any changes in strategy.  

Start your digital transformation journey

While the construction industry may have traditionally relied on manual processes, forward-thinking companies are driving a wave of change in the industry. They’re investing in digital technologies like BMI, IMS, and project management software to streamline operations and fuel growth.

You, too, can be part of this digital evolution and reap the benefits like cost savings, improved site safety, and greater efficiency and productivity.

The key, of course, is to take the right approach to digital transformation by focusing on business needs, getting true buy-in from leaders, creating a solid plan, and executing your plan with continuous improvement in mind.