Collaboration is key
‘We need to change the way we collaborate and communicate in construction. The first thing you do when you get together to build something is to sign a contract about how you are gonna solve things when you go to court. That’s the challenge this industry is facing.’
Mistrust and punitive contracts appear to be one of the biggest nightmares for the building sector according to Ulrik Branner, Executive and Board Member at LetsBuild. With that in mind, it becomes apparent that something should change and fast.
Nevertheless, it takes a lot of effort for such a groundbreaking shift to happen. The way that the value chain in construction works and communicates lies at the heart of the problem.
‘The value chain is broken and it’s because there is no clear communication path throughout it. Another important factor is that it’s an industry built on punitive contracts. An industry built on mistrust’, explains Ulrik Branner during his talk at European ConTech Summit.
Digital tools can be a ‘game-changer’ for the industry and connect the numerous stakeholders in a more direct and efficient way.
‘Future is about building open-systems, freeing the data, and making it easy to integrate. We are not going to make our money by holding in the data’, Mr. Branner.
Let’s talk numbers
There are many problems in the way that construction communicates and collaborates at the moment. Despite the fact that we are talking about a $10 trillion industry, the numbers speak for themselves. In a nutshell, here are some of the most noteworthy statistics which depict the troubling situation that construction has got into:
- 1% IT spend: Construction is one of the least digitised sectors. Based on McKinsey’s index of digitisation (2015), only agriculture and hunting are less digitised than the building sector.
- Source: McKinsey & Company
- 30% wrench time: The efficiency rate in construction is concerningly low. During the last five decades, productivity in construction declines by 0.3% on average on a yearly basis. Only in the US, the labor productivity growth rate doesn’t exceed 0.1% (the lowest rate compared to other similar industries).
- Source: McKinsey & Company
- 30% rework rate: Rework is also hurting the industry. Broken communication is one of the most essential factors for it. Reworks can consume between 7% to 15% of the total budget in new construction.
- Humongous waste rates: According to Eurostat, the building sector is accountable for 34.7% of the overall waste in Europe. Waste minimisation can be the outcome of better collaboration and communication.
- Source: Eurostat
It goes without saying that construction is under extreme pressure. However, the numbers show that just by focusing on improving the way we communicate and build we can revolutionise the industry and get the most out of construction’s great potential.
The United Kingdom is an excellent example toward that direction. As announced last December, the new UK government productivity plan will allow British construction save up to £15 billion. And this will happen only by boosting productivity and improving existing practices.
The equation of change
By now, it is clear that productivity goes hand in hand with effective collaboration. Maintaining long-term relations can be the key for higher profits and fewer conflicts in construction.
As Ulrik Branner suggests, the following equation describes perfectly the reason why collaboration should be seen as the basis on which the future of construction should be built:
‘No commitment = no relationship = no innovation = no gain’
Simply put, well-establish strategic collaboration appears to be the way forward. Otherwise, it can be almost impossible for construction stakeholders to push for innovation, improved productivity rates and increased profits.
But for strategic collaboration to flourish, construction expert Ulrik Branner underlines that there are three decisive prerequisites:
- Repetition and/or volume are fundamental factors for longstanding collaborations to develop.
- The degree of complexity is an essential factor either we are talking for projects or portfolios.
- Financial profit for all the different parties should be a given.
In case that those three conditions are satisfied, then the success of the project(s) is up to the Client. This applies both to public and private clients. Regardless of the project’s scope, success is hidden in the details and the effort that you are ready to put in initiating strategic and visionary collaborations.
Copenhagen Municipality shows the way
The example of Copenhagen Municipality is more than indicative. One of the biggest public clients in Denmark (Copenhagen Municipality) assigned all its school projects to one building team consisted of a contractor, an architect and an adviser.
The whole project is expected to run for the next four years and it covers the construction and renovation of the different schools in Copenhagen. What makes the deal more impressive is that a fixed revenue was guaranteed on the project.
Despite the criticism for monopoly and lack of competition, the project seems to work well so far and the first promising results are already visible.
‘It’s called the TRUST brainwork, they started six months ago and the first six projects have been delivered ahead of time and below budget’, noticed Ulrik Branner.
Truth is that projects like that can be a solid step toward the protection of the client. On top of that, when we are focusing on public clients the protection of taxpayers is another indispensable parameter.
The four pillars of collaboration in construction
Establishing a well-functioning collaboration plan is harder than it might look. There are certain rules that should be respected. Otherwise, the creation and development of beneficial partnerships is extremely difficult.
In short, these are the four central pillars of partnership in the building sector:
1. Establishing a strong relationship should be a priority
Prioritise the relationship instead of the project. It comes as no surprise that if you want your project to succeed, you need to keep mistrust and conflicts out. To achieve this, all the different parties should come together and try to see what are the best options for initiating a beneficial and long-term partnership.
2. Invest in a long journey
In order for a long-term strategic collaboration to flourish, you need to be patient. Most probably, the first project won’t be that beneficial for you. Nonetheless, all you have to do is to focus on your goal and keep pushing in terms of investment.
3. ‘Farmers before Cowboys’
As Ulrik Branner smartly underlines, what you need in such cases is the ‘Farmer approach’. Be patient and work on a continuing basis toward your ultimate goal. Avoid to work with ‘Cowboys’ who can reap for the short-term gains and sabotage your endeavor in the long run.
4. All sides should win!
For a partnership to be fruitful, it has to provide all the different sides with a number of benefits. As we saw in the Copenhagen Municipality example, when everyone is winning from a project (Client, contractor, architect) then productivity and collaboration flourish.
Data is power!
We have mentioned many times from this corner that data is the oil of today’s world. In that aspect, taking ownership of your data is critical. By owning your data, you own the value of your work. Like that, you can continuously optimise the way you design, plan and operate.
That being said, it is no coincidence that knowledge workers are regarded as the construction workers of tomorrow. Even if you are working in a construction site, it is most likely that soon you should learn to operate in a completely different way than you do today.
Being able to open up your data, integrate with other ambitious players and share your know-how is also important. Keeping knowledge and tools just for yourself isn’t the answer anymore. For that reason, the creation of a data ecosystem is the present and future of construction. Determined parties should come together, open up their data and share project intelligence and profits.
Data should be seen as the foundation for faster and smarter collaboration, as they could empower the construction process in the following ways:
- Better connection between the different teams and real-time communication between the site and the office.
- Project insights and overview. Much easier to locate the source of your problems.
- Make reliable and data-driven decisions.
All in all, focusing on strategic collaboration in construction can be the first brave step for a building sector without mistrust and costly disputes. Data is the key for this paradigm shift, and digital tools can function as the actors of change which can push for the creation of an open and cooperative ecosystem.