Little effort builds on the next, piece by piece, from digitalization to transformation is done.
E&C companies must be thoughtful in the ways they approach their digital transformations. Our experience in the industry suggests that adopting the following practices will increase the likelihood of success and enable companies to capture greater value from digital.
Focus on fixing pain points, not installing IT solutions
Around the world, E&C companies are upgrading and replacing legacy back-office systems while also implementing digitial solutions (new softwares) to increase engineering and field productivity. However, companies can focus too much on IT, pursuing improvements to systems and software as ends in themselves. We often see E&C companies deploy cutting-edge technology tools before they have figured out whether and how those tools can improve their operations. This tech-first approach can lead to digital “organ rejection,” whereby a solution fails to deliver visible benefits, and the workforce, noticing this, does not adopt it.
E&C companies can increase the likelihood that digital technologies will make a positive difference by first identifying operational changes that will improve performance, then defining digital use cases that will enable those operational changes. This process-centered approach helps focus each use case on a real business need while suppressing the impulse to chase technology trends. Use cases defined in this way deliver greater benefits while building the understanding and conviction of the workforce, from the CEO to managers and frontline workers in various functional groups and decentralized business units. Such use cases are also easier to replicate on multiple projects and to introduce to new workers.
Implement digital use cases that promote collaboration
E&C companies should therefore devote special attention to activities that involve multiple disciplines and groups and design digital use cases that smooth the interactions among them. For example, real-time progress reporting from the construction site can help ensure that subcontractors raise invoices promptly and accurately. Of course, use cases can be more difficult to implement when they involve numerous designers, subcontractors, and specialists. But if E&C companies put compelling incentives in place, then cross-cutting use cases can unlock significant value despite the industry’s fragmentation.
We know many E&C companies that cherry-pick digital use cases that apply to just one activity or trade. One reason they do this is to avoid the complexity of working across multiple organizations in the fragmented value chain. But developing narrowly targeted use cases usually means that E&C companies miss out on a valuable opportunity: stemming the large efficiency losses that can occur because information isn’t transmitted effectively during handoffs between trades and functions.
Reskill and restructure engineering teams
Digital technologies have introduced profound changes to engineering design. For example, generative design tools, which automatically propose a range of design options in accordance with user-defined specifications, can radically reduce the time it takes to develop designs. The ability to examine and optimize a product of generative design is arguably becoming as important as the ability to conceive an original design. In addition, the uptake of modular construction methods has placed more importance on standardizing design elements and storing them in design libraries so they can be used over and over.
Applying these new techniques requires designers not only to learn technical skills but also to design in new ways.
Connect projects to unlock impact across the enterprise
At a typical decentralized E&C company, it is easy for business-unit leaders to focus on optimizing projects—while overlooking the enterprise-wide use cases that could unlock a whole new wave of value as the company standardizes its digital tools and platforms across its various business units and shares more data from projects. Common enterprise-wide use cases for E&C companies include the following:
consolidating cost and schedule data from multiple projects and business units to increase the accuracy of bids for future tenders, thereby increasing the margin
gaining an enterprise-wide view of resources to optimize resource loading and respond quickly when project demands change
creating central repositories for designs at the element, package, and project levels so those designs can be repurposed on future projects