Globally, digital transformation has risen to the top of organisational agendas. Businesses are devoting an increasing amount of time, effort and capital into digital Transformation.According to research, 80% of companies globally have invested in digitalisation, with an estimated US$2trn to be spent on digital transformation by 2022.
The business case for digital transformation and its benefits are clear: it provides safety gains, financial benefits, productivity gains, enhanced decision making and improved efficiency. Research done by Deloitte globally shows that 50% of business leaders identify productivity and operational goals as drivers of digital transformation. These benefits are also true for capital projects.
Yet, the capital projects industry has traditionally prioritised investment in conventional tools, techniques and process changes, as familiar ways to improve delivery on time and budget. Technological change can seem uncertain and has impacted digital initiatives negatively. As is the case with regards to new technology investments in other industries – which are often a reactive response to business risks rather than proactive innovation causing the industry to be
change resistant.
Furthermore, digital initiatives, where they have occurred, have seldom delivered and sustained the anticipated value or achieved their full potential for various reasons. While digital maturity varies from sector to sector, the capital projects industry lags behind other sectors, such as media, retail
and finance. Construction and mining lag the furthest behind.
For many capital projects industries this is because digital investment has typically been ad hoc. Initiatives have simply emulated what has been done elsewhere, or used what seemed most convenient or readily-available. Project teams have tended to work in silos, adopting piecemeal and unconnected technologies that fail to serve the full project lifecycle.
Such thinking and practices have led to inconsistent data and information mismanagement within and between projects, leaving capital projects owners and organisations unable to develop and
mature their digital capabilities in the long term.
Project teams, owner organisations, and the supply chain are coming to the overwhelming realisation that their traditional approach to technology investments are not yielding the benefits they had hoped for. Projects are still not delivering a fully digital operation, but rather delivering a traditional asset with some digital functionality. This fails to realise the full potential of the technology. In other cases, digital ‘quick fixes’ may be too limited in scope to deliver meaningful improvements.
Central teams still focus on impressive-sounding ‘headline’ initiatives, but advanced technology is often not mature enough, and as a result, fails to solve key business problems and delivers
no immediate value to projects. This can discredit further initiatives, limit budgets and stall new digital ideas.
The scale and complexity of the digital landscape makes it hard to determine the most appropriate solution, with multiple providers, manufacturers and consultants each pushing different solutions.
The right approach requires a fit-for-purpose, organisation specific digital vision and strategy that allows cohesive piloting and appraisal, investment, planning and implementation.
A digital capital project is more than just the use of technology in delivering a project. A digital capital project represents a fundamental shift in how a project is designed, constructed, operated and decommissioned. Only when projects begin with a strong digital foundation built around data can subsequent investment in technology become more effective.
Deloitte research has shown that when digital is integrated and used effectively, it has the potential to add value throughout a project’s lifecycle. For example, digital integration can reduce engineering hours by 10-30% in the design, financing and procurement stage of a capital project. Similarly, in the
operations and asset management phase, operating costs can
be lowered by 10-20%.
Other benefits include:
•• Reduced project start-up costs and reduced construction
defects
•• Impact of design-stage decisions over lifecycle performance
and cost
•• Significant safety benefits by reducing hazards to human workers
•• Reduced management process costs arising from incomplete
data (5-10% saving on design fees)
•• A single source of data, with visibility of assets at portfolio and
national level.
Organisations that have invested wisely are seeing significant benefits. For example, in the mining sector, a major mining company in Australia uses a fleet of autonomous trucks to haul
ore, which improves safety, productivity and cost, as one remote operator can supervise multiple trucks running 24 hours a day.
Other case studies, based on Deloitte’s experience, have been in the Oil and Gas sector for example. One case required the objective of a step change in productivity and capital efficiency across the ecosystem as investments had been ad hoc and were not delivering value. The value estimation of digital transformation included the following:
•• 5-10% reduction in build cost
•• estimated value capture of up to US$1.7bn annually based on
productivity improvements
•• 3-5% reduction in maintenance hours
•• 30% reduction in engineering hours.
This article was extracted from the Deloitte Africa Construction trend report 2019 to access report click here
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