What Tech-induced Construction Holds for Future?
The growing investments in infrastructure, industrial and real estate sectors have resulted in ample business opportunities for the engineering and construction (E&C) companies. As a construction partner, Shapoorji Pallonji E&C has played a pivotal role in the creation of public infrastructure in India while associating with Central and state government undertakings, PSUs and quasi-government bodies. Such projects include construction of airport terminals, convention centers, educational institutes, healthcare facilities, urban transport infrastructure, affordable housing, urban utility infrastructure, etc. Apart from government projects, we are also executing many projects in the private sector.
Despite the growth in business opportunities in the last few years, the construction industry was battling poor productivity, operational challenges, project delays, tighter margins and increased competition. The pandemic has only accentuated the systemic hurdles that the industry was facing all along. In the COVID era, E&C companies are under greater pressure to improve costs, timelines, and efficiency.
Even as the government relaxed the lockdown norms for the construction industry, E&C companies are grappling with slow progress, shortage of workers, disrupted supply chains, poor productivity, increasing costs, new operating procedures for health and hygiene and cashflow crunches.
Tech-induced Transformation in Construction Sector
The evolving landscape of new technologies in the E&C sector has the potential to transform all stages of the project delivery process. The new technologies can change how companies design, plan and execute projects. By adopting advanced software, construction-focused hardware, analytics capabilities and advanced construction technologies, the companies can eliminate many of the problems that have dogged the E&C sector for decades. Technology could also enhance performance on the parameters of time, cost, quality, precisionand convenience.
Shapoorji Pallonji E&C has begun incorporating new construction technologies into its projects, across all project phases viz., design, preconstruction, construction, and operations and management. The various digital initiatives being implemented include :-
1.SPACE :Thisis the digital portal of SP E&C and offers various applications like
•HSE and Quality to record and track all internal check processes
•Labour Management System to record all labour data including their attendance and compliance
•Action Module for organizing meetings and assigning tasks and assignments to individuals
•Knowledge Management portal to share case studies, articles, news feed, e-books, etc.
2.BIM Implementation :At SP E&C, Virtual Design & Construction has been implemented across 100+ projects for Modelling, clash-free design co-ordination, RFI production/resolution, quantification, scheduling and monitoring, and site logistics. We are leveraging BIM capabilities using multiple tools offered from leading digital tool suppliers.
3.Use of Drones&Cameras : We are using drones to capture site images and aerial survey data. We are also using PTZ cameras to monitor progress and to improve safety and security.
4.Back-office Integration on SAP : We are accessing and utilizing valuable project data on resources, finances, costs and schedules on SAP. The system gives our managers immediate access to real-time back-office data and aids decision making.
SP E&C is amongst the leading Indian E&C companies using new building systems and construction techniques viz., precast construction, modular formwork systems, shear-wall monolithic construction, pre-engineered structural steel construction, top-down construction, etc. These have been ably demonstrated at many of our projects.
USPs of the Indian construction sector in Comparison with International Markets
Being a developing country, India is investing heavily in new infrastructure creation. While investments in infrastructure are growing, many infrastructure projects are synonymous with serious time and cost overruns. The infrastructure development in India is prone to dependency on external factors (land, environment, socio-economic, community, regulatory, market forces etc.) and has its fair set of challenges. While there may have been a few success stories like the Delhi Metro, but as a whole, our performance falls short significantly, and on a consistent basis. This means that the Indian construction industry, although large in size, is lagging in terms of international standards in quality, safety and productivity.
While a few organizations have been at the forefront of adoption of advanced construction technologies, the rest of the industry has been slow to adapt to new methods of construction or technology. The Indian construction industry is still seen as unorganized and heavily labour-dependent. Although there have been many projects with successful demonstrations of advanced construction technologies in India, most of the projects are still being built using conventional methods. Therefore, there is tremendous scope for the productivity and efficiency standards of the industry to go up.
Excepting Government organisations, PSUs, MNCs and some corporates who have adopted DesignBuild contracts in a big way, a majority of project promoters and developers still prefer traditional sourcing models for their construction needs. Many projects experience poor cashflow and hence poor progress on account of delayed payments, onerous clauses in contracts, inadequate funding arrangements, poor dispute resolution mechanisms and lopsided competition. These factors are actually proving to be barriers to innovation and adoption of new construction technologies.
The GoI, over the last few years, has implemented numerous legislative and procedural reforms. India’s now stands at #63 in the World Bank’s Ease of Doing Business Rankings 2020, up from #142 in 2014. This is a testament of a more seamless and efficient process of procuring construction permits.
The Government has facilitated in debottlenecking critical infrastructure-sector projects, especially in the roads, metro rail and aviation sectors. Such initiatives have been successful to an extent, in easing out some of the core issues such as land acquisition and regulatory approvals. In addition, NITI Aayog has recommended implementing model agreements for improving contractor procurement, which advocate adopting EPC contracting, incentivizing contractors for early project completion, and stage payments that can potentially align the interest of both clients and contractors to the project and reduce the number of claims.
The current regime has also introduced GST and other reforms like the IBC Code, which are expected to boost growth in the long term. All these steps by the GoI should help the construction industry to scale up sustainably.
Beyond all these reforms initiated by GoI, a lot more needs to be done to make contract execution smoother. Although the construction contracting fraternity has made multiple representations to GoI, the tender conditions continue to be archaic, onerous and inequitable. Many government contracts involve contractual risks that are far higher than the margins that can possibly be earned through efficient projects execution.The government machinery needs to walk the talk when it comes to timely release of payments to contractors. The execution ability of contractors is dependent on many key decisions and approvals that need to come from the Employer or the Authority’s Engineer and these are often delayed.
The leading E&C companies are implementing advanced construction technologies as preferred solutions for overcoming the existing challenges. This has also become imperative to address the needs of the large and complex projects – both public and private, that are being planned in India. Moreover, technology has become necessary to achieve consistency, repeatability, scalability, predictability and traceability.
Role of Leadership in Construction Sector
Leadership is most crucial, be it at an organisational, business, industry or at a national level.Effective leadership in construction requires combining technical knowledge with people management and business management skills. A leader in the construction sector needs to demonstrate project management capability and maturity in his organisation in addition to his domain or sector-specific knowledge. At SP E&C, we consciously nurture our high potential employees for senior leadership roles and are committed to develop project management competency at individual and organisational level.
In the post-COVID world, top leaders in construction must adopt digital and agile ways of working in order to model them for the rest of the company. Leaders are also required to raise awareness and excitement about the new business models.
In the construction sector, most of the learning happens experientially and on-the-job. This includes training for leadership roles.In addition, instructor-led trainings and online modes also play a significant role. For leading E&C organisations like ours, employee attraction and retention are a priority.Learning and organisational development practices at SP E&C help us create a competitive advantage. Keeping in view the ever-evolving construction processes, we have recognized the need for constant retraining of the workforce. Our training initiatives also include our workers.
India as a nation has no dearth of engineering talent with decades of project delivery experience residing in pockets that needs to be tapped into to help improve the overall average performance levels. Deep techno-commercial expertise, robust contractual and legal systems, a passionate and driven workforce, with a strong entrepreneurial culture, leading technology advancements and disruptions–these are some of the favorable factors that should be leveraged. As a nation, we need to build our leadership pipeline and overcome what has slowed us down in the past.
For India to become a developed nation, the successful implementation of public infrastructure projects is imperative. This requires leadership development at all levels. All stakeholders including key ministries, nodal GoI think tanks and key state undertakings that are implementing these projects, engineering and contracting firms in the country, to address and adequately respond to the challenges. These stakeholders need to organize themselves by adopting best practices in risk management, project governance, procurement and contract management. These stakeholders also need to optimize their project management processes to achieve on-time and within-budget performances.
Indian Construction Sectors’ Outlook
Despite the pandemic-induced setbacks, we see no long-term impact for the Indian real estate, infrastructure and construction market. India has a huge economic opportunity in the coming years. With increasing per capita income and a population of about 1.30 billion, the Indian economy will continue to prosper aided by digitization, globalization, favorable demographics, and reforms. In addition, increased government spending on infrastructure and increasing urbanisation will provide plenty of opportunities for the construction sector.
Over the next few years, the government is expected to continue investments in the infrastructure sector. Both central and state governments are taking proactive steps to stimulate the economy and attract investments across sectors. The contracting fraternity in India has geared up for the “new normal” amidst the pandemic. This level of interest amongst key stakeholders augurs well for the upcoming real estate and infrastructure projects.
As the Indian economy transitions and its workforce expands, it will offer vast development and investment opportunities for the real estate sector. The growth of cities is going to further influence the country’s built environment, while technology, demographics and environmental issues will become its new value drivers. The ideas, trends, and behaviours that will shape the real estate sector in the next decade are already perceptible today.
In the years to come, the Real estate, infrastructure and construction sectors in India will continue to be major contributors to the country’s GDP. India continues to attract Private Equity and Venture Capital investments in the real estate and infrastructure sectors.
Recent initiatives like Smart Cities, Real Estate Investment Trusts (REITs), “Housing for All’ are expected to bring huge investments. The Real Estate (Regulation & Development) Act is making the RE sector more transparent.
Despite COVID, India’s resilient economic fundamentals and the ongoing reforms agenda make it attractive for foreign investors. It is also owing to the country’s policy actions, sustained focus on innovation, continued fiscal consolidation and an anti-inflationary monetary policy that it continues to move towards macroeconomic stability. This is an exciting time for the country. It also presents a different set of challenge for the E&C companies, which is to grow sustainably and support the economic activities as a growth catalyst.