Capital planning in an unpredictable world
Though Covid-19 is far from being the only challenge facing the construction industry, it is proving a salutary indicator of weaknesses at all points in the supply chain, and on sub-contractors, many of whom are vulnerable even to comparatively short but unpredicted site shutdowns. The pandemic will pass, but no-one knows when, or whether it may be followed by another.
A recent report from points to widespread cancellation or delay of projects and supplier bottlenecks, all leading to uncertainty. It predicts “a sharp rise in the number of organizations invoking 'termination for convenience' clauses for projects in the US and even abroad, as well as force majeure claims by suppliers – especially those in hard-hit parts of Asia. If that wasn't enough, the complexity of overlaying currently approved projects (both CapEx and OpEx), makes effective decision-making on what to cut, what to keep, and what to delay more and more challenging.
In this environment the importance of adequate strategic planning and is paramount. Oracle Construction and Engineering focuses on this when considering alternative strategies and the wider issues around asset lifecycle management, warning that decisions made solely on the basis of cost neglect many other important factors not visible to the planning team. These can and should be included in any model when looking to make tough decisions.
To improve the chances of successful planning, a set of investments with a clear line of sight to the strategic goals of the enterprise is required. To achieve that, planning stakeholders need to evaluate projects based on a predetermined set of drivers – from generating positive cash flow and acceptable ROI, to ensuring regulatory compliance and shareholder value says , Senior Director, Product and Industry Strategy at Oracle Construction and Engineering
“The ability to reset and re-evaluate these drivers means they can model different scenarios, accurately assess risk, and make faster, data-based, and objective decisions,” says Bullard.
To achieve this flexibility, reduce uncertainty and take the gamble out of the strategic planning processes, he points to Oracle's technology solutions widely adopted across the industry. Oracle’s Primavera suite of products, enhanced by Oracle Aconex, make planning more efficient and crucially provide the visibility to identify bottlenecks and take corrective action early, cutting the risk of schedule creep.
In these difficult times, it's critical to establish a true loop between assets, the business, and project delivery organizations, bringing data together quickly across multiple business lines. But managing the entire asset lifecycle is harder when teams are working remotely. Among the steps that can be taken to reduce the impact of unplanned-for events are to develop a mitigation plan for project disruption, to be ready with a restart plan, and to identify those services that can be moved off-site to offset delays. Post-pandemic it would be nothing short of disastrous to expect a return to pre-pandemic norms: The technology that enables business to navigate the uncertainties of the present will be essential to survival in the new environment that emerges as society restructures.
Intelliwave SiteSense boosts APTIM material tracking
“We’ve been engaged with the APTIM team since early 2019 providing SiteSense, our mobile construction SaaS solution, for their maintenance and construction projects, allowing them to track materials and equipment, and manage inventory.
We have been working with the APTIM team to standardize material tracking processes and procedures, ultimately with the goal of reducing the amount of time spent looking for materials. Industry studies show that better management of materials can lead to a 16% increase in craft labour productivity.
Everyone knows construction is one of the oldest industries but it’s one of the least tech driven comparatively. About 95% of Engineering and Construction data captured goes unused, 13% of working hours are spent looking for data and around 30% of companies have applications that don’t integrate.
With APTIM, we’re looking at early risk detection, through predictive analysis and forecasting of material constraints, integrating with the ecosystem of software platforms and reporting on real-time data with a ‘field-first’ focus – through initiatives like the Digital Foreman. The APTIM team has seen great wins in the field, utilising bar-code technology, to check in thousands of material items quickly compared to manual methods.
There are three key areas when it comes to successful Materials Management in the software sector – culture, technology, and vendor engagement.
Given the state of world affairs, access to data needs to be off site via the cloud to support remote working conditions, providing a ‘single source of truth’ accessed by many parties; the tech sector is always growing, so companies need faster and more reliable access to this cloud data; digital supply chain initiatives engage vendors a lot earlier in the process to drive collaboration and to engage with their clients, which gives more assurance as there is more emphasis on automating data capture.
It’s been a challenging period with the pandemic, particularly for the supply chain. Look what happened in the Suez Canal – things can suddenly impact material costs and availability, and you really have to be more efficient to survive and succeed. Virtual system access can solve some issues and you need to look at data access in a wider net.
Solving problems comes down to better visibility, and proactively solving issues with vendors and enabling construction teams to execute their work. The biggest cause of delays is not being able to provide teams with what they need.
On average 2% of materials are lost or re-ordered, which only factors in the material cost, what is not captured is the duplicated effort of procurement, vendor and shipping costs, all of which have an environmental impact.
As things start to stabilise, APTIM continues to utilize SiteSense to boost efficiencies and solve productivity issues proactively. Integrating with 3D/4D modelling is just the precipice of what we can do. Access to data can help you firm up bids to win work, to make better cost estimates, and AI and ML are the next phase, providing an eco-system of tools.
A key focus for Intelliwave and APTIM is to increase the availability of data, whether it’s creating a data warehouse for visualisations or increasing integrations to provide additional value. We want to move to a more of an enterprise usage phase – up to now it’s been project based – so more people can access data in real time.