Construction is a cash-heavy industry, and its success is dependent on meeting project deadlines and contract specifications. Your construction company, on the other hand, may face a number of challenges, including a severe labor shortage, employee productivity issues, and technological setbacks. In addition, rising and volatile material costs, combined with productivity issues, often cause your infrastructure projects to go over budget.
Despite the fact that low productivity affects a variety of industries, the end result is always the same: declining profitability and rising costs.
78% of engineering and construction companies believe that project risks are increasing* with a failure rate of nearly 30%**.
*100+ Construction Industry Statistics, Autodesk Construction Cloud, 2016
**6 Reasons Why Construction Companies Fail, Construct Connect, 2019
As a construction company leader, you will try to mitigate these challenges by leveraging technology to keep your company on track. However, to achieve this goal, your company may face several IT challenges along the way. It’s critical to identify and understand your challenges so you can create strategies for resolution.
Here are the top 6 challenges facing construction firms:
Challenge 1 – IT Downtime
If your company’s IT infrastructure fails to function as expected, it will incur an average cost of $3600 per hour for IT downtime, which may vary depending on the size of your company. This estimate is based on several factors, including lost employee productivity in terms of salaries due to malfunctioning systems or an inability to connect to the Internet, potential employee overtime costs to meet deadlines following a period of disruption, and IT recovery costs.
The average downtime cost for IT systems is around $3600 per hour for a construction company generating 6 million Canadian dollars in revenue, where the average number of working hours in Canada is 1722, adding to the construction firms’ expenses. The estimated downtime is around 7 hours, with a cost per incident of $25,200.
Source: Recovery Time & Downtime Cost Calculator, Datto, 2021
Challenge 2 – Cyberattacks
Your company’s downtime is caused not only by unreliable IT infrastructure and services, but by cyberattacks, which could limit your access to company files and expose confidential client information. The disclosure of confidential information could result in massive financial liabilities, such as client claims, trade secret damages, and regulatory fines. It’s challenging to understand how vulnerable your organization may be to cyberattacks without having a strategy and expert to fully assess. Bird Construction, a leading builder in Canada, was infected with Maze ransomware in 2020, and hackers demanded $9 million in exchange for a decryption key.
According to ActiveCo data, the average ransomware demand from Canadian construction companies was around $400,000, with stolen data averaging 40 Terabytes in size.
Challenge 3 – Lack of Cybersecurity Training
Cyberattacks would not only expose your data, but they could also have an impact on internal systems, such as your building information modelling (BIM). Because of the shared nature of BIM and the numerous connected parties, the risks of a data security breach are much higher. Threats include stealing intellectual property, sabotaging projects, and holding commercially sensitive data to ransom.
As a result, deploying cybersecurity systems and training your staff are critical, especially since human error accounts for 90% of these attacks. Nevertheless, a recent Forrester survey found that 75% of respondents in the construction industry had been victims of a cyber-incident, which had a negative impact on their performance.
According to a Forrester survey conducted in 2017, more than 75% of respondents in the construction, engineering, and infrastructure industries reported a cyber-incident, a figure that is rising.
Source: construction could be the next target for cyber threats, PropertyCasualty360, 2017
Challenge 4 – Lack of Workflow Automation
Employee productivity is hampered not only by cyberattacks, but also by a lack of automation of day-to-day tasks. According to Autodesk blog, approximately 30% of construction companies’ work is rework, with poor project data and miscommunication accounting for 52% of that rework.
As a result, the total cost of rework approaches 9% of the total cost of the project. Automation eliminates the need for multiple steps or duplicate data entry, while also providing user-friendly dashboards and alerts to ensure action items are addressed and project data is always up to date.
Rework accounts for approximately 30% of the work performed by construction companies, where poor project data and miscommunication account for 52% of that rework. As a result, the total cost of rework approaches 9% of the total project cost*.
*100+ Construction Industry Statistics, Autodesk Construction Cloud, 2016
Challenge 5 – Lack of Integration
Many construction applications do not integrate, resulting in duplicate work, data loss, and inefficient workflows. As a result, content is dispersed across multiple repositories, making it difficult for employees to retrieve documents. When your company fails to implement document retention practices and policies, your employees may spend up to 25% of their time looking for information that they require to do their jobs. Furthermore, 49% of them still manually integrate data, and 13% do not migrate data at all.
Employees may spend up to 25% of their time looking for information needed to do their jobs, negatively impacting their performance. Furthermore, 62% continue to migrate manually or ignore this process, resulting in data loss*.
*2020 Construction Technology Report, JBKnowledge, 2020
Challenge 6 – Noncompliance with the PIPEDA
Finally, if your company’s IT systems and cybersecurity measures fail to protect your clients’ information and you fail to report the data breach, you could face business or regulatory penalties for violating PIPEDA rules. The Personal Information Protection and Electronic Documents Act (PIPEDA) of Canada requires mandatory data breach reporting and imposes fines of up to $100,000 for noncompliance. Without having a technical expert on staff, it’s challenging to build your IT infrastructure to ensure PIPEDA compliance.
Businesses that fail to report data breaches to the to the Office of the Privacy Commissioner of Canada or notify affected individuals of a breach that poses a real risk of significant harm could face fines of up to $100,000.
*The Digital Privacy Act and PIPEDA, the office of the privacy commissioner of Canada (OPC), 2018
Construction firms frequently rely on limited internal resources to manage their IT infrastructure, which lead to inefficiency and scalability problems. Without having a strong IT strategy in place, it’s difficult to understand and mitigate these common challenges that your construction firm may face.
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