The construction industry represents about 13% of global GDP (or about $9 trillion per year), yet each year roughly $1.6 trillion is left on the table due to lagging productivity improvement. Embracing a holistic data environment is one of the key ways construction and engineering can break free from its productivity plateau of the last 30 years with increased efficiencies that yield dramatic results.

What’s holding the industry back? The current document-driven landscape

While there are many causes behind the lack of productivity improvement in construction, the main culprit lies in how project teams and contracts to develop and deliver projects are structured. Standard practice is to bring together multiple companies with disparate cultures, systems and data structures. This severely restricts the movement of data and information. Then, due to the lack of trust between parties, each relationship is wrapped in contracts that further exacerbate the problem. 

The cost of this approach is significant, but hidden. It’s buried in existing cost norms. At the project level, the Construction Industry Institute recently completed research that showed a 2-4% inefficiency burden for every relationship in the project supply chain—from the owner operator down to the suppliers of original equipment manufacturers. This hidden, compounding cost can add up to as much as 40% of the overall project cost.

Data as the currency and lifeblood of an organization

A holistic data environment (HDE) completely disregards the document-driven way of thinking and makes things profoundly more efficient. It’s estimated that some companies embracing HDE, in fact, will be able to do the same number of projects with just 10% of their current overhead—leaving them free to focus on the creative, analytic and value-added side of their work.

A HDE places data and design at the center of everything. It also removes the control points that act as bottlenecks. A holistic approach allows information to move more efficiently between departments and systems, enabling the adoption of automated approaches to project activities—from progress measurement, validation and invoice payment approvals to the automated application of changes throughout the supply chain.

Rather than a separate approval process for every little thing, the technology itself will validate a majority of procurement events via smart contracts. Most requests could proceed without the need for manual approval—and those that do would be automatically flagged for manager review.

Within the HDE model, everyone involved in each stage of an asset’s existence—design, construction, operations and maintenance—has infinitely more visibility into what’s happening. Suddenly they’re able to get a real-time sense of the project’s schedule and spend. Design changes become instantly available to all relevant players. Those design changes also automatically update timetables, budgets and projections.

The benefits of creating a digital twin

Over the last few decades, a holistic approach has played a large role in how the manufacturing sector achieved major productivity gains. Many of the most successful do so by creating a “digital twin” of their end product.

In a holistic model, a digital twin contains all the data needed for the making of an item. It contains details and specification of the parts and materials and drives the manufacturing sequence. If a change is introduced within the 3D design, suppliers are automatically notified. The new parts automatically show up because the manufacturer and their supply chain are all working off of a single source of the truth.

The HDE approach follows this same model for construction projects. The “digital twin” is the 3D model of the asset to be constructed, which incorporates the details of the equipment, materials and fabricated items, as well as the construction sequencing and required resources. If a change is introduced to the design, it can automatically flow onto suppliers, fabricators and construction resources. Similarly, if a change is identified during construction, it is identified back against the digital twin that all the project parties are working from. Resource, cost and schedule impacts are determined and alternatives are evaluated to establish the best path forward.

Moving toward a holistic data environment

A HDE approach is profoundly different from the paper-based “integrated system” that most companies strive for today. Here are the three primary best practices that an organization needs to take to get there:

• Lead with data. How the people within an organization interact with and use data across all functions (and between companies) is hugely important. Getting the data model design of structures and flows correct sets the foundation for both the digital operating model and technology platform.
• Place the digital asset at the center. The digital asset should be at the center with all other transactions and data associated to components of the digital asset. This is the key to the digital approach for developing and maintaining assets (which is in direct contrast to the functional, paper-based approach that dominates the industry today).
• Address the trust issue head on. Use the HDE to define mutually acceptable data sources and business rules that can be automatically validated through smart contracts with a technology platform where all parties are working from a single source of the truth.

The HDE concept must be adopted early in the design phase of the project to be effective. It is not something that can be adopted later in an attempt to add efficiency. Committing to a holistic approach, however, allows companies to be more adaptive change and future proof. Rather than static documents or expensive software platforms, the organization’s own data is at the center. Although this requires integrated planning, the impact to the bottom line is substantial. HDE is not an incremental change in project delivery—it’s a seismic one to the entire industry.