Majority of global construction professionals are facing inflation and supply chain challenges but technology is key to addressing them.
The results of a new survey of global capital project owners and contractor construction professionals have revealed that almost three quarters of respondents are experiencing cost inflation and supply chain disturbance, but that the industry must remain focused on deploying technologies that drive predictable project outcomes to support long-term growth.
InEight Inc, a global leader in construction capital project management software, this week today launched its third annual Global Capital Projects Outlook, which draws insights from research conducted with 300 of the world’s largest capital project owners and contractor construction professionals across North America, Europe and the Asia-Pacific region.
Nearly three quarters of respondents (74%) report disruption caused by cost inflation, while 70% cite delays and disturbances in the supply chain according to this year’s Outlook, with impacts reported across scope, cost, schedule, collaboration and work performance. According to the report, the construction industry continues to face challenges around effectively leveraging project funding, such as the $1.2trn in infrastructure spend outlined in the Infrastructure Investment and Jobs Act in the USA.
Despite this challenging operating environment, a step change in project certainty is evident this year, with more projects being completed on or ahead of schedule (47%) this year compared to 2022 (40%). And regarding cost control, 45% reported staying on or below budget, compared with 42% last year.
The Outlook adds to growing evidence that the ability to both see and understand the bigger picture through connected data enhances project delivery.
Positive impacts of connected data
Through connected data across project lifecycles, construction organsations say they can more astutely identify risk and balance the trade-offs between scope, cost and schedule. Half of respondents say it improves risk management, while a third say it reduces cost overruns (38%), leads to fewer scope changes (37%) and schedule overruns (33%). It also has a markedly positive impact on employee productivity according to 46% of respondents.
Use of connected data varies by company size with those with the fewest capital projects most likely to report using industry benchmarks (52%) and historic project data (51%) while the largest portfolios are the least likely (43% for benchmarks, 46% for historic project data), possibly due to the greater complexity of integrating new technology software and managing greater volumes of data. This varied use of connected data is creating a clear divide between the data haves and have-nots, with projects much more likely to be completed on or ahead of schedule when industry benchmarks and historic project data were used.
Commenting on the Outlook, Jake Macholtz, CEO, InEight, said: “It has been a challenging couple of years for construction, with most organisations facing significant supply chain and labour challenges which have impacted everything from cost to workmanship.
“However, those organisations that have remained committed to achieving technology sophistication are reaping the benefits, both for themselves and their clients. The Outlook sets out a strong case for all construction organisations to follow in these footsteps, highlighting the many benefits for risk management and communication to project certainty, to name a few.”
A challenging operating environment
Nearly three quarters of respondents (74%) report cost inflation as disruptive and 70% cite delays and disturbances in the supply chain. On the labour side, 68% point to pay inflation and 64% point to the related issue of labour and recruitment challenges.
Many respondents say their organisations are using technology to understand and engage with the big picture operating environment. The use of project management or project controls software is most popular (58%), while many organisations also use artificial intelligence and machine learning (50%), risk-adjusted project planning software (47%) and connected worksite communication (47%).
Macholtz said: “Only once we understand how the big picture impacts the fine details of a project, and how those fine details all interact with each other, can we fully optimise project decision making to drive predictable project outcomes and support long-term growth.”
Despite a challenging operating environment, optimism has remained high for a third year in a row (92% in 2021, 96% in 2022 and 94% in 2023) with digital technologies, economic growth/recovery and sustainable building projects identified as key areas of growth. Construction and capital project spending levels continue to trend upwards, with 86% reporting an increase compared to 76% in 2022 and 68% in 2021.
This positivity is somewhat tempered by a significant rise in concerns over labour challenges. Concerns over staff and skills shortages were identified as a risk to growth by 42% – not only entering the top three risks for respondents for the first time, but also taking the top spot. Yet, even with an intensifying skills shortage, along with disruption caused by cost inflation and supply chain delays, industry confidence remains high this year, with those feeling somewhat or very resilient slightly increasing from 91% in 2022 to 92% in 2023.
Click here to access the InEight Global Capital Projects Outlook.
