The construction sector accounts for an annual spend of ~$10 trillion but productivity has trailed that of other sectors for decades. The sector is at a crossroads with an estimated $1.6 trillion dollar opportunity to close the productivity gap. What are the root causes of low productivity? What practical actions can be taken to improve the efficiency of projects and create a step-change in productivity? How can the sector better embrace digital technologies, new materials, and advanced automation?
This peer-to-peer roundtable convened a select group of influential South African E&C executives, private sector owners, and public sector authorities to discuss how to deploy the insights, existing best practices, and emerging technologies at scale. Key themes from the discussion and useful links can be found below:
- Explore a combination of proven management processes, new contracting models, and innovative technology-enabled solutions to boost productivity and accelerate delivery. Proven examples include Lean Construction, collaborative contracting (Integrated Project Delivery), and BIM.
- Improve contractual relationships to reduce risks and achieve better outcomes. The current contracting environment is highly focused on risk transfer, and often results in adversarial relationships between owners and contractors. Case studies have demonstrated that aligning contractors’ and owners’ interests results in better project outcomes. Collaborative contracting was cited as a big opportunity to explore within the South African context. Some participants suggested launching a few pilots between owners and contractors to demonstrate the potential.
- Selectively embrace technology to improve productivity. Technology alone will not address the root causes of productivity and there is some skepticism with regard to its adoption potential in South Africa (e.g. BIM adoption is very low). However, there are proven examples where technology has had significant positive impacts on productivity and owners and contractors should continue to experiment.
- Design an approach for all stakeholders to engage with advanced analytics and digital applications in construction. While the opportunity of advanced analytics and digital is relatively clear from an owner’s perspective, government and labour are less convinced of the benefits. Positioning the opportunity in a way that engages all stakeholders to see the benefits will go a long way to improve adoption.
- Invest 3-5% of the total project budget on up-front design and planning before procurement launches. Scoping projects adequately up-front is a proven method to significantly reduce risk and increase the probability of an on-time and on-budget project.
- Accept that China is a real player in Africa for the foreseeable future. With China’s huge investment in the Belt and Road Initiative (BRI), African E&C companies need to adopt a collaborate or compete strategy. Chinese competitors are here to stay.