Global Capital Projects Outlook: Strength and Resilience Through Transformation
September 14, 2022
“Construction is one of the toughest and most demanding industries with a sheer will that any challenge can be overcome. It is an inherent resilience that knows no bounds.”
— Tad Bungener, EVP Marketing, InEight
The InEight Global Capital Projects Outlook (GCPO) 2022 is out, and if there is one core idea that seems to echo across every region, it’s that digitalization not only yields better project outcomes, but that the industry’s move in that direction is stronger than ever. This year’s results serve to validate the initial findings from the 2021 report and show they were no flash in the pan. In truth, they reflect both an observable trend, and a growing realization that a holistic approach to digital transformation correlates with organizational success.
The company’s second such report to date, it is based on a March 2022 survey of 300 large-enterprise, capital project and construction professionals, conducted via an online survey. The survey included 26 questions designed to gauge general confidence and optimism levels across the industry, and assess track records, plans and attitudes towards digital transformation.
Of the 300 respondents, 100 participants were drawn from each of our focus regions of the Americas, Europe and APAC, giving each equal weighting in the report. Globally, 67% of respondents are project owners, and 33% are contractors.
To uncover some of the key takeaways, we sat down with Tad Bungener, EVP of Marketing and GTM Strategy for InEight, to get his take on this year’s report implications for the future of global capital projects and the construction industry.
Growing Attention to the Human Connection
There were definite differences between the GCPOs of 2021 and 2022. For Bungener, they were largely positive and many related to the more human aspects of the industry’s technology journey.
“For me, I was less surprised, and more pleased to see that there is an increased emphasis, a clearer focus on the human elements of digital transformations,” he says. “Inside that focus remains a critical component, however, oriented to managing the very intent of digital transformation, and that is change.”
It’s notable that the perceived benefits of digitalization seem to fall in line with GCPO respondents who do report that technology is broadly helpful in their day-to-day roles. Rated as highly beneficial is the gaining of detailed, holistic information on projects and events (51%), prioritizing tasks/managing project workflow (50%) and giving reassurance that environment, health and safety policies are being followed (54%).
Yet the change required to bring these benefits to fruition should not be glossed over. “Change is an easy aspect of any technology initiative to underestimate, but a potentially costly element to have underestimated,” Bungener points out. “This is because though change in technology offers an opportunity to refine processes, improve data quality and impact outcomes, it also requires a level of adjustment within human behavior that isn’t always smooth.”
This need is highlighted within the GCPO, with 94% of respondents saying they have specific concerns about the future of digital transformation. Reduced in-person communication (45%), professional experience and human intuition being replaced by technology (43%), damage to work-life balance (41%) or the replacement of jobs by automation (39%) were all top-of-mind for respondents. Yet Bungener is not surprised by any of this.
“These results just serve to underline that however digitalization is intended; it’s not always welcomed. And we know that if you allow your organization to lose support from the ranks, it can then prove to be a difficult path to realizing your strategic objectives.” The solution?
“Creating an integrated change management plan and sustained communications effort can keep people securely and confidently connected and onboard throughout the transformative journey,” he says.
And it’s well worth it to all stakeholders to stay the course. When asked what benefits they hoped digital transformation could deliver to them in the future, respondents said more automation (49%), more control (48%), greater strategic insights (47%) and better communication (49%).
Navigating an Uncertain Landscape
Against a backdrop of supply chain shortages, inflationary pressure, energy challenges and the looming horizon of major infrastructure remodeling, capital project owners and contractors remain firmly positive about the direction of the industry. Notably, respondents reported a significant increase in construction and capital project spending (up from 68% last year to 76% in 2022) while resilience also remains high, with 91% of respondents considering their organization to be very or fairly resilient.
Yet underlying the maintenance of this happy balance in an ever-changing operating environment, respondents called out unmanaged or unexpected risk as the most influential factor for whether a project will be completed on time and on budget.
Bungener admits that though thriving in the face of such adversity is an industry strength, a change in thinking is still needed to deal with constraint realities.
“I see the main takeaway from all of this as balancing optimism with what is still a clear admission by owners and contractors that over 50% of projects are completed over budget and behind schedule,” he explains. “So, while resilience still delivers on the projects, constraints are inescapably reflected in the outcomes. That’s where an integrated mindset, methodology and platform can really help pull people and processes together in practical yet meaningful ways.”
Maturing Beyond Software
As opposed to last year’s report, there is also a growing realization that digitalization is more than simply installing software. In this vein, respondents called out sporadic implementation (58%), process and data integration issues (54%), poor communication (51%) and technical and system limitations (51%) as the top frustrations caused by uneven technology implementation, all adding up to what they see as barriers to greater technology investment.
While it’s accepted that regions across the globe gather digitalization speed differently, it may simply be that respondents are seeing the reality of what’s involved in a true digital transformation. They are acknowledging that success requires a change in organizational processes with everything from supply chains to the construction methods used on-site.
Our next steps? To capture the industry’s current digital enthusiasm and momentum and apply it to more integrated thinking. Bungener believes all signs point to this already happening.
“Given the multitude of macro constraints still lingering from past years, the report’s overall optimism this year was expected to have gone down, yet it hasn’t,” he points out. “This is because construction is one of the toughest and most demanding industries, with a sheer will that any challenge can be overcome. It is an inherent resilience that knows no bounds.”
Summing things up, Bungener sees the answer to successfully continuing the industry’s digital journey as lying within its own behavior.
“The key now is channeling construction’s desire for greater project certainty into more realistic and humanistic practices, and that means thinking about technology in a holistic, integrated way,” he says. “This is how we will uncover its full potential to not only benefit project outcomes, but the people who power those projects.”
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