Time & Budget Issues Continue to Plague Construction | KPMG | GLOBAL

Construction Industry Still Struggles to Bridge the Performance Gap: KPMG Survey

Time & Budget Issues Continue to Plague Construction

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Half of construction firms and project owners report adverse project performance in past 3 years.

Majority lack confidence in the industry’s ability to deliver projects on time and on budget.

It's time to reassess the approach to effective performance of major construction projects, according to Make it, or break it - Global Construction Survey 2017 from KPMG International. Of the 200-plus senior construction executives taking part in the survey, only 25 percent say they have confidence in the industry's ability to deliver projects on time and on budget.

“In this, the 11th Global Construction Survey, KPMG professionals explore an industry on the verge of reinventing itself by reimagining three key drivers of project performance: governance, people and technology,” said Geno Armstrong, International Sector Leader, Engineering & Construction, KPMG in the US. “While all the data points to an industry ripe for disruption, there remains significant cause for optimism - and for those forward-thinking companies the size of the prize is significant.”

New rules for a new generation of construction worker

The growth of the millennial workforce is exposing the limitations of the industry's reliance on “hard” technical controls. As 37 percent of the workforce, millennials now outnumber baby boomers, who comprise just 23 percent.

And the latest generation is less accepting of the rules that have traditionally guided project management. “Some of the executives involved in the survey spoke of younger workers feeling constrained by too many regulations, which suggests that the traditional focus on hard, technical controls may be inappropriate for millennials,” explained Armstrong.

Yet, just 40 percent of the organizations in the survey have formalized `soft' controls - which promote rather than dictate good behavior.

“This all points to an urgent need to rationalize the number and degree of controls, to have a more manageable system that users of all generations are likely to use effectively,” Armstrong said. “In our desire to be thorough and systematic, we've underestimated the human element. Rules and procedures are only as good as the people administering them.”

Poised for a digital breakthrough

This KPMG 2017 Global Construction Survey finds an industry that's very excited about the potential of technology - but also a little cautious about where to invest to get the optimum impact.

An overwhelming 93 percent of respondents think technology/innovation will significantly change their business, but a mere five percent view their organizations as `cutting edge' in terms of their technological maturity. And, fewer than one in 10 are routinely using innovations like mobile platforms, advanced data analytics, and robotics and digital labor.

KPMG's Armstrong feels the industry's inherent conservatism is holding back its efforts to tackle the complexity of today's projects: “Those that choose to invest in the right disruptive technologies have the opportunity to achieve a massive uplift in performance, but the survey finds the industry's players long on enthusiasm for the digital revolution, but short on action to help realize their digital potential.”

As further evidence of this slow response to disruption, fewer than half of the respondents say their company has developed a data/technology strategy or roadmap.

Unlocking performance

While other sectors have succeeded in raising productivity over the past decades, construction has largely stood still. The findings suggest both construction companies and owners need to take a closer look at governance, people and technology.

“It's not just about improving these three drivers; but also addressing missing linkages between them,” said Armstrong. “Standardization and optimization are worthy goals, but on their own are unlikely to shift the needle. Future success is dependent upon rationalizing the rule books, creating a truly integrated digital strategy, and nurturing a workforce and culture that embraces new technology while respecting the proven effectiveness of sound project management.”

About the report

Make it or break it - Global Construction Survey 2017 highlights the views of 201 senior executives from major project owners and engineering and construction companies. The report looks at how the industry is approaching governance, people and technology. The survey, now in its 11th year, includes both private companies and government agencies, with project owners from many industries including energy and natural resources, technology and healthcare.

For further information, contact:

Jennifer Samuel
KPMG International
+416 451 8185
jsamuel@kpmg.ca

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