I recently sat down for a long conversation on Teams with IFS's Kenny Ingram, where we discussed the numerous and ever more urgent challenges facing the world and the construction industry in particular. Brexit was somewhat down the list and even the pandemic had to take second billing as we delayed focusing on the primary purpose of our talk and jumped straight into the crisis in the housebuilding market, with house prices rising beyond the reach of the young and affordable homes becoming a sad myth.

I suggested that prefabricated or modular construction methods would bring the cost of construction down, but Kenny countered, saying that the principal cost lay in the land, which is purely a speculative item for landowners who buy land at low interest rates and use it as an asset. They either hang on to it, sell off a chunk, or develop a bit here and there for commercial or residential projects.

"If they want to develop the land," Kenny said, "they provide the working capital and don't get paid back until the job is done - and they catch a bit of a cold if the market crashes but make handsome profits as its value rises." Cash management and planning are therefore critical, as are project cost management.

Building Contractors, on the other hand, usually have a single client and don't speculate on land acquisition and development. Most of them are using traditional construction methods, but some are using modular and off-site techniques, where they bring factory-built components on-site and bolt them together. As such, they are primarily concerned with project costs - materials, labour, plant, subcontractors and other professional services, both committed and projected - and their job is to keep on top of all of this and handle forecasts and variations, and provide complete visibility in how the project is developing. All of this comprises the basic elements required of a decent construction-centric ERP system.

Before we doubled down on this we ranged further, discussing issues surrounding infrastructure development, sustainability, material and skill shortages (both of which have been blamed on Brexit and the pandemic, although the latter has been endemic in the industry for quite some time) and the numerous technical innovations that will change the way we work significantly over the next two decades, and which are encouraging the evolution of some forward-thinking companies in the industry.

ACHIEVING CONTROL
It was time to come down to earth though. As fascinating as it is to extrapolate futures, I was more concerned with the solutions that IFS provided for their clients that enable them to handle the immediate challenges within the industry.

Kenny explained that the absolute starting point for this is helping them achieve control of their current operations. At one level that means putting a system in place that can handle all of the changes and issues that affect every project - delivery shortfalls, the lack of qualified labour, quality issues, engineering and design changes, and so on. But it also needs to tackle the bigger problems caused when you try to assimilate the working practices of numerous subcontractors, integrated companies and assorted suppliers who are all used to working on different applications and are often determined to hang on to outdated paper while generating hundreds of individual Excel spreadsheets.

To illustrate this point, Kenny described an organisation in the Middle East that had 12 different business units, 75,000 different spreadsheets and were using over 30 different business systems. In brief, as useful as Excel is, the data is not going anywhere, it can't handle variations and can't be used as a contract management system.

The only way forward was to simplify and have a digital ERP backbone that is integrated with best-of-breed solutions such as BIM. This approach provides a master asset data source which will allow the realisation of an integrated digital twin. With this is place everyone involved in a project is able to access and utilise a common set of accurate, timely information.

How do you do that? Kenny described the three key steps that need to be taken by every company. The first step is to be emphasised once more. Take control, don't run before you can walk. Ensure that your work processes are up to scratch and able to provide an accurate overview of a company's day to day status.

The second step is to take advantage of new technology. That includes BIM and Robotics, and both virtual and smart construction technologies - but without step one, control, you won't be able to exploit them effectively.

Step three is to widen or change your methods of construction. Dispense with old working practices and inefficiencies, move some of the construction off-site and increase the use of prefabricated components - or change the way you handle work packages.

Kenny compares the latter to the manufacturing industry. In a factory, everything is geared towards the job in hand - work commences when resources are available, components arrive on schedule at a rate commensurate with the job in hand, the task is done and the next one is waiting. Compare that with the way construction sites seem to have operated for many years, as skilled craftsmen hang around waiting for deliveries or plant or until other trades have completed their assignments.

There is no lack of activity, just a lack of coordination. Builders on-site don't really understand part numbers and the concept of work packages and are not really interested in having to accept receipts for goods, going through picking lists or checking goods against invoices.

Kenny added a fourth point which is not really a step as such, but an incentive. Stop being just a construction company, and look to take over the complete asset lifecycle commitment. Provide clients with a service for building, operating and maintaining and eventually dismantling an asset. Take a leaf out of Amazon's book. Or, as an alternative, consider setting up your own manufacturing and supply chains. To go in either direction, of course, the use of BIM is a sine qua non.

IFS CLOUD
The key to maintaining control while encouraging companies to evolve, is to work on a single version of the truth - a single source and repository of information. IFS Cloud provides that environment using a construction-centric Digital ERP Backbone, enabling everyone on a project to work together. Changing a company's culture, though, is not quick, or easy. Kenny suggests that one step is taken at a time and that it could be 9-12 months before the benefits are felt from each cultural shift.

You can see this in the move towards off-site/modular construction or what is commonly called MMC (Modern Methods of Construction). This needs a more structured approach and a rebalancing of a company's infrastructure which can accommodate a less-skilled workforce, along with a switch from building components to buying them and setting up a JIT delivery system to prevent components clogging up a building site. The obvious next step is to become vertically integrated and to set up and run your own factories to supply your own components.

This is why IFS recommend the use of its IFS Cloud solution to support all the project and asset lifecycle processes that a company needs to handle both current requirements, and the changes that will undoubtedly occur over the next twenty years.

The advantage that IFS has is that, while there are several companies that provide alternative ERP solutions for the construction industry, their expertise is somewhat scarce outside of this environment. If the trend is towards companies becoming multitalented, then the knowledge that exists within IFS as a supplier to a wide-ranging selection of industries enables the company to match a client's aspirations to its solution.

Besides Engineering and Construction, Service Industries, Manufacturing, Oil and Gas, Property and Commercial - all of which have some relationship to engineering and construction - IFS covers both Aerospace and Defence and Energy and Utility Sectors. All of these industries are involved in designing, building, manufacturing, operating and maintaining assets.

The challenge, as is always the case in the construction industry, is not just to handle change but to make it work for you - something that IFS have proven time and again.

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