Category: Digitalization

CECE is a recognized organization that represents European construction equipment and related industries. They aim to achieve a fair competitive environment through harmonized standards and regulations. Recently CECE published a report “Digitalising the Construction Sector: Unlocking the potential of data with a value chain approach.” We read the report, and here is our executive summary of some of the key findings in the report.

To remain unbiased in their research, they created a Steering Committee. This committee was established to ensure that the research was reflective of highly representative companies. The research was then conducted through desk research, online surveys and in-person interviews. The report corroborates the importance of digitalization within the industry, while also giving examples of this through case studies.

With the introduction of new strategies in an organization, changes in the management styles are almost inevitable. An example given by CECE on a management style, is “squadification”. This refers to the creation of smaller cross-functional teams working together on a unified goal, that is measured on the same metrics. These groups do not have bosses, rather they have a product owner who leads the group. This makes the decision process quick, and allows for agile changes within the groups. This is one example of how changing management systems, with the introduction of new technologies can aid an organization. These changes also bring new benefits to the organization, such as, increased efficiency, innovation, and increased revenue.

Ecosystem Collaboration Drives Increased Efficiency

When organizations are able to successfully integrate new technologies into their business models and strategies, there may be an increase in efficiency. One reason for this is because of the ecosystems that can be built through partnerships or joint ventures with cross industry organizations. “When all of the actors involved in a project are gathered together communicating in the same environment the picture is wider,” meaning that these ecosystems will give each actor a larger perspective on current processes. Through the digitalization of the construction industry there has been an increase in the collaboration between OEMs, rentals and contractors. Therefore, each individual organization is increasing efficiency internally, but this increase in efficiency can also be seen on the construction sites.

Innovation as a Result of Data Access

Through the possibility of having access to machine data, and the increased collaboration between organizations, there might also be an increase in the pace of innovation. Innovation is important as it will lead to the development of new products and services. “Digitalization also means higher customization,” the ability to track customer needs through data analysis holds many benefits; this ability allows for customization of products and services, paving the way for tailored, innovative products or services. The innovation of new and customized products plays a role in improving the quality of the product or the service provided by an organization.

Leveraging Data to Increase Revenue

Access to data, and the proper use thereof is also a key element in the digitalization of an organization. When businesses look to increase their revenue based on their digitalization efforts they should also keep in mind, that it is not the amount of data that determines the success rate. Rather, it is the leveraging the data for usage which will allow them to generate revenue. Thorough understanding of these elements could increase revenue. The increase in revenue stems from the increase in efficiency which again comes from the increase in the product innovation.

The benefits of digitalization are plentiful, and the implementation of new data strategies and the ecosystems will bring the construction industry into a new wave of construction. CECE also presents case studies, about how organizations have utilized digitalization in their businesses, and how it changed their processes while allowing them to benefit from these changes as well.

If you would like to know more about the CECE report and their efforts in developing the construction industry, you can check out the full report here.

Knowing that something is wrong, you quickly check the fleet management overview. Yes, there it is: On a critical project with tight deadlines, your excavator has stopped working. To stay on schedule, it needs to be up and running immediately. You dig into the machine log to check what is wrong and scroll through the chat between the service technician and the operator. Even though the breakdown is a setback, it looks as if they have things under control. You take a deep breath and get another cup of coffee.

Whether you are a fleet manager or a site manager, your job is to streamline the execution of projects, prevent delays and downtime and make sure operators, machines and materials are available.

Soeren Brogaard, CCO, Trackunit

Say Goodbye to Spreadsheets

Whether you are a fleet manager or a site manager, your job is to streamline the execution of projects, prevent delays and downtime and make sure operators, machines and materials are available. Using new digital tools instead of numerous spreadsheets in various versions, the analysis part has become much easier. This leaves the fleet or site manager with the responsibility of staying updated and making decisions based on this insight. McKinsey Global Institute has researched exactly on this topic and published “Reinventing Construction: A route to higher productivity.” The report states: “In the future, new forms of digital collaboration, notably the Internet of Things (IoT) and advanced analysis, will combine to enable tracking of equipment and materials and therefore greater transparency.”

The report supports the fact that in recent years, fleet management has changed from a hands-on approach to an overview management style with the ability to predict and prevent issues – and to make the right decisions based on data, not on a gut feeling.

Say Hello to Better Management

Likewise the “Digitalising the Construction Sector” report from Committee For European Construction Equipment suggests “… the increased ability to collect, analyze, integrate and use data derived from several sources (i.e. geographic information systems, cyber-physical systems on construction equipment, weather data, drone aerial photography systems, mobile devices and tablets) contributes to a higher level of transparency between actors thus leading to a substantial improvement in the management of construction sites thanks to closer collaboration.”

The ability to collect and analyze data from several sources provides a better foundation for good decisions – and also paves the way for better management of work sites. The same report looks at new business models based on the value of data. These business models are about new and improved services, increased abilities to fulfill customers’ expectations, and new forms of collaboration for mutual benefit – coming from digital solutions based on facts and data.

… the increased ability to collect, analyze, integrate and use data derived from several sources … contributes to a higher level of transparency between actors thus leading to a substantial improvement in the management of construction sites thanks to closer collaboration.

The “Digitalising the Construction Sector” report from CECE

For a fleet manager, the keyword is “analysis.” Not exactly the analysis itself but the ability to see complex correlations and their implications presented operationally, providing a solid foundation for strategic and everyday decisions. This is where digital fleet management makes sense – and profit.

Transparency – not complexity – is a key enabler for a new digital era in construction.

In a foot race, or a bike race, you might have good legs one day, and bad the next. If you can learn lessons from both, you can adapt training schedules, nutrition and so-on, in order to build a platform to produce winning performances. It’s about connecting inputs with outcomes so that even if you don’t come out on top every single time, you go to the start line with the expectation of success.

It was with exactly the same expectation of success that the McKinsey Trackunit Predict Summit was conceived. Although digitalization of the construction industry is still very much in its infancy, the event agenda was put together comprising real experiences and learnings which have been gleaned as manufacturers, rental companies and end-users have embarked on their journeys.

While celebrating these case studies, we also wanted to look at the underlying factors which helped deliver success. Business consultants and trade bodies spoke enthusiastically about prevailing economic conditions which are continuing to make the construction industry a magnet for capital investments to fund both residential and non-residential development. People need buildings in which to live, work and enjoy themselves.

Perhaps more interestingly, in recent years there has been a flood of venture capital to finance construction technology. I would suggest that this is the result of an awakening. Market movers and shakers have become aware that construction can no longer afford the level of inefficiency with which it has operated for years. The situation is out of sync with the modern age. Budget and schedule overruns are no longer tolerable if construction is to advance sustainably.

With this raised interest in technology, we also wanted to use the Summit as an opportunity to examine the best practices which are driving both the innovation process, and its implementation. From breaking down barriers and substituting Open Innovation for siloed thinking, to collaborating in beneficial ecosystems, there has been an epiphany about the link between the free movement of ideas, information and data, and accelerated development. There is a connectedness in all this which is pervasive. The history of innovation in the US during the last years of the 21st Century reveals an interesting difference between the Eastern and Western seaboards. The former locked-in employees in an attempt to prevent IP drifting into the wrong hands. The latter had no such addiction to non-competes and restrictive covenants. Talent was able to move without hindrance from start-up to start-up. Today, there is no Silicon Valley equivalent in the East of the US.

An organization’s ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage.

An organization’s ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage.

Jack Welch

Over the coming weeks, Trackunit will be using this blog to share digitalization perspectives from United Rentals, Wacker Neuson and McKinsey. Whether you have not yet started your own digitalization journey, or are already en route, I’m sure you’ll find something compelling in these posts.

I started this blog with a sporting analogy. No one competes, on the track or in business, to come last. Becoming a consistent winner means continually evaluating performance and looking for the opportunity to advance. Often this means minor enhancements sometimes it means a major step forward. Digitalization is not just a step, it’s a much needed leap. Towards the end of June, Trackunit is arranging a major webcast to share outcomes from the McKinsey Trackunit Predict Summit 2018. Stay tuned.

Most technology-based businesses begin with a great idea and some special insight from their founders – a visionary CEO, a gifted CTO. Blessed with the zeal that their innovative new product or service has an expectant market just waiting to be fulfilled, they raise money, work like crazy evangelising their message, make the crucial first sales and develop some market momentum.

As their vision becomes realised, they fill out their supply chain and their channel partners. By now their requirements are definable, predictable and measurable, allowing them to specify exactly what they need from suppliers and to choose the best tenders; and exactly what they can expect from their channel partners allowing them to set the necessary expectations and rewards for successful sales.

And if this were a fairy tale, we’d say they all lived happily ever after (until a step change in technology or a new operating system).

Sadly, the real world is no fairy tale. More than ever, innovation is a constant requirement, and a firm that does not continually innovate to improve its offering for its customers will quickly be overtaken by companies that do. However, the process often requires specific expertise and knowledge outside established competences. Bringing it into the fold is also a real challenge.

Some try to establish within the firm specialist units tasked with developing new technologies likely to provide useful synergies with the existing product line. Sometimes called “garage” units, these subsidiaries are encouraged to think and act like entrepreneurial start-ups, separated from the disciplines of the established organisation and with their own distinctive culture. Problems often arise, however, when the results of such initiatives come to be integrated back into the parent firm. Cultural fit is difficult to achieve.

Another potential route is through collaboration with outside firms. But here too there can be problems. Identifying the firm whose products are the right fit, establishing formalised relationships and reward mechanisms can be fractious and time consuming. In the area of technology, the pace of change is so fast that by the time the relationships have been established and agreed, the market has moved on.

Perhaps a better approach is that of Open Innovation, where companies collaborate at a very early stage in the development of each other’s product lines and how they can be of mutual benefit.

A clear example to follow is that of the Open Source movement in the software industry, where participants get free use of each other’s code and are given the freedom to develop and make changes to the source, provided that they make those developments freely available to the community as a whole.

Instead of customers paying for the software itself, they pay for the services and support that the Open Source community provide. Companies then compete on the basis of their overall product and service offering rather than on the sale of the product itself.

In the case of hardware companies, Open Innovation requires a leap of faith from participating companies. The host must trust the smaller party with complete exposure to its entire value chain, from processes and internal IT systems to its suppliers, channel partners and even customers. The prize is that the synergies ensuing from such collaboration benefit both parties in the long run. The established larger firm gains innovative technologies that enhance its existing product line and does so at speed; the smaller, newer firm gains access to volume sales and greater exposure much faster than it could have done on its own.

The approach is hardly free of risk: each partner has to agree just where the boundaries of ownership over new product lines are drawn. Who owns what is a familiar stumbling block. But the real value of Open Innovation come about when partners cease to be paranoid about ownership issues and focus instead on moving the abstraction layer upwards: defining their uniqueness as how they best service their customers and with the best technologies, rather than fretting about which component or widget they own exclusively.

After all, it wasn’t so very long ago when many companies viewed their internal IT capabilities as a competitive resource, able to deliver benefits beyond whatever their rivals could offer. Now, in the era of cloud computing, most back-office IT functions are outsourced to specialist operators with their own expertise and firms compete on how well they improve their customers’ overall experience. The abstraction layer has been moved upwards.

The Open Innovation approach, applied more widely, offers great rewards to those who dare to admit not only that they can’t do everything by themselves, but that by collaborating more closely and earlier in the cycle, they can better define the best way to innovate; for their own benefit, for their customers and sometimes on behalf of the whole market.

On the 28th November, the first Trackunit Connect Summit is bringing together like-minded individuals and companies to deliberate on the process of innovation, and take a deep dive into the business drivers of digitizing the construction industry. If you’d like to get involved, be inspired, engage and socialize as part of future events, please drop me a line at [email protected] with “Connect Summit” in the subject matter.

The key to operational efficiency

Strong competition and tight margins forces contractors to rethink their operating budgets and start looking for new ways to cut costs and optimize on operational processes – become more competitive. Most contractors are concerned about how to reduce operational costs and a big chunk of these are accounted for by wasted fuel and unnecessary service expenses, due to lack of insights.

Because one hour of construction equipment activity most often consists of less than one hour of productive time, it is critical for contractors to boost their operational efficiency. Traditionally, operational efficiency (ŋ) is defined as the number of minutes per hour that the equipment is used to do productive work, often expressed as a percentage.

Nonidle time refers to the number of productive hours where the equipment is doing a construction job. In contrast, idle time refers to the amount of time that the equipment’s engine is running, but the equipment is not doing a construction job. Idle time therefore refers to non-productive equipment time, and nonidle time refers to productive equipment time. Naturally, contractors would want all hours to be productive, but often the reality is far from this utopia. All non-productive hours translate into a lot of wasted fuel and increased emissions. In addition, for contractors with full service contracts, non-productive hours imply unnecessary routine servicing that will quickly add up as critical hidden costs.

Besides these metrics, excessive idling also accelerates wear of Tier 4 technologies, burn through warranty hours and plummet residual values. Decreasing idle time should therefore be a key focus point for contractors and all actions should be taken to reduce it.

A scary but simple equation

How much can idle time influence your operating budget, you may ask? I have made some calculations showing you how small reductions in idle times make an enormous impact on your budgets. The calculations are made with a representative machine that logs 2,000 hours per year for five years. In addition, the average diesel pump price in Europe of €1.17 per litre and a price of €5 per hour for a full-service contract have been assumed. Moreover, logged engine data from a medium-sized excavator with a Tier 4 Interim / Stage 3B engine has shown an average fuel burn of 3.79 litres per hour of idling. In the table, you can see how an idle time of 10% has a cumulative cost on a five-year period of €3,790 for a single machine. If that machine has a full-service contract the impact rises to €8,790 since it now accounts for unnecessary routine servicing.

Idle time vary between various construction equipment, construction jobs, and operator behaviours, but it is estimated that most heavy construction equipment has an average idle time of 30-40%. Imagine a contractor with 100 machines. It is fair to assume that the average machine will not idle excessively, but there will be groups of machines that do. Let us assume that one out of ten machines idle excessively with an average idle time of 40%. Reducing idle time from 40% to 30% on these 10 machines will cause direct fuel savings of €37,900 on a five-year accumulated period. That’s €7,580 in savings per year or just above €20 per day. If a contractor manages to cut idle time by just 2-3% on the overall fleet, this would translate into huge cost savings.

Machine-learning models to the rescue

It’s common knowledge that actions like restricting morning warm ups, turning off equipment at lunch time and using automatic shutdowns decrease idle times. However, very few have an overview of which machines or operators are idling excessively, which makes it difficult to accurately gauge the effectiveness of such anti-idling policies. In addition, contractors rarely know the magnitude of idling and the direct benefits of reducing idle times might therefore not always be clear.

Machine data enables contractors to identify groups of machines or operators that are idling more (or less) than the average. This can be done by implementing unsupervised machine learning algorithms that can be embedded in simple dashboards notifying the relevant stakeholders whenever machines are performing below (or above) fuel efficiency targets. In addition, machine data can be used to explain why some machines are idling excessively and helping contractors taking corrective actions by suggesting highly probable root causes. This branch of statistics is also referred to as descriptive modelling, where the primary purpose of the model is not to estimate a value (as in predictive modelling) but instead to gain insight on underlying and unknown patterns in the data.

The good news is that from a technical point of view, implementing such models does not require a particularly high data maturity – such models only need a handful of CAN Bus parameters and a little data history. The bad news is that to get this capability right, it requires creating a data-driven organization with the structure, culture, and problem-solving mindset to reveal the actionable insights that contractors need to drive growth. The contractors that start to think about machine data as strategic assets will become industry leaders and get ahead of the curve.

Fleet Intelligence

As the name “telematics” indicates, a telematics system combines telecommunication and informatics, as simple as that. Telematics is by no means a new technology in the construction industry, however a lot of companies have failed to adopt it into their operations. Even for those who have, telematics has drastically improved in terms of possibilities, price and availability.

Nowadays the industry contains telematics systems that can provide true fleet intelligence to businesses and the providers are going above and beyond to ensure customer success.

It’s important to stay up to date with telematics trends to get the most out of the system. Think about it this way: A consumer would never buy the latest and most advanced smartphone just to use it to make phone calls. It is the same concept with telematics, utilizing a system to its full potential will ensure that the investment is worthwhile.

It´s all about digitally connecting machines, equipment, assets and even operators within the construction eco-system, and collect valuable insights and data to help create relevant services for the individual personas in the value chain.

Whether you are an OEM manufacture, a rental company or a private fleet owner, the data driven services should be tailored to your specific needs. In addition to this, the construction telematics solutions need to support a mixed fleet concept, and provide universal connectivity and global coverage.

Until recently, all data types in the construction industry remained brand-specific, requiring contractors to use proprietary software systems provided by each of the OEMs to access data for operational decision-making. Today Association of Equipment Management Professionals, called AEMP have agreed to standardize telematics data across all makes, and in July 2016 a mixed-fleet telematics protocol adopted by AEMP members was approved as an international ISO standard. This allows the industry to have full access to telematics across mixed fleets, providing contractors with their first holistic view of machinery in motion.

The arising of Narrowband IoT

New technologies within the cellular networks arises quickly under the name narrowband IoT, (NB-IoT), designed to broaden the future of IoT connectivity. Ratified by the 3GPP, a telecoms standards body which works to develop future generation wireless technologies, NB-IoT will soon be deployed by operators across the globe.

This new technology move, offers immediate connections with miles-long connection ranges, low-power and a much more affordable price point than the traditional IoT connectivity known in the industry, and based primarily on 2G, 3G or 4G platforms.

Narrowband IoT will eventually bring new telematics solutions to market, and potentially enabling a lot of equipment and assets that would never have been considered as part of construction IoT.

It is a very important fact that NB-IoT is a complimentary solution to the present telematics solutions on the market. NB-IoT makes a huge difference, but it is not an upcoming revolutionary technology, that should keep construction businesses on-hold from investing in and utilizing telematics in their fleet.

The industry is at a very important state, and the sooner the individual machine or equipment types are enabled to be included in an IoT ecosystem, the better are the possibilities of achieving great results, and help generate savings on the TCO. Just reach out to your preferred telematics provider for assistance and consultancy to help your business towards the next gen. construction telematics IoT.

In conjunction with the new technologies and standardizations, modern telematics solutions should not only aggregate data, but also provide analytics and recommendations that empower fleet managers to make smarter business decisions.

The best telematics solutions are often provided as turnkey solutions, that requires little to no work on the management end of the data collection. From installation to full implementation, telematics solutions are meant to do the work for you – tracking, recording and analysing the equipment data needed, in order to address real pain points.

The world is beset by smart technology. The idea of connecting anything from people, devices and systems, to smart vehicles, smart buildings and smart factories is very much the zeitgeist. Smart describes a whole technological approach to increasing the way all resources can be distributed and utilized. A recent McKinsey blog “Imagining construction’s digital future” underlined to me why smart is a very appropriate word – although for a slightly different reason.

In the realm of goal setting, smart stands for specific, measurable, attainable, realistic and timely. In McKinsey’s curation of a list of technologies to enhance the performance of the construction industry they’ve met the bar for all five of these metrics. But what stands out is their emphasis on being attainable and realistic. Not one of their five ideas is either “futuristic or implausible”. They are all practical and proven solutions.

Defining the role of telematics in equipment rental, I want to emphasize that this is not the stuff of science fiction, rather science fact.

The technology has been around for two decades now doing useful work to increase the way we design and use machines. Telematics has also, for example, provided specific value by helping to identify or recover stolen equipment.

However, things are evolving and changing. Today, telematics can provide great insights throughout operational stage of equipment rental. Data and analytics are increasing in usefulness to both rental companies and customers through convergence with the service management process. And it’s here that if telematics is done right, machine data is set to transform the rental experience.

Right now, telematics can enable problems with equipment to be diagnosed remotely. This is going to substantially reduce machine downtime as service personnel can be briefed properly with supporting data prior to being dispatched. Secondly, the site will only be attended by an engineer equipped with both the appropriate spare parts and the correct tools to ensure an effective and efficient repair.

In day to day operations, telematics systems can effectively become the machine log book. Automation immediately solves the challenge of ensuring a complete record of equipment use and service. However, by continuously recording data about both operator and machine actions, it’s possible to solve other issues; like how to incentivize higher fuel economy, reduce idling time, and perform root cause analysis when problems occur.

All of this is very feasible right now. However, the thing I have most conversations about, and perhaps the most exciting technological development on the horizon currently is predictive operations.

By extracting and making machine data transparent in the workflow, we are moving to a point where, e.g., predictive maintenance will overcome lost construction hours due to unforeseen downtime, service errors and problems in the spares supply chain.

The key thing is how to get started. Before OEMs, rental companies and end-user customers can start to fully realize the cost savings and operational benefits which result from successful machine telemetry, we need to start making connections. The pre-requisite for smart, data-driven construction, is to connect machine and operator.

The consequences of not investing

The rise of telematics and the Internet of Things IoT within the construction industry is happening right now! For the Contractor, considering the return of investment in fleet telematics and services, it can be complex to understand the full scope of the technology and thereby the countless possibilities within the solution to secure the right fit in the first place. Too often the main focus is therefore on insecure investment calculations based on narrow insight.

Resulting in an endless series of discussions on whether to invest or not invest in machine digitalization and telematics solutions. The contractor should consider the corporate price of stagnation. The opportunities of use-cases are massive, and IoT based solutions has proved to be a profitable investment, reducing total cost of ownership (TCO) for construction fleets based on data and analytics enabling predictive maintenance.

The journey began with simple GSM/GPS systems developed to identify equipment location and prevent theft, has evolved into one of the deepest applications of IoT in the construction industry. Leveraging Controlled Area Network (CAN bus), grant access to a nearly endless suite of machine data. In addition to the advanced machine data, new technologies are dramatically increasing the possibility to include even low valued and non-powered equipment to “talk” and provide relevant data into the construction IoT eco-system.

While machine and equipment telematics is no news to the construction industry, the way new telematics technologies and machine data will be utilized is entirely new to the industry. It is no longer a matter of collecting advanced raw machine data in large amounts, and wirelessly transferring all the data back to a server.

It is a matter of collecting the correct data, using the right telematics technology, and focusing on solving real pain points, by using the construction IoT possibilities with a common-sense approach.

Just reach out to your preferred telematics provider for assistance, consultancy and guidance to support your business towards the next generation construction telematics IoT.