The construction industry was one of the first affected by Sweden’s recent economic deterioration, and housing construction has also slowed down over the past year.
“We notice the macroeconomic effects with both cost inflation and higher interest rates,” says Peab group CIO Klas Antoni. “That means we generally have an increased cost focus now and are keen that investments in IT are made in the right places and in the right way so we get results within a reasonable payoff time.”
This means, among other things, an increased focus on impact recovery, and that projects and various development initiatives are prioritized with more scrutiny.
“We’re more short-term oriented,” he says. “The business has to adapt more quickly because we have a little less patience, and we have to push out new things in a little less time.”
Difficult processes to digitize
If you look at the industry more long-term, it’s long been singled out for having a low degree of digitization because of a multitude of players and processes that aren’t easy to digitize, according to Antoni.
“All industries have different conditions, but the challenge in construction is it needs to be industrialized to a greater degree to get away from projects where things are being done for the first time,” he says. “A higher degree of standardization and process orientation makes it easier to digitize, thereby increasing productivity.”
But that doesn’t mean the construction industry and Peab stood still. On the contrary, a lot has happened and digitization is reaching further into the business.
“Today we have good digital tools that support us in many different parts of our production,” he says. “From advanced map systems and aerial scanning with drones, to very good tools that support our employees in their daily work both in planning and production.”
Structure the data
More machines and measuring points are also being connected to the network, and Peab sees a great deal of work to structure all data as a means to be more data-driven in the long term. To cope with this, the company’s data warehouse is in overdrive.
“We consolidate, wash, harmonize and normalize large amounts of data that come from our various systems,” says Antoni. “The data is then analyzed and presented in reports for different needs so it also creates value for the users.”
And although Peab has come a long way, there’s still a lot to do to create well-functioning infrastructure around the area. Not least, it’s a challenge to maintain good quality of all data over time.
Reporting requirements
In addition to being able to use data proactively in one’s own operations, there will also be increased demand for external reporting, requiring the construction industry in general to get its data in order.
“Against a background of new regulations, the construction industry also needs to take big steps to be able to report, for example, environmental and climate data in a good and uniform way,” Antoni says. “Then the data needs to be standardized and structured from the source all the way until it’s reported. That’s challenging because we have very long subcontractor chains. So we need to help each other in order to work uniformly and efficiently. Not cooperating on these issues will drive unnecessary costs for all of us, so the need for common standards is great.”
A generational change is also underway at Peab, where old legacy systems have been gradually replaced for a number of years.
Recently, a new salary system for the entire Swedish operation has been put into operation—an extra complex task in an industry with many collective agreements and some special forms of compensation that are unique to the industry. And old financial and follow-up systems for the entire contracting operation have been replaced.
A time and place for investment
Some investments must be made, but they shouldn’t be done all at once and preferably not while being held to ransom. “Instead, own the timetables, says Antoni. “There are many dependencies between different solutions, which make the whole thing even more challenging.”
Changes to things like payroll systems and financial systems are often largely driven by necessity, when they’re so old they’re no longer supported, or don’t work at all. This often means significantly increased costs with new systems compared to consistently low operating costs of the old ones, considering solutions sold today are often delivered only as cloud solutions based on subscription models.
Going toward the cloud
At the same time, all points lead to the cloud, and Peab essentially has a cloud-first strategy but will continue to live in a hybrid environment for the foreseeable future, says Antoni, before adding that the development is simultaneously moving toward the cloud environment regardless of what strategy is in the foundation.
“We’re moving more toward cloud deliveries,” he says. “Suppliers of course see advantages based on how solutions are developed and operated, but it’s in their interest for financial reasons as well. In some cases, there are good reasons for us as a customer to have a solution on-prem, whether for operational reasons, business-critical data, or third-country issues. But it’s less often as a customer that you have that choice.”
Of course, replacing some decades-old systems doesn’t always have to do with the fact they’re bad, but more simply approaching end of life.
Provide concrete support
At the same time, new systems don’t always add much new functionality more than replacing old ones. Older systems need to be managed, but Antoni would rather focus on getting new digital support that really creates value for employees and customers.
“We want to get good support for the employees,” he says. “It shouldn’t only be about new systems for reporting time, but that they receive more concrete support for planning, project management and project follow-up. Those parts have lagged behind with us, and that probably applies to many construction companies, not just Peab.
The company also announced last year it would start using solutions from solutions provider Dalux, where entire projects can be managed from beginning to end.
“It’s a good example of a tool that’s about to be rolled out to our employees—something that really makes their jobs easier, creates order, and contributes to our working more efficiently,” he says.
Automation and AI
Peab already uses a lot of automation in its administrative processes with relatively low threshold costs. And AI is, of course, something the company follows with great interest and Antoni follows developments with great interest. But AI still needs proper oversight in order to process data accurately and efficiently.
“We’ve previously done some evaluations of tools for predictive analyses, but we didn’t achieve the results we wanted due to the data quality we had to work with,” he says. So the fight is fierce for competence in historically new areas, and it’s both about changing and raising competence internally and recruiting over time, he states.
Consultant dependency can be broken
There may be another movement in the market where consultants look for more secure jobs when the economy fluctuates—something favorable for companies like Peab that would like to have greater in-house competence in certain areas.
“In recent years, many companies have been forced to build up a consultant dependency they didn’t want,” he says. “And although it may be easier to hire today, the economy as it stands means we’re waiting to hire.”
For the construction industry in general, it’s also important to broaden the base for recruitment by breaking the prejudices that exist and getting more people to apply there.
“It’s a matter of survival for us,” says Antoni. “We need to get access to the entire supply of available labor, which means we need to get more women into our industry. We still have some way to go in our production, although I’m happy we have a relatively good balance in our IT operations.”
CIO, Construction and Engineering Industry, Digital Transformation, IT Leadership