Following a period of decline, business is (thankfully!) on the up within the construction sector, with forecasts indicating a 20% increase in new work outputs by 2029. And yet, a number of issues continue to plague the industry, threatening to undercut the successes of construction companies across the UK. From increasing resource costs, to drawn-out project completion times, many are facing a horizon of challenges that risk halting work overall.
To tackle shrinking profit margins, operational inefficiencies, and scaling risks, many businesses are turning to business intelligence as a means of future-proofing their business.
With the power to increase project completion rates, improve operational efficiency, and reduce overall costs - it's no wonder that 97% of construction professionals expect to see increased investment in digitisation at their companies over the next two years.
In this article, we'll take a top-level look at how business intelligence is reshaping the construction sector, with a focus on cost, efficiency, and project effectiveness.
We'll be covering:
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What is business intelligence in the context of construction?
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What are the key benefits of implementing business intelligence in the construction industry?
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How can construction companies use business intelligence to enhance operational efficiency?
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How does business intelligence help in reducing costs for construction projects?
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How can business intelligence be used to scale growing construction businesses?
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What are the main challenges construction businesses face with business intelligence?
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How can construction companies implement business intelligence today?
Let's get started with the basics - what do we mean when we refer to business intelligence in construction?
What is business intelligence in the context of construction?
In simple terms, business intelligence (often referred to as "BI") is the conversion of raw data into actionable insights. In the construction sector, this involves the use of data analytics, advanced reporting, and visualisation tools to gain a top-down picture of projects, their performance, and the improvements that can be made.
In a data-heavy sector like construction, business intelligence will often involve a deep dive into tools like project management software, financial systems, supply chain logistics, and on-site analytics, to convert disparate data into decision-making that improves construction companies overall.
What are the key benefits of implementing business intelligence in the construction industry?
The construction sector is infamous for its complexity, fuelled by disparate stakeholders, unwieldy project timelines, and large-scale budgets.
Thanks to the digital age, that complexity has increased, in part due to a data overload from the likes of supply chain logistics, project management software and on-site analytics. This data - though invaluable - is often disconnected, sprawling, and challenging to navigate.
And, that's not all. Unpredictable costs, operational stand-stills, shifting market trends, rigorous compliance requirements, and evolving client expectations, all lead to a complex web of challenges for construction companies.
Put simply - the sector is waning under the weight of its scale, and crying out for technology that can consolidate data, simplify its analysis, monitor progress, and improve the construction lifecycle overall.
Enter: business intelligence.
At a top-level, business intelligence helps construction companies to:
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Streamline the construction lifecycle: With BI, construction companies can make better-informed decisions which reduce risk, and improve projects overall; whether that's simplifying project timelines, tightly tracking financial investments, or appealing to stakeholder interests.
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Aggregate and analyse data: Business intelligence can collect disparate collections of data into one place, making the navigation and analysis of information dramatically more manageable. With a complete overview of resources, insights, logistics, and more, teams can make better decisions, informed by real-time data.
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Improve operational efficiency: The construction industry is renowned for its revenue-hitting delays, which drastically limit the impact of projects overall. In fact, nearly 1 in 4 projects are delivered more than 250 days late, with 1 in 10 being delayed by at least a year. With business intelligence, managers can peek into problems, and tweak operations for effectiveness and efficiency. The result? Fewer bottlenecks, faster completion times, and more profitable projects overall.
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Manage costs: Similar to shifting project deadlines, costs within construction often balloon far beyond expectations. With business intelligence, however, teams can employ accurate cost forecasts fuelled by accurate data, helping to avoid budget increases in the process.
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Fuel company scaling: It's almost impossible to scale a business with financial, project, and market unpredictability at its core. With business intelligence, however, construction companies can more accurately prepare for market shifts based on data-driven insights. Armed with a more accurate picture of customers, competitors, and industry evolutions, these businesses can scale more steadily than before.
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Prioritise compliance: Speaking of safety, business intelligence can be invaluable when it comes to implementing safety protocols, reducing incidents, and staying on top of regulatory changes within construction. Thanks to business intelligence, more workers are protected, legal risk is minimised, and projects stay operational for longer.
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Create happier customers: Finally, business intelligence improves the relationship between construction companies and their customers, by providing real-time feedback, tracking project progress, and unearthing insights that allow companies to take charge of changes. With the ability to be more proactive in preventing and resolving issues, client retention rates invariably increase.
How can construction companies use business intelligence to enhance operational efficiency?
Let's take a closer look at how business intelligence can improve the construction sector; beginning with its operational efficiency.
Without the right insights, projects quickly become unmanageable within construction. Project managers are left in the dark, progress monitoring becomes guesswork, bottlenecks begin to creep, and decision-making becomes, well, ineffective. Without the right data, operational efficiency becomes a mammoth task.
With business intelligence, however, data guides the actions of a project, thanks to KPI tracking (key performance indicators), team productivity metrics, project timeline monitoring, and resource allocation checks. With a stream of continuously updated data, managers gain a top-down view of looming issues, allowing them to pivot their strategy far before something becomes an issue. And the result? Company-wide improvements in operational efficiency, thanks to business intelligence implementation.
In addition to arming teams with the ability to more accurately forecast, and mitigate risk, BI also helps construction companies use their resources more efficiently. From labour, to materials and equipment, teams that use business intelligence can ensure their resources are used efficiently, reducing waste and limiting surprise costs in the process.
Perhaps one of the more powerful impacts of BI on operational efficiency is the way in which it fuels company-wide collaboration. By opening the channels of communication, and making data easier to navigate, key stakeholders, project owners, contractors, and clients can better coordinate their efforts. This leads to fewer misunderstandings, happier customers, and more efficient projects overall.
How does business intelligence help in reducing costs for construction projects?
Cashflow is crucial in construction, and yet the sector has become renowned for its dwindling profit margins, and sky-rocketing costs. In fact, the Construction Industry Institute reports that, on average, construction projects run over budget by 10 - 20%. For teams without business intelligence, mitigating financial leaks is one of the biggest challenges to face.
For those that implement business intelligence, however, a different reality emerges - where teams can more accurately predict (and plan for) material costs, labour shortages, procurement lifecycles, equipment failure forecasts, energy-saving reductions, financial planning, and more.
With the implementation of business intelligence, you can expect cost-saving insights across:
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Project management: Thanks to data-driven decision-making, projects are better run, reducing costs overall.
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Procurement processes: Armed with data analysis that informs construction companies on material costs, the times to purchase for the lowest rates, and how to limit over and under-stocking, procurement becomes a cost-saving opportunity.
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Labour resources: With the ability to monitor team productivity rates, labour shortages, and predicted surges, business intelligence allows companies to correctly staff projects, reduce overtime, and improve efficiency overall.
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Monitor equipment: With business intelligence, construction companies have a far greater insight into their equipment, their health rates, and how to plan for maintenance. This allows teams to be more proactive in their approach, reduce downtime, extend the lifespan of tools, and optimize expenditure overall.
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Reduce energy consumption: Unsurprisingly, the construction sector eats up energy. However, with business intelligence, teams can be more optimal in how and when they use energy - resulting in cost-saving measures that can benefit the planet at the same time.
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Simplify financial planning: With business intelligence, teams have a far greater insight into cash flow, predicted costs, and the overall financial performance of projects. Equipped with this information, teams have great control over their financial planning, and ensuring projects stay within budget.
How can business intelligence aid in scaling construction businesses?
Surprise costs, market unpredictability, and shifting deadlines: construction companies face their fair share of challenges. For those looking to scale, these challenges can drastically stifle progress.
Many scaling construction companies rely on business intelligence to mitigate the risks of the construction sector, while sustainably fuelling growth across the business. This includes:
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Deep dives into market trends and future demands: to ensure the business balances customer needs, with the sustainable use of resources.
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Enhanced project management mechanisms: to accelerate the pace of projects, best utilize budgets, and improve overall outcomes for customers.
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Data-driven financial planning: to monitor cost fluctuations, improve profit margins, and shield the business from cash-flow problems.
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Human resource management: to maximize the impact of teams, best utilise resources, and position the best talent, in the best positions.
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Customer lifecycle improvements: to better meet customer expectations, earn loyalty, and ensure retained clients.
What are the main challenges construction companies face when implementing business intelligence?
By now, we've covered a host of benefits when it comes to business intelligence. From cost improvements to scaling sustainably, improving efficiency, accelerating project timelines, and exceeding customer expectations, business intelligence can, and does, have a phenomenal impact on contemporary construction companies.
And yet, it's not necessarily all plain sailing.
Implementing business intelligence comes with its own set of challenges, and you'll need to be prepared to meet each one before gaining the benefits of BI.
Let's cover some of the most prominent issues when it comes to construction BI today.
Data integration
Construction projects generate vast quantities of data, often living in different CRMs, software, project management tools, and more. Integrating this data into one repository can be a complex task - and it’s often best handled by a technical expert.
Data quality and accuracy
Within data there's a common phrase: garbage in, garbage out. While business intelligence can power your business with data-driven insights, you need to ensure the data fuelling those insights is accurate, high quality, and ultimately - reliable. The health, efficiency, and cost-effectiveness of your company relies on it. For those implementing business intelligence, you'll need to pay careful attention to inconsistencies in data, outdated information, poorly managed systems, and more.
You may need to trigger new business-wide processes that prioritise data accuracy, alongside implementing a strict approach to data governance - or risk the consequences of misleading insights.
Resistance to change
Perhaps one of the most challenging parts of business intelligence implementation is the human resistance to change. Stakeholders, managers, contractors, and clients alike will all be used to a particular means of getting the job done. Unless they're bought in on the new system, you'll struggle to truly get the value out of business intelligence. You'll need to pay special attention to demonstrating the benefits of this approach, how it will impact each sector, and why it’s crucial for the company to head in this direction. You'll also need to take responsibility for training, to ensure tools are used to the best of their ability.
Cost
While business intelligence has the capacity to reduce the costs overall of construction projects, alongside improving the capacity of a business to scale - it does come with its own set of overheads. You'll need to consider software, hardware, and staffing requirements - and ensure business intelligence doesn't bleed your budget dry.
Security and data concerns
As a sprawling library of information, your business intelligence infrastructure is packed full of sensitive data, from financial records to employee details. You'll need to ensure your BI technologies comply with data protection regulations (such as GDPR), in addition to having a robust plan for any breaches. And, the risk is real, as cyber threats within the construction industry are on the rise, with 83% of construction companies experiencing a cybersecurity incident in 2024.
Create an airtight plan, ensure your BI is data-compliant, and prevent your business from legal risk exposure. Thanks to its affordable, reliable, and progressive approach to construction technology: Lyon Tech is considered the the go-to for business intelligence implementation in the UK. Having backed countless construction companies to power their growth with BI, they’ve developed a bespoke approach that meets the needs of each individual business.
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