Picking up Pace

Initially slow in the adoption of technology, the Indian construction
sectors IT adoption picked up pace in the last decade. The initial resistance
to IT adoption was a result of ignorance, but with the construction industry
going global, there was a need to introduce efficiency and productivity in
business processes. The growth in infrastructure projects is one of the leading
drivers in the construction industry, providing necessary spurt to the IT
adoption curve in the vertical.

Agrees Satish Pendse, CIO, Hindustan Construction Company (HCC) that the
construction industry is under a rapid growth phase over the last six to seven
years and every business system is surprised by the growth.

The increased government spending on large-scale infrastructure projects is
another reason contributing to the growth. Until six to eight years back, the
government spending was only about 2% of the GDP, which has now gone up to
around 5%. This figure is likely to go further up, as India looks to catch up
with China.

The construction industry is broadly categorized into two segmentsbuilders
engaged in the construction of residential and commercial buildings; and
infrastructure (bridges, dams, roads, highways) construction players. In
addition, the sub-segments include contractors for the above two segments, and
niche service providers who specialize in specific areas like waterproofing,
industrial flooring, tunnel repair, rehabilitation of old buildings, expansion
joints, etc.

With the entry of new players in the sector, adds Pendse, the competition has
taken a turn since these new players come with no legacy systems and new
processes. The projects undertaken are on a bigger scalebe it residential
projects, townships, to shopping malls.

However, as the competition is getting aggressive, the older companies, too,
are getting bigger by the day and are bracing up for the competition. With the
government allowing FDI in the sector, foreign players too are entering the
fray. This, in turn, is putting the pressure on the companies to improve
operational efficiencies. With the growth, companies today are handling as much
as around sixty to seventy projects simultaneously as compared to around ten to
twelve simultaneous projects till about a few years back. This apart, the value
of the projects has also increased substantially with the ever-increasing
pressure to reduce the cycle time and costs, as well as greater strictness to
deliver the projects on time.

The business dynamics have changed; there are various models nowthe PPP
model, BOT, EPC modeltherefore, the only way to work efficiently at such a
large-scale is to have strong operational systems in place that take care of
everything from procurement to financials to timely project execution. Sometime
back most companies were using basic IT. Over the last few years, there has been
an increase in the uptake of world-class IT solutions by this segment as they
reap the benefits of computing, project management, and collaboration

Solutions on the Platter
Even though the global giants have been using various IT solutions for
improving operational efficiencies, the Indian counterparts too are now
deploying IT solutions for growth. With the corporatization of smaller players
becoming professionally managed companies, they have had to adopt technology in
various areas of business.

Moving on from home-grown solutions to islands of computerization, the
adoption of IT in the construction sector is now moving to deployment of
standard ERP systems.

The move towards the adoption of integrated solutions has come about due to
the combination of several factors like the need for tighter control over
operations, quality compliance in execution, global business practices due to
global expansions, MNCs entering in joint ventures with Indian corporate, and
streamlining operations as prerequisite norm before going for public funding
like IPOs.

The ERP solution can be categorized into contractor suite and builder suite.
The contractor suite includes pre and post tender estimation, labor management,
purchase and inventory management, billing and MIS based solutions. On the other
hand, builder suite has features like estimation and costing, client management,
billing and site management.

Apart from deployment of ERP, there are specialized engineering solutions
like geotechnical, structural, mechanical, transportation, hydraulic,
environmental, land surveying, etc. These solutions have enabled the civil
engineers to construct durable, aesthetic, higher functional, and user-friendly
structures which are economical and time-saving.

Besides, work is on for development of solutions for structural analysis for
increasing the lifespan of buildings and protection from calamities. New systems
are being adopted in infrastructure development, civil engineering and
management of projects to enable construction sector to perform better.

Construction professionals engaged in designing of architecture, engineering
designs, detailing, estimation, tendering and procurement of materials and
project management have the solution at their fingertips which was not possible
through traditional methodologies.

There is an increasing focus on integration of sales, inventory, finance,
procurement, costing, integration with other project management tools.
Therefore, the focus is now on consolidation across locations, projects, MIS,
and a complete WAN in the construction segment.

"Most of the processes like financials, HR, legal, and construction process
are IT-enabled. Technology is also being used for land bank management, sales,
and after-sales processing" says Pendse.

Project management, however, is becoming a big focus area keeping in mind the
sheer size of projects being undertaken by companies. The growing size and
volume of the projects are also increasingly making it difficult for companies
to manage their data. As a result, they are also looking for IT solutions that
enable them to manage their vast data in order to increase efficiency, reduce
procurement costs and wastage, boosting productivity, and thereby, cutting
project execution time.

Technology enables companies to do bid analysis effectively, manage projects
more efficiently, finish projects on schedule, and manage global operations with
flexibility. It is also crucial that solutions are customized in line with the
processes specific to the construction verticals. Therefore, customization will
hold key to success factors for how far vendors are able to make inroads into
the super highway.

Stuti Das

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