Breaking Through the Barriers: How We Can Unlock Real Change in Construction?

Over the past 10 years, we've seen impressive advances in digital technology and greater awareness of the need for change in construction procurement, but on the ground, progress remains stubbornly slow. At Docketbook, we work closely with head contractors, suppliers and subcontractors every day, and despite real momentum in some areas, the same barriers to innovation continue to hold the industry back. Fragmented systems, entrenched risk-shifting practices, and a persistent “lowest price wins” mentality are preventing the kinds of collaboration and transparency we know are possible.

In our latest blog, Mark Shepherd-Smith explores what’s stalling progress, how we can begin to turn the tide, and what each of us, contractors, suppliers and tech providers, can do to help make productivity improvement a true team sport across four key questions:

1. What is stopping us from taking action, why is nothing changing?

2. What can you do to turn things around?

3. What do others need to make change happen?

4. What's the one thing we must do to make productivity improvement a team sport?

What is stopping us from taking action, why is nothing changing?

At Docketbook, we work closely with head contractors, suppliers and subcontractors and our observation is that a lot has changed in 10 years, however, there are still a number of barriers to change. Some of these are listed here:

• Fragmentation & Risk Allocation – our industry is still working within long-end adversarial norms and the concept of a ‘zero-sum’ game. Contracts are often designed to push risk down the supply chain resulting in defensive behaviours and an unwillingness to innovate.
• Price-driven Procurement Practices – despite the rhetoric, the industry is firmly embedded in a lowest price focus without consideration of total cost of doing business or the inherent risk that reductions in price result in reductions in quality. The result is that investment by the supply chain in solutions to lower the cost of doing business is generally not recognised by the industry.
• Lack of shared transparency – Projects rely on fragmented tools, siloed systems and manual processes. Unlike other industries, construction relies on the close collaboration of dynamically changing supply chains and cross-company integration and data sharing is difficult.
• Not invented here syndrome – As an industry, we are professionally programmed to solve problems. We are not so good at adopting solutions from other people. Speed to learn is a key capability that we can all build.

What can you do to turn things around?

We are excited about driving industry change and supporting the industry itself to make change. Our focus is improving the construction procurement processes – from purchase to pay (P2P) – primarily focused on the transactions between contractors and their supply chain and ultimately creating an environment where cash can be moved with less effort, less time and less risk than the current status quo. Some areas that we are working on include:

• Championing Digital Integration – We help digitise core P2P workflows so that information flows freely, accurately and transparently across company boundaries. This builds trust and reduces waste. We integrate with supplier delivery management systems and contractor ERPs to communicate data seamlessly between systems, all while driving onsite approvals and accountability.
• Reducing Payment Risk – By creating a shared version of the commercial truth in relation to order rates, approved dockets and three-way matched invoices, we help reduce the risk of non-payment or delayed payment. This payment risk is built into every supplier and subcontractor rate so reducing this risk may be good for the industry and lower costs across the board.
• Accessible Digital Transformation – The construction industry has a long tail of low-tech / no-tech companies that, in an ever more information-hungry world, are struggling to keep pace. Docketbook sponsorship provides a no-cost avenue towards digital transformation for this core process for many of the smaller companies that make up the heart of the construction industry.

What do you need others to do to make change happen?

We must all acknowledge the issues with the status quo and embrace solutions that address the root causes. For the purchase to pay process in construction, this means:

• Contractors – streamline engagement for smaller suppliers and subcontractors, recognise adoption of digital systems and focus on value in procurement decisions
• Subcontractors and Suppliers – recognise opportunities to improve processes and embrace change, and don’t be afraid of leading change with your contractors – transformation can work in both directions
• Technology Providers – recognise that information is a key currency for the construction industry and be prepared to partner with other providers to provide best-in-class solutions to your customers.

What’s the one thing we must do together to make productivity improvement a team sport?

To establish a shared, trusted source of commercial truth across the project ecosystem - an industry platform that would mean subcontractors didn’t have to change systems for every new job they work on, and the data integrates seamlessly through a common digital environment.

This would mean:

• Transparent communication of progress and performance.
• Digitally connected tools that ensure commercial alignment.
• Agreed metrics and aligned incentives for all parties.

With a common digital backbone, we can:

• Reduce data re-entry, rework and disputes.
• Improve planning and forecasting.
• Ensure people are paid on time, every time.

If we can agree on the facts, we can focus on the fix. Productivity becomes a team sport when everyone can see the scoreboard.