The financial impact of the economic shutdown of 2020 is expected to have lasting effects on the built environment, according to the McKinsey and Co. report “The Next Normal in Construction.”
The industry is still recovering from a job shortage that stemmed from the 2008 Financial Crisis; therefore, stakeholders are forced to rethink business strategies to maintain cost effectiveness and flexibility in an ever-changing environment. Analytics will be a key player in separating the winners from the losers.
In 2008, the U.S. unemployment rate jumped 7.2 percent, reducing the construction industry’s labor force by approximately 2 million, according to FRED data. For more than 10 years, statistics show that the industry struggled to bounce back to pre-recession levels.
Even before the Great Recession, however, the sector lagged in productivity compared to other industries, registering about 1 percent annual improvement compared to the manufacturing sector’s 3.6 percent improvement, according to the McKinsey Report. A reluctance to embrace technology and change the way the industry conducts business have been contributing factors to the slow growth rate. To compensate, many building owners adopted a deferred maintenance strategy to keep assets operational with limited resources and funding, especially given the shortage of skilled and knowledgeable workers.
As of 2018-2019, however, capital-project partners were poised to drive changes that could close the productivity and skilled trade gaps. Many market leaders began turning to data-driven solutions to improve capital project outcomes and reduce risks.
Enter March 2020.
The industry quickly felt the impact of project cancellations, postponements, and supply chain disruptions. The market shifted overnight from an emphasis on optimizing uptime, energy efficiency and ongoing maintenance services to balancing reduced occupancies and integrating strategies to reduce risk of viral spread. In turn, facilities technicians were asked to prioritize tasks to keep critical assets operational and defer maintenance on assets that are not.
Data Analytics will be the game changer.
A connected building with a centralized facilities management system can help streamline asset maintenance, making it easier to operationalize preventative maintenance activities, schedule work orders, coordinate teams and tasks, and ultimately do more with less. By leveraging the vast amounts of data coming from building management systems, equipment, and other operational data points, analytics can uncover critical insights needed to speed up productivity and improve the quality of management decisions.
For example, deployed analytics can be leveraged to lower total cost of ownership with actionable insights that help extend asset life, reduce unplanned maintenance events, and improve guest experiences. This means recognizing the actual cost versus expected costs of a deferred maintenance strategy, ie: What does the burden of fixing a problem versus finding a long-term solution mean for your return on investment? Alternatively, it opens the door to financing options, like an energy as a service (EaaS) agreement that keeps capital improvements off the balance sheets with a pay-for-performance financing solution.
A centralized platform streamlines communications from the top down, applying descriptive, predictive, and preventive analytics to understand the full lifecycle of the facility, which is needed to make informed decisions.
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