4 Surprising Ways to Reduce Construction Costs

4 Surprising Ways to Reduce Construction Costs

How can utility companies reduce costs and operational risks while maximizing revenue?

This is an issue virtually every utility leader is concerned with, as well as their boards of directors and finance departments. Technology companies can provide the solution. In addition to modernizing manual processes with digital methods, they can also lower costs and boost revenue.

How to Make Construction Projects Cost Effective

What are some of the key areas where energy companies experience high costs?

Typically, this includes the human workforce, infrastructure repairs, construction project delays and loss of materials. Digital construction technology empowers utility leaders with the advanced tools they need to solve these challenges.

Reduce Human Labor Costs of Construction Projects

Unsurprisingly, one of the most common areas of high costs is manpower. Large-scale infrastructure projects require hundreds - sometimes thousands - of crews or contractors. The bigger the project, the greater the likelihood of requiring additional on site workers.

Between field work and back office management, data collection and project reviews and approvals are some of the most time-consuming tasks.

Paper-based field data collection is typically fraught with human error, resulting in missing or inaccurate data. These errors will only be discovered later on or at the end of a project. When this happens, crews are forced to go back and spend time correcting those errors. Rework costs the company additional time and money.

Multiple crews from different contractors working on the same project might also create inconsistencies and a lack of standardization during data collection. As long as these processes are paper-based, this will continue happening.  

For the back office, simply reviewing paper as-builts is tedious, from reading handwritten notations and questioning the quality of the data to additional time spent removing duplicate entries or filling in missing details.

Over time, utility leaders have begun to understand the importance of replacing manual processes with Digital Construction platforms for a complete digital as-builting solution.

High quality digital as-builts are created in the field in real time using existing construction crews equipped with a mobile device and preloaded software, high-accuracy GPS receivers and barcode scanners, with minimal manual data entry.

This standardizes the data collection process throughout all stakeholders, improves data integrity and may offset the need for outside surveyors or other third-party hires, allowing them to focus on other tasks sooner. While this happens in the field, the back office uses a web application to track project progress, view alerts and iterate with crews, saving critical time, eliminating human error and making on-the-fly decisions.

Utilities may employ hundreds of internal surveyors to create as-builts. An advanced digital construction platform can do this digitally and with existing crews, without the need for third-party surveying crews.

By removing these bottlenecks in the construction process, utilities can install more assets faster, and that has a direct impact on costs and earnings.

As a recent use case, VPI Charge, a large electric utility contractor in California, was working on a multi-jurisdictional infrastructure project. During the execution phase, the as-built data requirements changed to +/-0.2" accuracy for both underground and overhead assets. With construction already underway, the scale of the project made these new data requirements a challenge.

After an initial requirements gathering session, Locusview built the configuration, ensuring that digital forms and material lists matched the company's materials for the project and that the crews understood how to manage real-time alerts. After a 4-hour in-field training session, the company’s crews were back on site and already collecting field data.

While using the Locusview platform, VPI saw that digital as-built data was collected without disruption to work schedules or processes.

Without the need to coordinate tasks with third-party crews or experience scheduling delays, the company was able to achieve 20% time savings. Fewer man-hours on site resulted in 50% cost savings.

The company’s Senior Project Manager Zack Chancellor stated, “One of the biggest benefits we realized was that we no longer had to coordinate with outside survey crews or deal with the delays caused by conflicting schedules".

"This resulted in a time savings of ~20% in project management for closeouts and reduced time in the field. There is huge value to the time savings and flexibility it provides a construction crew. Having the ability to self-perform does not tie us to outside resource availability.”

The workforce is also aging, risking the exit of institutional knowledge when they retire. This loss of knowledge can result in additional costs for training new hires and additional time for them to learn and get acquainted with a new environment.

The younger workforce entering these markets expect a digital experience. Also note the competition over these sparse human resources exists - it is hard for utilities and their contractors to retain good work due to competition around the increased construction activity in critical infrastructure.

Invest in Grid Modernization for Aging Infrastructures

The infrastructures that support electricity, gas distribution and transmission and water are complex, spatially disparate, exposed to the elements and are aging around the world. Utility leaders spend millions on updating these outdated systems and networks.

According to the American Society of Civil Engineers, infrastructure repairs cost roughly $2 trillion. The UK government estimates that £1.2 billion a year in damage is caused by accidental strikes on underground assets.

Over time, continuous repair work becomes less cost-effective than investing in grid modernization solutions.

Updating aging infrastructures may incur higher costs initially, but it can achieve long-term cost savings.

Over the last few years, the traditional method of energy distribution has evolved. Consumer demand for new energy sources and green technology - combined with energy leaders' need for more reliable and efficient energy solutions - is driving change. One of those changes is rising demand for Distributed Energy Resources (DERs).

DERs improve reliability by deploying alternative energy sources such as wind or solar. This helps balance the electric grid and better manage energy consumption during peak periods.

DERs also reduce long-term costs by alleviating pressure on utilities to build more power stations. According to IRENA (The International Renewable Energy Agency), implementing DERs can achieve $1.3 billion in cost savings and reduce peak demand by 60% through smart energy management.

Technology advancements in the energy sector require a centralized system to run and monitor the network. This system is known as an Advanced Distribution Management System, or ADMS. An ADMS equips energy companies with the ability to monitor and control energy usage, automate outage restoration, and optimize performance.

It’s worth noting, however, that DERs and ADMS require high fidelity data and can be incorporated onto the grid only after the grid has been properly augmented to incorporate them.

Minimize Project Delays and Reduce Cycle Time

Few construction projects are completed without any delays. Issues like scheduling conflicts, weather incidents, budget constraints, or other unforeseen circumstances can slow project completion. Add in design changes, material management or data accuracy errors, and close-outs can take even longer.

Electric utilities who continue to rely on paper-based data collection typically experience more frequent - and sometimes longer - construction project delays than those who use Digital Construction Management technologies.

The complexity of crew members’ penmanship can cause time-consuming delays, as this forces them to iterate with the back office via phone calls and/or emails to clarify their handwritten records. The discovery of duplicate entries or missing information adds to these delays. Excessive back-and-forth communication means tasks cannot continue until all corrections have been made.

The accuracy and reliability of as-builts are a key element of contractor revenue. Since as-built data is used as the basis for confirming completed work, until the predefined thresholds have been met, billing is delayed.

In addition, many utilities rely on multiple systems for different functions of project work, such as data collection, design verification, inspections, material reconciliation, and more. This causes a disconnected process with a lack of standardization among all stakeholders.

Locusview’s Digital Construction Management technology unifies all construction data throughout the entire organization. By automating labor-intensive work, digitalizing manual processes, and providing real-time visibility into the field, project cycle time is reduced by as much as 70%, accelerating data into the system of record, improving the speed of close-outs, and ultimately achieving faster revenue realization.

Automate Material Reconciliation

Loss of materials costs construction companies billions of dollars annually, largely due to theft, over ordering, inadequate skills training, or damage during delivery. Theft alone costs the construction industry nearly $1 billion a year, according to the National Equipment Register.

Additionally, design changes made during construction projects can lead to additional costs when new materials are required and others, which are already on site, are no longer needed.

A key component of cost savings is verifying materials used in infrastructure construction projects. Technology solutions have made significant advancements in material reconciliation.

An advanced Digital Construction Management platform verifies company-approved materials during construction and incorporates material traceability into the digital workflow. The status of all materials can be tracked, such as received, installed, scrapped, or lost, then automatically reconciled against the Bill of Materials for a complete accounting.

Automating material reconciliation makes the final phase of construction work faster and more transparent, simplifies project execution and saves time at close-out.

Digital Construction Technology for Cost-Reducing Efficiencies

Locusview’s Digital Construction Management platform provides leading utility companies with an advanced end-to-end solution for their capital projects. The technology is driven by real-time data and acts as a single digital thread linking all phases of construction together, from planning to execution and close-out.

Construction crews use Locusview Mobile together with high-accuracy GPS receivers and barcode scanners to create high quality digital as-builts, with minimal manual data entry. This expedites field data collection and improves data integrity, creating the foundation for a high fidelity Digital Twin.

At the same time, back office management uses Locusview Web to gain real-time field visibility, track project progress and validate that the completed work meets company requirements. This improves on-the-fly decision making and creates transparency among all stakeholders.

With the Locusview platform, utility leaders can create cost-reducing efficiencies by:

  • Saving time in the field
  • Performing inspections remotely
  • Automating manual processes
  • Gaining real-time field visibility
  • Enabling real-time communications between key stakeholders
Utilities using Locusview’s technology can achieve 90% less time spent on material reconciliation, 70% reduced cycle time, 50% reduced costs and 20% time savings.

Locusview uses its deep industry knowledge, expertise and a Field User First philosophy to decouple the user experience from the underlying technology, with a user interface and workflows designed specifically for construction field work.

The company works with top utilities and thousands of crews around the world, helping them solve their most complex challenges.

* Portions of the piece originally ran on Power Magazine.