What's stopping digital innovation? Rethinking the relationship between the parties
January 2023
In this month's Smart Infrastructure Blog John Pelton MBE, Enterprise Programme Director at Costain and, between 2014-2016, the Strategic Projects Director for Crossrail and Director of the Programme Partner Transcend, a JV between CH2M, AECOM and Nichols, reflects on possible factors that influence the effective digital innovation of the infrastructure industry, calling for a better definition of the relationship between the parties involved to improve the exploitation of digital innovation opportunities.
The year 2023 marks the tenth anniversary of Crossrail’s Innovate18 programme, the first example of a systematic approach to innovation on an infrastructure programme. In itself, the programme was very successful as, within four years of its inception, it paid back many times over the 3m investment that was needed to set it up. Many of the innovations were centred around digital solutions. It subsequently became de rigueur for all major infrastructure projects and programmes to have an innovation programme. Innovate18 also gave rise to an additional industry legacy with the creation of i3P, the Infrastructure Industry Innovation Platform (now Partnership), which launched in 2016 and continues to go from strength to strength, having built digitisation into all its strategic themes.
One of the factors that is inhibiting digital innovation is the format of contracts between the various parties in infrastructure projects, which are the central vehicles for defining what is to be done and how the parties are to work together to achieve it. Despite so much progress in creating the capability for innovation across the various digital areas, it does seem that the way that contracts define and govern the relationships between the people involved may not be keeping up with the demands of digital innovation. John Pelton MBE, Enterprise Programme Director at Costain
The industry continues to struggle to catch up with other digitalised industries; it struggles with poor productivity and remains constrained by processes and systems that have yet to evolve to enable the benefits of digitalisation to be fully exploited. Despite much progress to improve innovation, it seems that more is needed to unlock and realise the potential of digitalisation.
There are many examples of recent initiatives recognising the importance of digitalisation. The BIM Task Force enabled the UK to establish world-leading standards for BIM. Project 13 identified digital transformation as one of its five features. The Construction Leadership Council has a digital network industry change initiative. The 2017 Department for Transport led Transport Infrastructure Efficiency Strategy set out to ‘Exploit digital technologies and standardise our assets to enable the adoption of best practice from the manufacturing sector, such as off-site construction’. The IPA’s 2022 Construction Playbook makes repeated reference to ‘embedding digital technologies’. Yet, the industry saw the demise of the Centre for Digital Built Britain in 2022 and there is still much pent-up frustration that digital innovation is being constrained.
One of the factors that is inhibiting digital innovation is the format of contracts between the various parties in infrastructure projects, which are the central vehicles for defining what is to be done and how the parties are to work together to achieve it. Despite so much progress in creating the capability for innovation across the various digital areas, it does seem that the way that contracts define and govern the relationships between the people involved may not be keeping up with the demands of digital innovation.
Despite some progressive collaborative approaches, so-called ‘transactionalism’ combined with a relentless focus on outputs and not outcomes remain major obstacles. The widespread use of frameworks by which clients essentially set up body shops further erodes the opportunity for collaboration at the organisational level. There have been some helpful developments, such as the Project 13 approach, to more progressive organisational models. The enterprise approach nevertheless needs to reflect the duration of the change rather than just the aggregate of the organisations involved. There is an alignment with programmatic thinking here that is rarely acknowledged in that programme completion is tied to benefit realisation, not to completion of construction.
All these factors militate against effective innovation and digital innovation in particular. ‘Transactionalism’ plays against the development of a shared purpose amongst the organisations involved. A shared purpose is essential to creating the commercial and behavioural alignment, and hence the collaboration that builds a diversity and engagement, setting the conditions for innovation. A focus on the end benefits, which integrates whole life and business/societal value (see ‘Never waste a good crisis’ Wolstenholme, 2009), should highlight the efficiencies achievable from digital twin applications and the related common data environments.
Whilst there has undoubtedly been progress in the infrastructure sector since Egan and Latham, there is still much to be learned. Modern methods of manufacturing are now shifting the industry towards greater modularisation, off-site manufacture, greater productivity and some of the lessons from the manufacturing sector. Yet the industry remains very poor at vertical integration of its supply chain and struggles to realise the benefits of the movement. Relationships between the ‘Tiers’, where many smaller companies are operating on the slimmest of margins and with little capacity to adopt more progressive practices, are still characterised by short-term, transactional interactions. The lessons of Toyota seem to have been cherry picked to the detriment of investment in the many companies that need to work together from within the supply chain to properly integrate and exploit digital technologies (see ‘The machine that changed the world’ Womak, Jones ad Roos, 1990).
There is hope and there is much great work being done. Digital innovation is forging ahead whilst the portfolio of projects and programmes in the UK provides an unrivalled opportunity to exploit digital innovation. Perhaps it is now time to pay some more attention to the way that we define the relationships between the parties involved to enable and exploit digital innovation?