Is Indian Construction Sector About To Enter A New Era Of Transparency, Efficiency & Organization?
When we were in school and asked to attempt a complex problem, we’d use a rough paper to work out the tougher calculations. This would help us make our mistakes early and fix them. Similarly, while constructing some of the most important sites in the world – it makes complete sense to make a rough version first to ensure the final product is devoid of problems and errors.
While this metaphor may seem simplistic, it suits the relation between construction and Building Information Modelling (BIM).
BIM is now an established technology in construction globally. It enhances how data is organized, improves operational efficiency, and generates transparency. Experts project the global BIM market to reach $15,892 million by 2027 – registering a CAGR of 15.2% from 2020 to 2027. While North America dominates this market, studies show that the Asia Pacific will exhibit the highest growth rate here, due to the booming construction industry. It stands to reason that one of the key players in this market must be India. But is India ready to adopt this technology? Let’s take a look.
Overview of Indian Construction Sector
By 2025, India will be the third-largest construction market and will contribute approximately 13% to the country’s GDP. It should hit US$1 trillion by 2030. These sunny forecasts are due to the consistent growth of the sector. In 2017, it was the most employed sector in India, as it employed around 51 million people. A key part of the sector concerns urban development projects, such as highway construction, transport, healthcare infrastructure, etc.
Along with its already immense scope, there are continuing plans to include modernizing existing infrastructure, developing smart cities, improving transportation routes, and more. Additionally, there are plans to craft an ambitious National Infrastructure Pipeline – which should prove to be a real game-changer. With so many exciting events constantly happening in this sector, it’s no surprise that even in 2020, just the real estate sector itself received foreign investments of over US$5 billion.
The Indian construction industry offers several investment opportunities for foreign companies, but the question is whether this hugely lucrative sector will retain transparency, efficiency, and organization with such entrenched practices. We know that international companies entering the Indian market desire such openness and structure. From the way things are looking, the answer is a resounding yes. This is mostly thanks to government policies and the industry itself striving to follow best practices. Let’s explore a few of the reasons that should safeguard the integrity of this sector.
Attracting direct investment from foreign investors with fewer barriers.
The government allows 100% FDI in infrastructure, SEZs, and industrial parks. Already, $17 billion has been invested through these routes over the past two decades. As the country rises out of the pandemic, this number should go up. Especially since foreign investors benefit from being able to invest in construction projects without needing approval from the government.
By injecting FDI into this sector, the government is breaking domestic monopolies, creating a competitive market, and bringing international best practices into the sector. This is beneficial in many other ways as it pushes firms to strengthen their processes and improve their offerings. Businesses become exposed to the latest international tools and technologies, as well as operational practices. Over time, these influence everyone, which results in enhanced efficiency and effectiveness of the industry as a whole.
International companies focus on adopting more structured, data-driven, and transparent ways of working.
Global projects of large-scale work with a huge amount of data and resources. It’s not enough to make decisions based solely on instinct with so many factors and people involved. This is why these companies have invested in tools and skills to streamline their processes. For instance, Building Information Modelling enables information exchange and effective project lifecycle management in real estate, construction, architecture, construction, and engineering.
Apart from the operational improvements (those are well-known), the use of BIM also brings in transparency, accuracy, and estimation quality. This is why international entities have adopted such tools to streamline and optimize collaboration and planning.
These companies are conscious of the need for agility and innovation, but value predictability and order.
The power players on the global scale place great importance on stability. They believe that predictability and order are important to drive sustainable growth. Again, it’s the technology that is enhancing systematic processes and increasing the certainty of decisions. For eg., BIM delivers more efficient estimates, transparent tracking, and ongoing visibility. This provides greater cost and resource savings, greater efficiency and shorter project lifecycles, improved communications and coordination, higher quality results, and more opportunities for leveraging modern technology like prefabrication and modular construction. Using tools like this helps companies progress at an orderly pace.
Modern construction companies appreciate building methods that leverage the power of technology like BIM. They know how this will help them make better plans, achieve greater visibility into ongoing progress, and optimize resource procurement and utilization. For any Indian entity to take advantage of the government's truly excellent policies to attract FDI or to compete with international players, they must have these technologies in place. This will show that they’re ready to go to the international stage, armed with excellent technology that’s on par with the global players. It also sends a strong message that they’re committed to transparency and efficiency. This acts as a signal that there will be ease of communication, organization, and operations. With the advent of foreign companies entering the Indian construction sector, a new era of transparency, efficiency, and organization will inevitably begin and technology and design software will power this.