Aug 13
Digitizing an E&C Company
Digitizing an E&C Company

L&T CEO & MD S N Subrahmanyan sheds light on how he’s seen digital technologies, particularly sensors, gateways, virtual reality, and Building Information Modelling (BIM) usage evolve across major projects.

By Subbu Narayanswamy, Senior Partner, McKinsey & Company

As projects increase in size and complexity, digital technologies are becoming a critical tool in every stage of project delivery. Larsen & Toubro CEO and MD Mr. S.N. Subrahmanyan sat down with McKinsey partner Subbu Narayanswamy to discuss how he has seen the use of digital technologies improve productivity, decision-making and attract talent throughout the life cycle of a project - ultimately improving the infrastructure asset owner’s experience.

McKinsey: Across the engineering and construction industry, how are projects changing in size and complexity?

SNS: Across sectors, the size of projects is definitely going up. At L&T, for example, in the road sector we bid for projects above $120 million in value - and we are considering raising this threshold. In commercial buildings, we bid for projects above $75 million in value, and so on. Even with these standards in place, we’re busy; L&T’s construction business has about 850 projects running at any point in time, across geographies.

While typically complexity increases as project sizes go up, project complexity is not always related to size. India is going through a development phase, and the country has many complex ongoing projects of various sizes. At least 20 of our projects in India today are technically tough and risky enough to keep anyone in the world up at night; for example, the Mumbai trans-harbour bridge requires complex structures to be constructed in deep water while preserving the environment.

It is an exciting, challenging phase. A lot of our time is spent on resource mobilization, overcoming technical challenges, and ensuring customer satisfaction. But working to accommodate large, complex projects is better than not having projects to work on.

McKinsey: Everybody in the global projects and construction industry is talking about digital technology. To what extent has L&T embraced digital solutions?

SNS: Five to six years ago, digital solutions were much less prevalent in the construction space than they are today. From 2012 to 2017 when I oversaw L&T’s construction division, which forms the bulk of the company, we set out on a mission to change that. Our digital team identified about 35,000 pieces of equipment in use across our sites globally, of which 15,000 were suitable for installing data-collection sensors. This spanned equipment like transit mixers, cranes, motor graders and wheel loaders.

We began connecting these equipment with Internet of Things (IoT) sensors; integrated these sensors with UBIQWeise IoT platform from L&T Technology Services and implemented L&T Infotech’s Mosaic platform  to collect information, process, and analyze data; and put that data on a real-time dashboard. In the past one and a half years, we have connected about 6,000 pieces of equipment. 

It’s not been easy. Installing the sensors can be difficult because some of the equipment are more than a decade old, and such equipment were simply not designed with today’s technology and IoT in mind, Older equipment were designed to transfer minimal data at relatively slow update rates, whereas IoT and big data are premised upon large volumes of data being transmitted in near real time.

Gateways - a piece of centralized equipment that collects data from multiple sensors - were also a problem because sites are remote, and Wi-Fi networks are not always available. We had to look for specific ways of transmitting the pulse to a gateway and look for a software partner to work with our platform, and all of this took time.

Still, we did start collecting data, initially just on fuel and spare parts consumption, as well as GPS locations. We were keen to collect data on productivity, such as how much weight is being lifted by an excavator or by a tower crane, but this proved difficult because these types of equipment see a lot of wear and tear.

Consider a tower crane, every time the hand scoops up weight the sensors can get damaged. We eventually discovered a way to gauge weight by measuring the tension on the steel wire that does the lifting, convert that into weight, and now we have a display in each operator’s cabin that shows the lifted weight.

McKinsey: What impact have you seen as a result of using digital tools on major projects, and what are some planned initiatives?

SNS: Digital solutions improve transparency, bring objectivity into decision-making, and boost operational efficiency and productivity. We can work faster to complete projects ahead of schedule - which of course greatly benefits the infrastructure asset owner. Just by using digital technologies (sensors, BIM software, virtual-reality glasses, and so forth) at our sites, we hope to increase productivity by 10 percent, which translates to significant annual savings. Our digital centers in Chennai and Mumbai receive a constant stream of objective data to support decision-making such as how many workmen have been deployed and where.

Another benefit has been improved talent attraction. Our expanding use of digital technology has helped us in recruiting the next generation of employees, who are excited by the prospect of working in an enlightened, digitally enabled construction atmosphere.

One upcoming effort is to map out our storehouses, which are dispersed across about 850 sites. We are hoping to catalogue our ecosystem of vendors and tag all of our parts and materials so we know what is being stored, where. This will allow us to allocate supplies between different sites, manage inventory, and cut waste. We are also increasing our use of tools such as LiDAR and drones to map out our sites and measure materials. 

McKinsey: What were some challenges to implementing digital solutions?

SNS: When we began implementing technology, we received lots of questions: Why are you spending money on this? What is going to come out of it? We knew there were lot of drawbacks. Nobody had done it before, and in an ecosystem where the network or the Wi-Fi is not well-developed you don’t get reliable data. While the business case wasn’t clear from the start, we knew we had to move in this direction so we made the decision to push forward and we’re starting to see the return on this investment.

We were also dealing with the reality of being an 80-year-old company with methods and processes evolved over the years. Many in this organisation may not always be in tune with the latest digitization efforts. As such, we’ve identified ambassadors of change in key positions who are charged with breaking us out of our tendency towards the familiar. These individuals have been hugely helpful in converting more believers in digital technologies and helping to fan the flame of support.

Today it’s a pleasure, seeing this working. Recently, I was at one of our major sites, the Motera stadium at Ahmedabad, and when I asked about digital there were at least 15 people taking out their devices to show what they were doing.

McKinsey: Where do you see the future of digital E&C technologies going?

SNS: We envision the use of digital solutions growing, of course, such as through the increased use of building information modeling on new projects. We anticipate greater use of virtual-reality tools and drones to monitor projects, and new tools that will be integrated with location data to track progress. We will also see more analytics and digital procurement platforms being deployed. This will fundamentally change the way we work, in India and around the world.

Keeping up with training and education will be critical. It is simple: We have to adapt, if we have to grow.

The interview originally appeared in the June 2018 edition of McKinsey & Company’s Voices, published through the Global Infrastructure Initiative.

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