Buildex 2024 D1E7 | Embracing Digital Transformation with Shawn Gray from The Net Effect and ConstructiQ Advisory

Prepare to be enlightened as Shawn, a visionary shaking up the construction industry, joins James Faulkner at BuildEx Vancouver to share his trailblazing journey. This episode promises a deep dive into how The Net Effect, is guiding small and medium-sized construction businesses toward digital transformation. With the aid of the Canadian Digital Adoption Program, budget worries are becoming a thing of the past, and companies are stepping into a tech-savvy, environmentally-conscious future. We tackle the tough topics – labor shortages, the hefty carbon footprint of construction, and the urgency to shed political bias for tangible, eco-friendly solutions. Get ready for a frank discussion on the necessary shift our industry must make to cut down emissions and why staying informed on sustainable practices is non-negotiable for the life span of any construction project.

Then, we zero in on a problem stifling the construction industry's heartbeat: lost productivity. You'll be astounded to learn that a staggering 25% of a project's timeline can be lost to rework – an inefficiency that Shawn is determined to obliterate with strategic tech adoption. Our conversation reveals how technology is not just a fancy add-on but a critical solution to lessening administrative loads and keeping superintendents where they should be – guiding their teams on the frontlines, not buried in paperwork. Shawn and James dissect the barriers to embracing innovation within construction, from budget limitations to the autonomous nature of trades. We lay out a blueprint for successful tech integration, driven by the on-the-ground operational needs and seamless data sharing, ultimately sketching a future where construction is not just more collaborative and efficient but reshaped by the power of progress.

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Transcript

Speaker 1: 0:00

Welcome to the Site. Visit podcast. Leadership and perspective from construction With your host, James Faulkner.

Speaker 2: 0:09

Live from BuildX Vancouver 2024.

Speaker 1: 0:23

Sean. Hello, how's it going?

Speaker 2: 0:25

It's going well, you're here last time, I am here and I'm here again and I hope to be here another year. Oh nice, that's good.

Speaker 1: 0:32

So things have changed for you. You've been doing lots of stuff, so tell me about what's going on now. So, yeah, you're trying to solve a lot of problems here.

Speaker 2: 0:41

You know when we met last year I was solving the challenge around supply chain constraints, especially in the ready mix industry. Yeah, and you know I can successfully say that I've helped move the needle on that, especially in the local area in Vancouver here, and towards the end of that year I actually went out on my own and established an own venture to really go help as many more companies as I possibly can. Been there, helped the big engineering construction manufacturing companies and there's 100,000 different companies to really help in drive changing in industries.

Speaker 1: 1:16

So at BuildX right now, the net effect is here and you have a booth over there, and so what is the main offering you guys are presenting here?

Speaker 2: 1:27

So what the net effect does very, very well is actually cater to the small, medium-sized businesses in construction and real estate and sub-trades manufacturers that are really actually going out and doing the work, actually building the assets, supplying the job sites, the ones that are actually feeling the real pains in industry. And what the net effect does very, very well is they, you know, in conjunction with government programs, is removing barriers to adoption, and top barriers being budget is number one and being a registered advisor for the Canadian Digital Adoption Program.

Speaker 1: 1:59

Oh, CDAP.

Speaker 2: 2:00

CDAP very popular, but also we have to make sure it's known. You know that helps remove that budget barrier for the small, medium-sized businesses by, you know, retaining a professional expert in construction technology, Actually put a plan together that is designed for them to adopt technology, not just pick one, and it also help them successfully drive results with that. That is essentially what the net effect brings to the table is removing that budget as a barrier and also bringing in the knowledge of new solutions and skills to implement All the ingredients needed for a small, medium-sized business to actually successfully do business and build this decade.

Speaker 1: 2:39

Okay, so this is a consultant company. Yes, okay, so that's so. What do you think you were talking a little bit also about? You had like four main areas, so technology was one of them. Technology adoption, the labor shortage we were talking about. You're also talking about some environmental stuff in terms of climate and then also the emissions reduction. So those Can you just take me through Before we just let's just focus on the last two just for a minute?

Speaker 1: 3:12

We've been seeing a lot of political stuff where there has been I think Jordan Peterson brought this in as this whole doom and gloom of, and I kind of go yeah, I understand where he's coming from that was trying to not depress kids, I guess, or depress the younger youth for having some hope that we're having just killed this whole thing. But it's clearly evident we've changed the planet. I mean, it's obvious. It's just a matter of what do we do about it? Yes, right, so I think that the Do you find that some of this stuff is getting political in terms of how people even want to start the conversation?

Speaker 2: 3:51

Of course, in all aspects there's a political lens to it for sure, but it is a very important topic to talk about and sometimes to remove the politics from it. The facts are very clear. Construction generates 8% of global GHG emissions 8%, 8% from one sector. That's huge. That's a huge piece of the pie and there are things that can be done to reduce that, and the impact of that is to TBD. But when we talk about someone like myself who's agile and start up trained, it's all about where is the most valuable problem and minimum viable solution.

Speaker 2: 4:34

If that is one of the biggest pieces of the pie, that's where we start. And then it's an industry unchanged for hundreds of years. There are solutions available to them now. They just need to be knowledgeable of them, on how they can actually effectively make change and how to incentivize that change, to make it easy for them. Depending on who you talk to and which province you live in and which years these things come in In our lifetime and very, very shortly, and some through this decade they're going to be required to reduce emissions by 50%, and that is a make or break sentiment for a lot of construction industries and they don't know the way that's going to hit them.

Speaker 2: 5:16

And that's, among you know, very, very similar, topical, to even just the workforce shortage challenges that the wave has been coming for 20 years.

Speaker 1: 5:24

And now it's here. So just in terms of emissions and you just sort of factoring that down, is there a? The different categories of the sort of the worst culprits. Obviously, we have off-gassing of concrete In terms of vehicles. Is that a significant part?

Speaker 2: 5:45

So I'll just make this clear I'm not the expert on environmental reduction, reduction.

Speaker 1: 5:49

I think I wasn't expecting you to give me all this data, but if you do, look for the you know, the bigger, obviously, contributors.

Speaker 2: 5:57

Concrete asphalt production are the largest contributors to that Right. Obviously, lots of technological advancements being made in that front, which is great to see, yeah. Well then when you actually go to the full life cycle process of, you know, from planning, design to build, to operation, maintenance that construction piece, there is a significant amount of waste that occurs through that build process.

Speaker 1: 6:21

Right, that makes sense.

Speaker 2: 6:23

The operation, maintenance side, which is the, you know, the 80% of the life of that asset, especially if it's a building, that is a huge GHG draw as well. And there are solutions that you know the developers, real estate developers up front you don't need to be aware of and can consider early in the stages.

Speaker 1: 6:41

So even after, like a post construction, there's still this impact. Yes, but does that still consider the construction part? It was only when the construction was handed off.

Speaker 2: 6:49

It's funny how these different codes work and again, I'm not the expert but I know enough to be dangerous here. But the codes are, you know, very incremental in how they're being put out there. Right now it's more about life cycle, the after.

Speaker 1: 7:02

I see Okay.

Speaker 2: 7:04

There is much, especially because the knowledge of that 8% piece of the pie is in the construction side. The codes that are coming in now and how they're evolving are targeting what is actually happening during construction Right.

Speaker 1: 7:16

That's cool. So you were also chatting earlier about that statistic of you were saying that 99% or probably close to that 98 point, whatever is all SMB business and is not the big you know large, you know PCLs, lead cores et cetera of revenue. And is that a Canadian statistic?

Speaker 2: 7:42

That is Canadian statistic. So it's interesting and you know what it is Canadian statistic. But that is a typical trend across North America as well. That makes sense.

Speaker 1: 7:53

So that's pretty crazy, and that really is. It becomes very. It's a useful statistic when you talk about adoption and technology, because obviously those companies have had to adopt, they've probably been leaders in starting new things, doing new things, so this other 99% has to sort of catch up. So the net effect you guys are helping companies become more efficient by adopting technology.

Speaker 2: 8:25

So just take it through that a little bit Sure, and you know I'll go this way is the. So, yes, the statistics, over 99% are businesses less than 500, less than 500 staff making less than a 1 million revenue, sorry, less than 100 million revenue. So those are the SMBs. What's interesting, and this is, you know, the PCLs, like those big groups that you know they were the Elaston, sorry, elaston. They were the way makers you know, in the last decade of, you know, trial and adopting things, trying things, funding things, funding things in law regards, and you know again, they. So we have a lot to owe to them on what they've done. And but I want to put these, this out here, there where, when we, when we look at, let's say, circa 2012, that is essentially the recognized benchmark for when construction technology transformation started to happen.

Speaker 2: 9:25

Here's some other statistics that are kind of cringe worthy and, if you want the, the sources of, we have to share, share with you. So, in the last 10 years, over $30 billion have been invested in construction technology. There's been less than 2% improvement in productivity. Over 50% of of technologies that have been adopted actually support the, the top, you know, executive leadership group, their kind of job functions, the actual business results being generated. Less than 4% in industry that's 6,000 businesses are less out of 500,000, plus less than 4% in the last decade have actually yielded any significant result from the technology that they adopted. When we look at things like, 80% of construction companies right now are struggling with workforce resource challenges. 40% are going to retire by the end of the decade.

Speaker 2: 10:24

I've thrown lots of statistics, that's awesome, but I'm data driven, so of that crazy workforce challenge that's coming up here. In the last decade, the emphasis of technological adoption has been around top driven. Less than 30% of companies have actually considered or adopted any type of workforce efficiency solution. It's kind of mind blowing In love with that as it's driven around just.

Speaker 1: 10:53

So dig into that a little bit. So workforce efficiency, so what would those vectors be of change?

Speaker 2: 10:59

So here's a really interesting kind of Follow, this kind of connection of the dots here and I'm going to continue to throw some data for you and wrap your head around the workforce issue here. So there's not enough people to do the work. 25% of project time. This is on average, but the actual creation on this is quite staggering. On average, 25% of project time is spent on rework. So you already have a constrained labor force and a quarter of that project they're actually doing the work twice so that they can't be deployed onto another project or progressing the project.

Speaker 1: 11:33

Because they're fixing the old one.

Speaker 2: 11:34

For sure Got it Okay. So we've got 25% of your project time Just fixing mistakes. Coincidentally, almost that exact amount of time 25 to 40% of a supervisor's time is actually spent on searching for information or administration, not actually out there supervising and avoiding mistakes. Yeah, avoiding that other 25%, 100%. So even something as simple as introducing automated time tracking, things as simple as more efficient reporting on your daily activities or logs, things like that, things that can automate more of that supervisor's administrative process, puts them in the field, actually made them able to observe the work and avoid the rework. There are direct connections.

Speaker 2: 12:23

So in my past experience I support over $25 billion in construction I was able to see what worked well and what didn't work well, and the jobs that were able to progress more efficiently, more productively and more profitably were the ones where their superintendents were in the field helping educate. You know we've got to Using the knowledge Exactly. So that's just kind of a. You know I call it the low hanging fruit where we talk about, you know, the minimum viable problem or the most valuable problem. Minimum viable solution? Some things as simple as just better empowering your superintendents to actually be out there doing the job while still being able to administer the work, do the project administration and feed that information up to the you know, the top levels that need to make those business decisions. Those simple little things, those 1% little changes, make ripple effects in terms into what a construction business can do with their existing workforce and profitability. And does that so, does that kind of wrap things?

Speaker 1: 13:21

around it does. I'm just wondering, like what are you finding in the reasons people are not adopting technology like they should be?

Speaker 2: 13:28

So there's and it's very interesting in 2019, mckinsey put out a report and said here are the top 10 things. Top. You know they can McKinsey's great cause. They can have so many the consistent top 10 barriers. Maybe we'll just go through the few. The first one is budget. Budget is one of the biggest barriers and even for the largest companies, and when you look at larger companies you think, well, they can write a check. But even large companies are made of the smaller little baby companies or geographical units with their own operating.

Speaker 2: 13:59

Oh and they're waiting to be paid, often For sure.

Speaker 2: 14:01

So budget is always the number one barrier and then the next two that are tied management hesitancy and workforce hesitancy, and that is what we typically call culture.

Speaker 2: 14:13

So and it's interesting around management hesitancy is they're typically tied to two strains budget and knowledge of solutions.

Speaker 2: 14:20

So when you start solving the budget problem and bringing knowledge of solutions to the table, the management alignment starts to click in. Then the next big hurdle, which makes up obviously the bulk of the engine, is the workforce and a typical, as we said, the big groups took them 10 years plus to adopt technology and they're still not receiving the results that they probably should have. A lot of it is, I guess, failure to help that the bulk of the workforce understand how this technology resonates and makes their life better, or selecting, crafting their technology adoption plan around the actual project execution operations rather than organizing that technology plan around the office leadership group. The groups that are the most successful right now are rethinking the approach and they're actually putting their operations project execution team at the center core, giving them the tools they need to do their job better and then, through the power of integration and otherwise, still being able to get the information needed for to support counting financials and business management.

Speaker 1: 15:31

Yeah, I mean I think of the a lot of the issues that I find is that because construction is a very unique set of individuals working together and that unique set is depending on the diversity of different sub-trades, depending on what a particular project is, you have businesses showing up at a business to do business and they all do business a different way and they all actually want the agility and autonomy to do it their own way.

Speaker 1: 16:04

When they are mandated to work on a certain way at a certain job site because of a GC software or whatever it is, there's a reluctance to that. However, there's critical information there. They have to go get it, they want to use it at a minimum, they want to do their stuff because they need their own records too. And it's who owns the records? For sure, because you've got on the safety side, you have CORE to deal with, you've got WorkSafePC here in British Columbia, I'm sure there's obviously the jurisdictions everywhere for safety. So it's really because businesses are showing up at businesses to do business. That's the reason, and I wonder whether or not that will be ever fixable.

Speaker 2: 16:55

So what I find very interesting is there is a solution to that and it all starts with understanding. When I work with customers, we go through problem fit, solution fit, business fit. Then I start looking at opportunity to fit customer fit. And, as we started talking about the opportunity to customer fit, it's helping those organizations move beyond the what do I need just for my business, helping them understand you are working for others and you need to.

Speaker 2: 17:27

If you want to be seen as value and especially the systems you use are valuable and maybe want to get them paid for by your customers, you have to align. It's critical that you align your technology portfolio to your core customers and it doesn't necessarily mean if your customer uses Sitemax or a ProCore or whatever. How well does your systems and data, especially the data side? Are you collecting the right types of information that your customer needs? System agnostic? There are many talented individuals out there that can make those integration connections between systems nowadays, but it's about mapping out, especially if you have a core, if over 30% of your business is from one customer, you better start aligning your technology, especially around your data, to how can we make that data accessible to your customer where there's no disruption to whatever system process they use and whatever system process you use. There is a roadmap to do that and that has been a critical success factor for a number of businesses.

Speaker 1: 18:34

Interesting. Okay, Wow, there's a lot there. Do you think that we have a power dynamic that is? I'll give you an example. So the phone that I have here in my hand, this thing has become ubiquitous. It's basically and it's an appendage. Now, Luckily, we can take it away.

Speaker 2: 19:03

It would hurt to get rid of it.

Speaker 1: 19:04

Yeah, but people are just tied to this thing. So you end up with a bring your own device to work situation and there is a. There are some people not all people but there is a little bit of a power dynamic struggle between management and field crews. And there is the why should I, why should I do anything extra? And sometimes digital adoption feels like an extra, and it really isn't, but it feels like it because it's like someone else's. It's my hassle to learn and I have to do this and I got to do something different way. It's taking data on my phone. Are you going to pay for my plan? Are you going to like all of that stuff? Because we are talking about that other 99%, right, this is where this stuff happens.

Speaker 1: 19:54

So there needs to be a cultural shift in terms of technology, of hardware, as in you get this. It can all come down to. You know, are you giving them a $450 phone or are you giving them a $1,700 phone? Right, give them a $1,700 phone and you mandate what they do with it. And, yeah, they're going to. You're going to have 25% of them with a smash green every month. But what is the actual if people can get over? It's interesting that there is a psychology of money that I think as humans in this. This flows into how we do business as well. If I say to you, here we're going to go out for dinner, we're going to go for drinks, and you're like, yeah, okay, let's go to a good place, you're going to have a good time and whatever, and you drop $250. And then I say to you we go to, we go to, you know, shopping on on Robson Street, and I'm like here's a pair of jeans for $250. You're like, oh, no way $250.

Speaker 1: 21:03

But you blow it just for the experience, where you didn't even think about it. It's that kind of thing. There's money being spent in these companies that are the nightlife stuff, it's the golf tournaments, all this experience stuff, and then, like I don't know, $70 for a phone. It's like hello. This is the actual channel to productivity, to everything. So I didn't think there definitely needs to be something around how that shift of spending. When you said budget, you're correct Budget, but psychology around budget For sure.

Speaker 2: 21:37

And you know you're on, you're exactly, exactly accurate. And it's so funny how often even that scenario comes up where, where I don't want to pay for my you know I have a hundred crew and they're trans and who knows who's showing up. I can't buy everyone devices but I don't want to pay for a hundred people's phone plans. Yeah, it's. It's crazy, as you said, the psychology of money when you start, when you give the you know, levers for them to pull, to remove that budget as a barrier, it's crazy how the floodgates open right and you know I'll just use case in point. Can you see that for?

Speaker 1: 22:09

that stuff or not? Yes, you can, yes, buying, buying hardware.

Speaker 2: 22:13

Yeah, so that's, that's the beauty of it. The CDAP program, you know it's the front end. It's essentially a forgivable grant to to bring an expert in like myself to actually to put a plan together for them, and the give or is a plan, that's a 25 grand right.

Speaker 1: 22:25

So that's, that's about 15, 15.

Speaker 2: 22:28

And you guys that's usually so that up right showing the way.

Speaker 2: 22:32

Yes, I see them and but in that plan, you know, what we tried to do very, very well is is help connect the dots to. You know that actual, you know what, what is, what are the costs and what are the ROIs, and we help them understand. Okay, yes, and then you know, through the CDAP program, if they need it, if the company's needed, it's almost instant access. Approval to up to a hundred thousand dollars in industry for loan for five years. Yeah, you know, if you have the right plan, you know fast, you can get your ROI.

Speaker 2: 22:59

Yeah, pretty quickly, sometimes after the five years, though you pay that back, but so in terms of your so it could be a hundred thousand dollars.

Speaker 1: 23:07

Sure, like we knew when we did the the COVID loan stuff.

Speaker 2: 23:13

Like you pay that if you don't pay it back in that time there's some trouble so, yes, there obviously some T and C's involved with with the BDC loans, but if you you know, if you actually work with the right expert advisor, there you go they are. They are crafting a strategy. Where you're, you can get your ROI.

Speaker 2: 23:30

Yeah, and we struck, you can structure in a way and there's some great new solutions that actually put money back in your pocket, and if you're smart and savvy and you understand the process, you're using that to pay. You know, to pay off your loans and do things like that. But what's interesting? Yes, exactly as you said, you know we go okay. Well, look, if, if your barrier to getting your workforce to adopt new technologies is a Paying their their internet bill, yeah, which is very affordable if you do it at scale, yeah, yes, that is what they'll use the loan for. That, 100% for sure, you get them to adopt these things, you start getting the ROI back in return, they are happy to continue to support you and you're making their life happy. That's, you know, it's about reducing that budget as a barrier and, like you said, it's they're happy. Companies are happy to go spend $200,000 on new Silverado's, but they won't pay for $30 foam plan. Well, let's just, let's just negate, take that out of the conversation completely.

Speaker 1: 24:25

That would be. That would be really cool if you didn't have a presentation or psychology of money. So yeah, I mean, as you know, sean, these are like short podcast or but I Think we could probably dig into this a little bit more. How do people get hold of you? What's your website?

Speaker 2: 24:41

all that kind of stuff. So you can contact me a number of ways as so I'm here on behalf of the net effect group. Yeah, so you can contact me, sean shawan, at the net effect dot ca. Okay, that's my direct contact and let's go through those channels. And website addresses are WWW dot the net effect dot ca. Okay, go through that.

Speaker 1: 25:02

Okay, that's the best way to contact me and you're on LinkedIn, obviously, and on LinkedIn, yep, sean pray.

Speaker 2: 25:06

Yep, you can contact me on there.

Speaker 1: 25:08

Well, that sounds like you got a valuable thing going on there, so that's awesome. Good on you, man.

Speaker 2: 25:11

Thank you, okay, cool. Yeah, thank you very much for having me on the show here. You're very welcome, thanks.

Speaker 1: 25:22

Well, that does it for another episode of the site business. Thank you for listening. Be sure to stay connected with us by following our social accounts on Instagram and YouTube. You can also sign up for a monthly newsletter at site max systems, comm slash, the site visit, where you'll get industry insights, pro tips and everything you need to know about the site visit podcast. And site max, the job site and construction management tool of choice for thousands of contractors in North America and beyond. Site max is also the engine that powers this podcast. All right, let's get back to building.