• Thu. Aug 11th, 2022

Entrepreneurs lost $ 1.8 trillion globally in 2020 due to flawed data, new report finds

Dive brief:

  • Building technology company Autodesk released a new study September 14 with the management consulting firm FMI Corp. on the prevalence of data use in construction and losses resulting from data errors. It shows that in 2020 bad data may have caused $ 1.8 trillion in losses globally and may be responsible for 14% of preventable rework, representing $ 88 billion in costs.
  • The survey gathered the results of 3,900 construction professionals in North America, Asia-Pacific and Europe on their data practices in 2020. The largest group of respondents, 39%, were general contractors .
  • The survey focused on the effects of “bad data”, defined as inaccurate, incomplete, inconsistent or inappropriate numbers. While 55% of those surveyed said they had implemented a formal strategy for project data, 30% said more than half of their data was bad and therefore unable to offer actionable insights.

Dive overview:

The focus on data in construction is nothing new, but the magnitude of the associated financial losses is a reminder of how important the collection and analysis of numbers is to the industry. In 2020, construction accounted for 13.2% of global GDP of $ 84.5 trillion, according to the study. For an entrepreneur that generates $ 1 billion in revenue, losses from erroneous data could be as high as $ 165 million, including up to $ 7.1 million in avoidable rework.

“Companies are embracing technology, but our study shows they have the potential to reap even more benefits from their investments,” Jay Bowman, head of research and analysis at the IMF, said in a statement. Press release. “Without data strategies in place, the construction industry leaves significant sums and opportunities for more positive project results on the table.”

The root causes of bad data are usually not malicious actors, hackers, or other criminal causes. According to the study, most bad data is the result of simple human error. Twenty-four percent of the data was inaccurate or incorrect, such as a 5 entered in a field where a 6 should be. According to the study, an additional 24% were missing data, such as empty fields in a spreadsheet, and 21% were just plain wrong, such as when an employee thought to record an aspect of a work site, but covered some. another, according to the study.

The power of good data

In addition to the pecuniary damage to the construction industry caused by bad data, there are positive results from good data. The study found that intentional data strategies supported more consistent, data-driven decision making. The 12% of respondents who said they always integrate project data into their decision-making use strategies such as regularly reviewing data quality, standardizing data collection, reporting and monitoring practices, and structuring data in a common data environment for centralized access, according to the press release.

The study also found that construction managers place a high value on data skills, and 60% of those surveyed said the presence of data management and analytics skills was important for construction teams. construction are working efficiently, according to the release.

“This study quantifies the immense value of putting in place frameworks to capture and manage data,” Allison Scott, director of thought leadership in construction for Autodesk, said in the release. “Organizations that implement formal data strategies should get the most out of their technology investments, so it’s important to collaborate with vendors and determine how to get the most out of the data collected. “

Editor’s Note: In a previous version of this thesis, construction GDP was incorrectly assigned. It represents 13.2% of world GDP.

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