Data Analytics vs Gut Feeling – A Discussion
Editor’s Note: This is part three of a series highlighting real customer stories shared during our Digital Contractor Roadshow events.
Data Analytics vs Gut Feeling – A Discussion
Data analytics is a buzzword in the construction industry today. It seems most construction companies realize a need to make more informed decisions, backed by data. But there are challenges that arise when putting into place a strong analytics program to collect the data that matters. Some contractors have been in the business for so long that they feel they understand the trends and the ebb and flow of the company better than any analytics tool ever could. So how are construction companies actually leveraging data and analytics to make better decisions for their firms?
We asked this question of Mike Thomas, IT director at Barth Electric and Michael Preyss, CFO of Garmong Construction Services at our Digital Contractor Roadshow event in Indianapolis a few months ago. They gave us excellent answers from their own experience.
We've heard a lot about data analytics in today's presentation. How is your company leveraging data, analytics and crew reporting, to make the better decisions?
Thomas: We hear the words data and analytics. They almost sound like buzzwords to a lot of people. To me, it means a lot of things. A lot of companies are probably doing data analytics at what we call the descriptive statistics level and don't realize it. So, when you run those reports, it gives you your totals, and averages, variances, estimate against action, all that sort of thing. That's looking in the rearview mirror. The next step would be predictive analytics and that would be taking not only what has happened but trying to determine what you can do with that. In other words, not only planning what's going to come down the road but having the software and the technology there that helps you and prompts you — almost like Siri, or your autonomous driving cars that say, “Okay, here are all these scenarios that make sense.” This is the decision support system. Now you take that data, you make your decision from it.
We're just scratching the surface of our descriptive analytics and what we need to do now is refine classification of what data you're going to actually capture. Be consistent about it, get clean data in, so that you can do analytics with it and make better decisions with it.
Preyss: Data analytics is something that ... to your point Mike, is a buzzword. It's one that we throw around a lot in meetings in large part because ... we scratch the surface on data analytics and I’d say we do so without realizing it. My company is a multi-generational, family-held business, so we have the benefit of a longitudinal sense of where things have been and where they are likely to go, because we’ve seen it over decades; and for those of you in those types of businesses, you may hear your leadership team say, “I've been here. I grew up here. I know what's going to come, because I’ve seen it before.”
Oftentimes I wrestle with this because I want the numbers to back up the gut feel. Is the data coming behind and supporting whether or not this is really going to go the way you think it will…or the way it went last time?” And that is a legitimate pushback on both sides. My data can suggest a potential outcome; but I don’t have 20, or 30, or in our case, more than 90 years to fall back on to support my assumptions.
The exciting part is, is we can now start to look at the numbers and we can do sensitivity testing and we can look back a year ago, or six months ago, and see if our predictions came true. Sometimes, I’m way off, but the fact that we can look back and say, “We thought we were going to be here and we're within 25 percent of where we thought we were going to be a year ago.” That's exciting to me. Call it geeky, but I think it's really fascinating to try to see how the math can come alongside and support the pulse of our leadership. As we continue to refine our models, my hope is we can find a predictor that will continue to tighten up that gap.
Preyss summed up his response with the following: Data analytics, good. Gut feel, not so good. If you can marry the two, good enough for now.
Where does your construction company stand when it comes to analytics? Are you using the right data for informed decision making? To learn more about Viewpoint solutions to help you improve on reporting and analytics visit our website.