Over the past year, you probably had to adjust your budgets, project timelines, staff schedules, and materials to keep up with the pace of change. And it’s likely your contractors, developers, and project managers realized that being reactive instead of proactive is no longer feasible.
In August, the largest infrastructure spending package ($1.2 trillion) in over a century was passed by the United States Senate. This package included new funding for improving roads, bridges, water infrastructure, and electrical grids. While this brings hope for the additional growth in the construction sector, it also reinforces the current challenges with resourcing issues including sourcing quality materials, the shortage of workers and the constantly adjusting state regulations.
So, while the U.S. government plans to modernize outdated infrastructure, finance and operational teams should be planning to improve their technology and office-to-field operations.
To move towards more agile project management, you’ll need the proper insights to focus on your biggest resources – people and equipment.
So, let’s talk about two tactics for improved resource management to support your success in 2021 and beyond.
Changes to the Construction Industry
The landscape of the construction industry is changing, despite rising builder and consumer confidence and a recovering job market, it’s still difficult to find qualified workers for skilled positions.
Viewpoint’s Quarterly Construction Metrics Index found that hiring is down 50% compared to a year ago, contract values were down heavily in 2020, and backlogs were down 20% compared to last year. This trend extends to materials and equipment – skyrocketing material prices and supply chain disruptions continue to contribute to a delay in the industry’s recovery.
To address these trends, construction CFOs need to develop better strategies to properly track equipment, materials, and job schedules.
For example, the average contractor reviews their equipment rental rates once per year. This extended window puts you at risk of losing money on rates you agreed to 8-10 months ago. With the right analytics, you can review your equipment rental rates more frequently and maintain better margins on your jobs.
Similarly, with materials, you’re often quoting jobs six to twelve months in advance. With fluctuating material prices, it becomes difficult to accurately quote on future jobs. For many construction companies, the pandemic highlighted a need for an inventory strategy whereby you buy materials in advance to guarantee your prices.
Now that we’ve covered the economic outlook for the construction industry and some of the current challenges with resource management, let’s discuss two tactics to make you more profitable in 2021 and beyond.
Tactic #1 – Invest in Technology
76% of construction executives are investing in digital technologies to address cost and margin challenges. This brings us to our first strategy for resource management – investing in technology that promotes efficiency and collaboration.
Having a collaborative approach to resource management allows you to monitor your current resource levels on each job and identify areas for adjustment.
Remote work has further emphasized the need for construction companies to adopt new technologies to improve communication and insight. Leveraging Zoom for online meetings, utilizing DocuSign for work orders, and employing online payment systems are all examples of ways in which the industry has already begun to rethink the way they do business.
Superior Construction, a Prophix customer, is a great example of utilizing technology to improve collaboration. Last year, Superior’s drive to analyze their construction sites data allowed them to create an interactive dashboard to determine how COVID-19 was impacting their employees’ ability to work. This dashboard was also instrumental in stopping the spread of COVID-19 on their job sites and included metrics such as:
- Has anyone tested positive?
- Are staff showing symptoms?
- How long will employees be out of work?
- Are we short-staffed in certain geographies? How fast can we bring on additional staff?
- How will this impact the job schedule?
Superior reported all this information at the employee, job sites, and division level to see the full impact of the pandemic on their business.
Tactic #2 – Tracking Productivity
For most construction companies, it’s important to continuously track productivity. Monitoring your daily progress on hours worked, raw materials usage, and total costs by work order, are important KPIs that your project managers and executives should have instant access to pinpoint areas of potential risk.
A recent report from Deloitte, titled The Future of the Construction Industry, identified three pillars of productivity tracking, including smart operations, advanced data insights, and strategic sourcing. Coupled with investments in technology and automated finance processes, these pillars are key to staying competitive in the construction industry.
Many contractors are still relying on multiple data-entry systems, which makes it difficult to track labor and equipment schedules, timekeeping, and equipment rates.
To address these challenges, contractors should prioritize investing in technology that promotes efficiency and collaboration and continuously track productivity.