Our societies couldn’t continue without the structures construction companies create. These businesses always seem to achieve amazing results in spite of forbidding circumstances and unique challenges. The right technology can help construction companies grow and succeed now and in the post-pandemic future. In this and the following blog posts, we discuss industry challenges and construction management software solutions.
In the construction industry, companies build office towers, residential complexes, industrial facilities, and physical infrastructures under taxing conditions. They recruit and manage large workforces, which need to include people with the right, sometimes hard-to-find skills in various construction trades. Independent subcontractors often manage segments of this labor pool, adding complexity and a need for transparency in financial and operations management.
The global pandemic has temporarily paused many construction projects. When economies reopen, construction companies must adjust to the evolving operating conditions in states and counties. That may mean having to reassign people and equipment faster and more flexibly to accommodate clients’ changed priorities and budgets.
Intense competition, small margins, and poor visibility
Some construction industry conditions remain the same. Firms compete intensely to win demanding clients’ business, who may impose stringent compliance and reporting mandates with budgetary parameters. Margins are tiny—hovering around two percent for many construction companies—and unlikely to change1. Construction firms, therefore, have to avoid additional costs and delays as much as they can. Industrial equipment needs to run reliably. Skilled people and contractors have to be available when they’re needed, without waiting for their next assignments. Managers have to remain in control of project activities as well as financial performance.
According to some estimates, only about 20 percent of construction companies can assess their actual margins. The others may well know that they are not as profitable as they would like to be, but lack a way to measure and manage margins and performance.
In most companies, business managers are at a centralized office, whereas those in touch with the pulse of projects are at various job sites and may only have a view of their current project. Communication between these teams may not always be timely, efficient, or reliable.
Fast-paced business mismatched with legacy software
The software tools used in many construction companies don’t always make things easier. Specialized estimating, design, or project management applications typically require user training and practice. Even some popular software products do not integrate with the finance, HR, and sales systems many companies use. The Information then has to be manually copied and transferred from one into the other, which takes time and can easily lead to errors.
In many companies, a spreadsheet program like Microsoft Excel is the standard way of managing finances and projects. We often see businesses use hundreds of spreadsheets, sometimes in conflicting versions, to record information. When project leaders or executives need business data to understand how profitable certain projects or accounts are, they need to ask for assistance. Under these circumstances, visibility is difficult to achieve and frequently lags behind events.
For project and team leads on job sites, physical remoteness and a lack of reliable connectivity can make it even more difficult to use the company’s software tools. Not all developers of construction and project management software offer mobile or offline-enabled versions. Information exchanges between offices and sites may require phone calls and emails or force people to travel to an office location.
When technology can barely support everyday activities, it becomes more cumbersome. When a construction company acquires or merges with another company and systems have to be consolidated, or when it’s necessary to respond promptly to client needs, balky software tools can get in the way. When people find workarounds, these may lead to a variety of informal, undocumented practices or shadow IT.
A great time to build the right construction software environment
We recommend that construction companies replace their aging, inefficient software and rethink how they want to use and manage technology. You might accomplish more with the right software applications. For example, what if software tools could help you assess, control, and improve margins? If they could make it easier to manage project costs and resources? Or, if they could help you get teams and equipment to construction sites sooner, or without project downtime? Commonsense, technology-fueled improvements in how you run operations and serve clients could give you an edge over the competition. If some of your clients are large construction companies that hire you as a subcontractor, a technology upgrade could make it easier and more attractive for them to work with you, and could expose you to more project opportunities.
For construction companies, there will probably never be a better time to upgrade their technology. It’s important that your construction management software deployment truly fits your requirements and does not disrupt your work. As Sikich has shown in hundreds of projects, we know how to accomplish that. When we work with you, we keep processes and systems streamlined and focus on helping you address your challenges.
Your construction technology partner
Sikich offers a complete construction software solution: HEADSTART for Construction. It integrates Microsoft Dynamics 365 Business Central as your foundation for managing operations with ProjectPro, a set of capabilities that enable such crucial construction-company functions as job quoting and managing subcontractors, resources, and projects. You run the business on a single, cloud-based system that helps everybody in the company manage their activities and report on what’s going on.
In the following posts, we take a look at how HEADSTART for Construction can help you. Our construction software can also benefit companies that perform a subset of building construction, like HVAC specialists, and firms that function much like construction businesses, such as installers of security and surveillance systems.
Take the next step
If you want to explore how Sikich expertise and HEADSTART for Construction can help you:
- Contact us and we’ll be in touch to answer your questions or arrange a demo.
- Visit the Sikich construction page with the latest on our services and solutions.
1See https://1build.com/blog/average-profit-margin-for-construction-industry/ and other sources
