The U.S. construction industry is booming in a big way. Demand is so strong that industry backlogs are on average booked through the remainder of 2018 with expectations that the next six to 12 months will be as good as or better than 2017, according to a new Associated General Contractors of America Management and FMI Corp. Risk Management Study.
Before you cue the confetti, they also point out that “with plenty of business opportunities, large backlogs, and a dwindling workforce, the industry is now facing a complex mix of challenges and opportunities.”
In other words, there are still plenty of issues that require vigilance from contractors. As a result, your construction risk isn’t limited to just insuring the company truck and making sure your data and customer’s data is safe from cyber-attacks.
Protecting Productivity and Profits
When it comes to how you manage your profitability and productivity, many of today’s construction firms struggle with risks that are both within and beyond their control. Whether you’re a walls and ceilings contractor or in the plumbing trade, these issues will seem all too familiar:
Are incomplete design documents putting us at risk?
More than 90 percent of contractors reported receiving design documents that were less than complete in the AGC/FMI survey. In the Willis Towers Watson (Construction Risk Index) Survey of 350 senior executives, 92 percent reported incomplete design documents as hurting their success. They worry that the growing demands for preconstruction efficiencies are hurting many construction companies. They feel companies will have to demonstrate a commitment to exploring new ideas and take advantage of digitization and new technologies.
Are we taking risks by choosing the wrong projects to bid?
The Construction Risk Index also noted that the average general contractor was earning a net profit margin of 1.46 percent. Even though the pressure is on to bid and win more projects, many contractors are resisting the very tech tools that could help to streamline their estimating process. The FMI Survey noted that contractors are only innovating “around the edges” and adopting technology in a piecemeal fashion (or not at all), but not fundamentally transforming their business approaches.
Are manual processes and spreadsheets adding undue risk to our bids?
The FMI Survey also notes that construction firms continue to operate the same way they did 10 to 20 years ago. Experts say nearly 94 percent of spreadsheets contain errors. If labor and materials are underestimated, your business could end up winning the low bid and losing money on the job. Even worse, spreadsheets offer no version control, which can result in substantial re-work. While spreadsheets may have the lowest bar for ease-of-use, they also make it more difficult to consolidate data input.
Are we hiring the right people?
Some experts speculate that the need for talent could have a serious and long-term impact on the construction industry. Nearly 90 percent of contractors are facing a shortage of skilled workers and 67 percent are struggling to find supervisory staff, according to the FMI Survey. Adopting new tech tools could help build an environment where contractors can retain the right skill sets and backgrounds.
Investing in the Right Tech Tools
Working smarter, not harder, has never been more critical. Bidding the right work, adopting innovative and new technology is key to conquering your toughest construction risks. The construction industry may be late to the digital party, but there are loads of tech options to choose from, thanks to the billions being poured into the construction tech sector.
Ready to put rough estimates based on old data, unclear notes, and keystroke errors behind? Powerful end-to-end construction management tools can help contractors realize significant gains in speed, accuracy, efficiency – and profits.
For more information, you can download that latest white paper, “Step Outside Your Comfort Zone: Digital Tech Holds the Promise of Boosting Construction Productivity,” at on.center/suite-white-paper. You’ll explore how an integrated estimating toolset can help you bid more jobs more accurately and respond more quickly to changes.