Patrick Hogan, CEO, Handle.com
The U.S. construction industry is one of the largest in the world, with expenditures reaching $1.293 trillion in 2018. While the recession of 2008 had a huge impact on the industry’s growth, the positive trends in both residential and commercial construction demand have put the industry back to its feet. New private construction is the key driver to the industry’s expansion with a total value of $992 billion in 2018.
The construction industry outlook looks good with spending projected to exceed $1.45 trillion in 2023. However, the road for the industry is not without its roadblocks. The surge of commercial and residential projects demands industry leaders to find ways to optimize construction processes and turnover projects faster than ever before. However, the persisting labor shortage in construction has resulted in 70% of contractors struggling to meet project deadlines. On top of this, the construction industry is one of the least digitized, due to locational challenges and the increasing scale and complexity of construction projects.
To stay competitive, construction businesses need to be open to new technology and strategies that drive efficiency and innovation. So how can you compete in tomorrow’s construction marketplace?
How to Compete in Tomorrow’s Marketplace
Technology
With plenty of repetitive and time-consuming tasks to go around, the construction industry certainly benefits from the operational and economic advantages that automation brings. Here are some ways automation can improve your business operations.
Operational efficiency and safety
The introduction of drone technology in construction has transformed the industry in a significant way. Its applications are expanding as project managers find ways to use drones to improve operational efficiency and construction site safety.
Drones are indispensable tools to conduct site surveys. Construction sites are huge and some areas pose a safety risk to human workers. A single pilot safely working offsite can finish a site survey in hours compared to a traditional site survey that can take days or even weeks to complete.
Human Resources
From attracting new talent to managing employees working in the field, construction HR professionals have a lot on their plate compared to other industries. Fortunately, some HR functions in construction can easily be streamlined through the use of automation software.
Automation simplifies the recruitment process, as software solutions make application tracking, hiring, and onboarding easier. A dedicated HR management portal makes it more convenient to access application documents, employee handbooks, and training manuals. Automation can also help in optimizing employee schedules. Since a typical construction business employs full-time and part-time workers with different job functions, figuring out the right schedule ensures that crucial tasks can be fulfilled when they are needed.
Billing and Collections
The construction industry is notoriously famous for its payment issues. The lengthy billing cycle puts construction businesses at risk of experiencing cash flow issues – not to mention the hurdles of fulfilling strict requirements to file mechanics liens. For these reasons, contractors can benefit from optimizing the billing and collection process.
Billing and collection solutions such as Handle can be integrated into your accounting system to protect your payment rights. From tracking construction project information and issuing pre-lien notices to tracking deadlines and sending invoices, a dedicated lien management tool makes managing your finances a breeze.
Social Impact
As contractors find ways to optimize construction operations and meet the ever-increasing demands of the industry, one must not forget the impact the industry as on society. Beyond simply generating profit, construction companies have a responsibility to influence and impact their respective communities in a positive way.
Society, in general, has become increasingly conscious of how construction companies conduct their operations. Consumers are looking for construction companies that prioritize sustainable development, labor safety, and cultural diversity. In fact, 87% of consumers will work with a company or purchase their products if the company advocates for issues that they care about.
Employees are also more likely to apply and stay in a company that has a good public image. Over 60% of employees are engaged at work if they are proud of the company’s corporate social responsibility.
The marketplace of tomorrow will see construction contractors engaging in practices that have a positive social impact. If the public finds questionable actions and even unethical activities in construction operation, there can be considerable damage in terms of PR and financials. Having a comprehensive corporate social responsibility program and actively communicating it effectively help build trust and confidence from stakeholders.
Knowing Customers
The construction industry is built upon relationships. Many small and medium construction businesses find word-of-mouth recommendations and client referrals as the primary sources for new business. For your business to stay competitive, you need to know how to leverage data to improve customer relationships.
Construction projects generate a lot of data. However, most of these data are unstructured, often in physical paper form, and stored away after the construction project ends. But over the past few years, contractors are realizing the value of these data in improving business operations.
Collecting customer data allows contractors to make informed business decisions in interacting with customers. For example, analyzing the demographics of past clients help build a customer profile and create a marketing plan to generate leads. This data can further be analyzed to gauge the effectiveness of the marketing strategy and adjust it accordingly.
Big data also allows you identify viable projects for bidding purposes. Having critical project information such as construction type, contract value, project stakeholders, and bid dates allows you to have a data-driven decision to adapt your bids.
Final thoughts
The construction industry is at the cusp of a revolution. Digital technology is slowly but surely transforming the way contractors conduct their business operations. Customers are also changing their behavior, putting emphasis on social advocacy and corporate social responsibility. There is also an increasing emphasis on big data and how contractors can leverage it to improve customer relationships.
The conventional methods and strategies in the industry are at their limit. There is no longer any doubt that the industry will change. To be able to compete in tomorrow’s marketplace, you need to embrace the industry’s paradigm shift and prepare for the future.
