Cut Operating Costs While Improving Productivity and Profit: The New Construction Industry Normal—Same as it Ever Was
If you are among the construction business owners looking to cut operating costs while improving performance, and increasing profitability, one area you can focus on is the cost of construction management software.
If you’re a construction business owner in the United States, you already know the good news and bad news in the latest headlines. So let’s get the bad news out of the way first. Construction costs are rising, and skilled workers are in short supply. Both facts are hammering profitability and productivity for construction businesses across the nation.
It’s hard to eke out a profit with costs that are difficult to lock in and adversely affect the job’s profitability as they may increase from one phase of construction to the next. A recent survey conducted by the NAHB shows builders reporting a 26% increase in costs on average over the last 12 months.
The talent and skilled worker acquisition and retention outlook in all skilled trades, including construction, is equally alarming. According to a 2020 Construction Hiring and Business Outlook report by the Associated General Contractors of America, 81% of construction businesses have difficulty finding qualified, skilled labor to fill open positions. That already catastrophic hiring situation has only gotten worse in 2021.
At least in residential construction, the good news is that demand is still solid, with starts and spending experiencing healthy gains over 2020. But this good news may be fleeting. With inflationary concerns rising, the continued market uncertainty of the pandemic, and those elevated costs being passed along to consumers in the form of higher home prices, there may be a slowdown in the coming months.
Some construction businesses will use this as a chance to catch their breath, make some necessary adjustments to their operation and end the cycle of daily firefighting just to tread water financially.
If you are among the construction business owners looking to improve your operational performance to increase profitability, one area you can focus on is the cost of construction management software. Successful builders, general contractors, and sub-contractors all have some construction management software in place.
But are you getting the most out of it? You may be substantially overpaying for the features you use because you’re only using a small fraction of the application’s complete set of features. According to oft-cited research, software users typically use only 20% of the application’s features. For expensive construction management software solutions, this can mean you are drastically overpaying for features you will never use.
Therefore, a way to cut operating costs is by evaluating the software solution you’re using and determining if it is a mismatch for your needs. You may benefit from a much simpler solution with a narrow set of features that align more closely with your organization’s needs.
This type of “lean” software can save your construction business in multiple ways by improving productivity and increasing profitability. Here are some common-sense considerations when comparing the different software solutions available for your construction business.
- The initial cost
Conducting a cost/benefit analysis on the construction management software solutions you’re considering will help you align your needs with the expense. Make sure you understand precisely what you’re trying to accomplish by implementing the software solution and that the application fills those needs first. Over-purchasing for features you may never use may seem like a way to “future proof” your business. But it may turn out to simply mean you’re overpaying for something you will likely never use.
- The cost to implement
How much time and effort will it take to get the solution up and running in your business? This cost would include training your people and any potential outlay for IT infrastructure. In addition, consider any extra charges for additional user accounts.
- The cost to maintain
What kind of support does the software solution provide? What IT infrastructure (laptops, broadband connection, etc.) does it require for the software solution to succeed in the field and at the office? How much time does it take each day to maintain the system you’ve built? How much ongoing training will your team need, and what will that cost? Is it easy to onboard new people with the software?
The trend in the software industry of late has been to provide solutions that do everything. Unfortunately, the result is often bloated, expensive, and hard to learn and use “solutions.” As a result, you may be paying far more than what you need. That’s why we built CMPRO. It is Construction Management Software Simplified.™ In other words, everything you need, nothing you don’t.
CMPRO is simple to learn and use, which increases the likelihood your construction management team will use it every day to document and report on all critical aspects of the project. Because we come from decades of construction management experience, we have focused on the features your team needs to lower costs and increase productivity. And because CMPRO is so easy to learn and use, it reduces the cost of initial training and the training required to bring new people on board.
CMPRO helps your on-site and in-office construction management teams manage mission-critical elements of every construction project, including:
- Pay Applications
- Pay Periods
- Change Orders
- Vendor Contracts
For your job-site team specifically, CMPRO has equally robust construction project management features, including:
- Daily Logs
- Punch Lists
- RFIs (Requests for Information)
Find out how CMPRO™ can help lower your operating costs while improving productivity by simplifying your construction project documentation, reporting, tracking, and communication. To find out more and schedule a demo, visit our website, or contact us at [email protected].
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By most accounts, the skilled labor shortage won’t be leaving the construction industry any time soon. According to a recent Commercial Observer article, the worker shortage may only worsen, especially if any infrastructure projects kick off any time soon. The labor deficit in construction has been building over many years, and it will take time to mitigate. On top of the spiraling labor challenges, burnout is a real consideration for the people you already have in place.
So, as a construction business owner, you must always find ways to be the most productive with the people you have. And if you do manage to attract new talent to fill vital roles, those new team members need to be effective as rapidly as possible. Fortunately, you can take some simple steps to make onboarding new workers less time-consuming and reduce training costs.
Simple technology systems can help your general contracting or sub-contracting business overcome “technology hesitancy,” increase productivity, add to your bottom line, and demonstrate a healthy return on the initial investment. When one poorly documented change order could cost your company thousands, possibly hundreds of thousands, of irrecuperable dollars, the ROI for construction management technology becomes evident. If you are currently facing “technology hesitancy,” here are some simple steps you can take to implement new solutions into your business in a thoughtful and meaningful way.
Cut Operating Costs While Improving Productivity: The New Construction Industry Normal—Same as it Ever Was
If you are among the construction business owners looking to improve your operational performance to increase profitability, one area you can focus on is the cost of construction management software. Successful builders, general contractors, and sub-contractors all have some construction management software in place. But are you getting the most out of it? You may be substantially overpaying for the features you use because you’re only using a small fraction of the application’s complete set of features.
Pay Apps That Are Incomplete, Inaccurate, or Late Can Cripple Your Construction Project and Impact Your Bottom Line
When pay apps are incomplete, submitted incorrectly, or late, the construction project can falter and possibly grind to a halt. Because the unfortunate truth of the construction industry is this—contractors do not get paid for the work they complete—they get paid for the work they can document! This point should hammer home the importance of correctly prepared pay apps. They can quite literally make or break the financial health of the project and your bottom line.
One of the leading issues on construction job sites affecting profitability is change orders. Unfortunately, they are also typically unavoidable despite your project management team’s best efforts. Do you know how to make the change order management process as pain-free and profitable as possible?
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