Are you capitalizing on technological advancements?
Fewer construction projects, more competition, tighter bids and lower margins are constant reminders that times are still tough. More than ever, construction businesses must strategically change to keep the doors open.
Traditional tactics for weathering a recession, such as downsizing, increasing credit lines and lowering margins, have not worked, and many construction companies have buckled under financial strain. Companies that have downsized and laid off low-performing employees have still held onto their best (and most expensive) employees, which results in slow cash depletion. Banks have increased loan loss reserves and tightened credit lines and/or declined loans, which cuts into a company’s available daily cash. And with increased competition for each bid, many contractors continue taking jobs at little to no profit or even at a loss just to keep their staff employed.
As the construction industry rallies to emerge from this economic decline, companies can implement IT strategies to safeguard assets, control costs, minimize risks and avoid bankruptcy. Several technological advancements allow construction companies to remain resilient.
1. Focus exclusively on the core business.
Instead of managing everything in-house, companies should consider co-sourcing certain processes, such as accounts payable, payroll, human resources and IT. By co-sourcing instead of outsourcing, companies can be sure the third-party vendor follows company procedures and policies, and the vendor interacts as part of the company, not independently.
Now that more contractors have moved their IT operations to the cloud, a co-sourcing company can directly log into a contractor’s system and transparently perform tasks. Companies can save considerably by negotiating pay-for-performance contracts for any of the following:
- AP data entry based on the number of AP invoices entered into the system
- Payroll data entry based on the number of times transactions were entered
- IT services based on the number of employees with computer access
- Equipment management based on the amount of equipment
2. Go mobile.
The construction industry is a highly mobile workforce, yet employees are tethered to their office computers or jobsite trailers. By replacing clipboards or clunky laptops with smart phones or tablet devices, like an iPad, Android or tablet PC, field employees can access corporate systems throughout the day to get the information needed to build their projects in real-time. A cloud environment enables field employees to be more efficient by allowing them to access and input data from their tablets, eliminating overtime expenses and nonessential administrative staff.
3. Add nonfinancial employee incentives.
Telecommuting is one of the top nonfinancial benefits desired by employees entering the workforce, yet only a small percentage of employers provide this capability. With telecommuting, companies can add employees without adding additional office space. By giving employees the option to work from home (even up to 50 percent of the time), employers can significantly reduce operational costs, such as office space, office goods and electricity, while giving employees the opportunity and independence to be productive on their terms. Company data can be moved to the cloud to allow telecommuting.
4. Monitor resource consumption.
Construction companies have several expenses, but heavy equipment purchases are one of the most costly investments. Companies need to protect their investments and keep equipment properly maintained to avoid malfunctions and costly downtime.
New technologies can help companies monitor and track equipment performance including maintenance schedules, fuel consumption, engine performance and idle and production time. By automating equipment maintenance management, companies can re-allocate administrative personnel, reduce overhead and closely monitor equipment to address potential equipment failures before they result in lost production and higher repair costs.
5. Improve workflow processes.
Improved content management and workflow technology can provide operational efficiencies. For example, document imaging is a common practice in most construction companies, but the true benefit of this system often goes unrealized. When most people think of workflow in document imaging, they think of routing AP invoices from the office to the field for approval. However, document imaging integrated with a solid workflow system can deliver greater efficiencies—including managing processes according to an employee’s role in the company, handling exceptions and reporting on a document’s status within the workflow to show progress.
Technology has progressed at an incredible pace, producing many ways to lessen the burden of the recession. Technological advancements can help construction companies streamline operations, automate processes and trim any excess to keep their businesses operating lean and efficient in downtimes and with greater profit margins in better times.
Construction Business Owner, October 2011
