Construction Management Opportunity to Improve ROI
Construction management firms face many challenges: resource management, procurement, payments, outdated or lack of digital tools, etc. To withstand the risk, construction firms must find ways to gain efficiencies and maximize their resources. We discuss how Automating Business Processes will increase efficiency and help in cross-functional collaboration and how your employees, contractors, and sub-contractors communicate.
Construction Management Challenges for 2023
In 2023, construction management firms face many challenges: resource management, procurement, payments, outdated or lack of digital tools, etc. To withstand the risk, construction firms must find ways to gain efficiencies and maximize their resources because, despite the challenges, the construction industry is one of the most significant contributors to the world’s GDP, adding a weighty 0.73 percent globally.
Another factor noted by Dr. Algan Tezel, a lecturer in Construction Management, Civil Engineering, and Lean Construction, is that 80% of the construction industry comprises small and medium-sized enterprises or businesses (SMEs or SMBs), often working as sub-contractors for larger firms.
A McKinsey study shows that 98% of construction projects are over budget, 77% are delayed, and efficiency rates consistently hover around 30%. The enormous amount of wasted time, money, and labor substantially negatively impacts the construction industry.
When working on construction projects, it is essential to manage efficiently. However, there are several inefficiencies and challenges that every project manager often encounters.
10 Most Common Inefficiencies in Construction Projects
1. Budget Constraints
The budget is estimated based on stakeholder expectations. Project managers are responsible for setting reasonable expectations for cost overruns and making reconciliations to alleviate them. A miscalculation or inadequate oversight could lead to project ruin. There are budget factors that the project manager cannot control, such as environmental conditions, scarcity of resources and workforce, etc. Therefore, the budget must be constantly monitored.
2. Time Management
Time constraints are the most significant problem resulting in defective designs, less revenue, and high accident rates. Project managers must identify the variables that cause delays and design workflows to meet deadlines.
3. Safety Issues
Workers need to be trained in safety, as accidents can be prevented by strictly applying safe work practices.
4. Lack of Well-Defined Objectives
When goals are not clearly defined, resources, time and money are wasted. Project managers must maintain good communication with the client to avoid unnecessary delays and help them develop and agree on these objectives. Sometimes stakeholders need a clear idea of what they disagree with or want.
5. Inadequate Risk Management
Project managers must have the right skills to identify potential problems and know how to solve or eliminate them. The project needs proper risk management to avoid delays or going over budget.
6. Inefficient Communication
Lack of communication means that essential work is lost, and the team is unaware of problems until it is too late to rectify them. Project managers should give clear guidelines and establish a scale that informs the team of progress and obstacles at the end of each day. These straightforward guidelines will allow problems to be identified early and rectified in time.
7. Unrealistic Expectations
Sometimes stakeholders make unreasonable requests, such as speeding up projects or limiting the budget. These requests have a very negative influence on productivity. Therefore, project managers must respond to them after getting feedback from their team.
8. Limited Skills in Personnel
According to Home Builders Institute’s Report, a total of 2.2. million new hires in construction are needed to meet demand through 2024. The industry faces two significant personal shortages regarding qualified workers, an aging workforce and a lack of skilled workers. A lack of skills in construction teams can cause delays. The project manager must be aware of these shortcomings before they affect the project and try to remedy them as soon as possible.
9. Lack of Structure
Performance management is a crucial issue. There must be clear objectives and job responsibilities. Therefore, everyone needs to have well-defined tasks to stay focused, and by breaking significant objectives into smaller, daily goals for each person, everything can be kept on track.
10. Cash flow bottlenecks
National Subcontractor Market Report highlights that slow payments contribute to 45% of their wasted resources, 41% reduced profit, and their failure to meet payroll 18% of the time. Late payments hurt the company’s cash flow and cause delays. 52% of subcontractors and 40% of material suppliers cite general contractor mismanagement as the source of payment problems.
To overcome these inefficiencies and to accommodate the growth expected within the construction industry through 2024, Deloitte notes in its “The Future of Construction” report that the industry will likely integrate more digital technologies into workstreams to boost production and efficiency.
What is Workflow Automation, and Why is it Used?
Workflow automation refers to the design, execution, and automation of processes based on workflow rules in which human tasks, data, or files are routed between people or systems in the fusion of predefined business rules.
Typical project inefficiencies will see significant improvements through automating workflows in these critical areas:
- Job Satisfaction
A project management software tool is the solution to workflow automation and will help keep projects organized, streamline construction processes, and eliminate the inefficiencies discussed above.
Workflow automation will allow workers to focus on managing their construction projects. The software takes care of many time-consuming tasks, such as invoicing, documentation management, incident reports, spreadsheets, communication between team members, etc.
How can Inefficiency be Reduced in Construction with Project Management Software?
How will a software solution help your organization’s bottom line and eliminate waste and inefficiencies?
What are the benefits of using automation solutions to manage workflows?
Configuring and implementing a workflow solution takes time, effort, and money. So knowing what waste and inefficiencies you are improving upon is essential. Some key benefits include the following:
Improve Internal Communication
It is essential to maintain effective communication among workers to maintain operational efficiency. Good communication minimizes possible delays and losses. Using project management software, the project manager can communicate important information to workers, such as task start times, task flows, or changes that need to be made instantly on-site.
Use Building Information Modeling (BIM)
BIM is a growing trend in the construction industry. Thanks to BIM technology, project managers can create digital representations of buildings before any actual physical work begins.
These digital representations help contractors and subcontractors to visualize the structure and its most essential parts before it is built, making it possible to include the workflows required for construction.
Likewise, conflicts between the various parties involved in the project (architects, structural engineers, electrical and plumbing installation engineers, etc.) can be visualized, enabling continuous communication between them and constant modification so that the final model matches reality as closely as possible.
Record Productivity and Tracking
Project management software can help the project manager break down the overall project into smaller, more manageable phases to identify areas for improvement and monitor worker productivity.
In addition, tracking allows you to see a breakdown of how each worker manages their time, so you can see how to improve their productivity. With this information, changes to the project can be made more efficiently, thereby increasing productivity and efficiency.
Data Management Tools
Data management is essential for increasing efficiency in construction projects. Using project management software with a central database to collect site data helps project managers get a 360-degree view of what is happening at each stage of the project lifecycle and minimizes the likelihood of errors and delays.
Improve the Planning Process
Far too often, the planning phase of a construction project is overlooked. It is, however, one of the critical factors in successful construction projects. When done accurately and carefully, project planning will help navigate unforeseen delays. Planning can also contribute to avoiding additional costs along the way.
By using construction software in the planning process, all necessary information can be accessed centrally and allow project participants to be kept updated on any changes.
Adopting On-Site Mobile Technology
In recent years, on-site mobile technology has been a growing trend in the construction industry. Using mobile technology, workers and project managers can communicate and share real-time updates on what is happening on site. It also reduces face-to-face contact, gives workers more time to complete their tasks, and increases efficiency in construction processes.
Improving Your Company’s Bottom Line and Gaining a Positive ROI
The bottom line is why you make any strategic business decision. A business’s improvement activities always need to be justified, and executives always want to see a positive ROI (Return on Investment).
Because the return from implementing different planning activities can negatively affect your bottom line, some tough questions always follow and is asked by the executive branch within an organization.
Many construction management companies have been slow to adopt business process automation because adopting a new way of doing things takes planning, work, and training, which translates to a loss in billable hours and a real fear of making a negative investment for the company.
However, the time may have come for management to consider these investments in digital solutions to offset rising costs and eliminate waste and inefficiencies within the supply chain, resource management, payments, and procurement to improve a business’s bottom line.
With new mobile and cloud-centric technology solutions, project managers can access a fully integrated system across all platforms for a comprehensive project management solution.
These software systems help eliminate time-consuming tasks such as invoicing, paperwork, bid management, and time sheets. Project management software helps the project manager improve efficiency and productivity by allowing contractors to self-complete those tedious tasks.
Automating Business Processes will positively increase efficiency and help in cross-functional collaboration and how your employees, contractors, and sub-contractors communicate. Providing a central place also to find documentation associated with the correct project phase and other vital information to check on project phase completion or how much is left to complete.
Eliminating these common risk factors that cause waste and inefficiency that negatively impact a company’s bottom line is the wisest investment your construction management company can make now. Rethinking how you do business and automating business processes is developing a new organizational mindset in cost reduction that, in turn, will make your business “recession-proof.”
Ready to Change the Way You Do Business?
An easy and simple workflow automation solution for an Agile environment is ClickUp, which is why we chose this PPM tool partner. The system is designed to replace & reduce the need for multiple productivity apps that might currently be used to run your business. The idea is to have one place for all your work and instantly bring your team together.
ClickUp has interviewed several of its customers to find out how they are using ClickUp to automate their business processes to improve their productivity and profitability. These case study stories highlight how adopting workflow automation helped these businesses embrace a cost-reduction mindset and eliminate high overhead costs and improve productivity by finding the inefficiency in the process that could be automated and save their company wasted man hours.
Contact Kolme Group today to discuss how we can help you rethink how you do business with a Business Process Automation Solution that can meet your agile Construction Management business needs.