Profitability and efficiency go hand in hand in construction, but it’s next to impossible to be operating on all cylinders if your teams aren’t on the same page. Overly siloed teams are prone to miscommunication, leading to people doing things incorrectly. This can have a devastating impact on a project’s profitability and schedule.
The estimated cost of bad data for a contractor who performs $1 billion in total revenue can be as high as $165 million. That includes $7.1 million in avoidable rework, the archenemy of any project’s bottom line. By some estimates, between 4% and 6% of total project cost across construction is the result of rework.
Bad data and poor communication are the primary culprits making it hard for specialty contractors to safeguard thin profit margins and ensure projects run smoothly.
You cannot be an efficiently run team if you’re siloed. It just doesn’t work. When you’re siloed, you’re inefficient, and when you’re inefficient, you’re bleeding money.
Current Pain Points for Specialty Contractors
Specialty contractor project teams are often fragmented and physically apart, spread out between different offices and job sites. The preconstruction and finance teams are usually at the office, while the PMs can be found driving around the jobsite or at the jobsite trailer. Field teams are, of course, scattered around at project sites. This presents something of a natural disadvantage when it comes to efficiency and makes connecting teams even more crucial to avoid siloing.
Without taking steps to ensure teams are on the same page, specialty contractors routinely face unnecessary project risk and profit loss due to internal systems, processes, and technologies that are outdated, broken, or inefficient. This often manifests as an over-reliance on offline, disconnected spreadsheets or time-consuming paperwork.
This means specialty contractors frequently find themselves buried in files, surrounded by poorly organized file cabinets, and chasing a never-ending paper trail of documents. This system makes it impossible to quickly locate historical financial documents or grant secure, team-wide access to the necessary information, creating an environment ripe for miscommunication. Accurately monitoring a project’s performance or keeping tabs on project health thus is harder than it needs to be.
Change is inevitable in any construction project. Today’s environment, however, means changes can be so rapid-fire that it becomes tough to manage. Worse still is a situation where a key change cannot be effectively communicated down the line before it’s too late. Changes can take many forms, from price escalations, drawings, changes in materials, or even shifts in the labor market, something the industry continues to struggle with.
These changes are especially tricky to navigate without taking a standardized approach to communication and data sharing.
Current Needs for Specialty Contractors
With construction projects growing increasingly complex, profits can evaporate quickly. Specialty contractors need protection against mistakes that can jeopardize their returns.
The all-important first step is connecting teams and data. This means ensuring finance has access to information from the project team and vice versa. Establishing a connected data environment and seamless communication between teams ensures everybody has accurate, and up-to-date information on key project details such as budget, schedule, and labor needs. This frees team members to focus on the task at hand without having to wonder whether they’re working from the most current project budget, drawings, and specifications.
Profitability and efficiency goals simply cannot be met if project teams are so disconnected they have no idea what their counterparts are doing. Ensuring peak efficiency and effective communication is particularly challenging when teams are scattered, so breaking down silos is especially important.
Without a centralized, standardized source of truth for project performance and financial health, specialty contractors will continue to have cost overruns and missed projections.