Although the construction industry has largely bounced back from the darkest days of the pandemic, there remains significant challenges for everyone. For specialty contractors, issues surrounding materials and labor shortages still loom large.
Rather than surrendering to these challenges, specialty contractors are turning to construction technology to confront them head on, ensuring maximum efficiency, boosting productivity, and improving outcomes.
“We don’t have to be resigned to the lack of resources. We are not victims of this situation,” said Procore’s Industry Product Manager Nate Tockerman, in a recent Procore webinar.
The webinar entitled, Tips for Trades: How to Stay Profitable Despite Labor and Material Shortages, featured construction technology leaders who have been instrumental in developing solutions for the trades. The experts discussed how to lessen the impact of the labor shortage, mitigate risk through data, and how to remain profitable during difficult market conditions.
Here are some key takeaways from the on-demand webinar:
Increasing Technology Investment to Minimize Project Risk
One of the biggest challenges contractors face today is staffing shortages. According to the U.S. Chamber of Commerce’s Commercial Construction Index, a whopping 92% of contractors are having difficulty finding skilled workers for projects, and 42% of contractors have turned down proposed projects due to insufficient staffing.
The lack of skilled labor increases project risk because it requires contractors to do more with less. Furthermore, it reduces the margin of error since any mistakes or rework can instantly start eating into profits. As more and more contractors recognize this, they’re increasing their technology investment and bringing on partners to help digitize and streamline their operations to minimize these risks.
Ben Schultz is founder and CEO of LaborChart, which helps companies better manage and utilize human assets in construction. Schultz explained that the best way for a contractor to approach risk is to start by determining what they can actually control and learn how to avoid self-inflicted risk. That begins with what he calls the “People-Process-Technology” framework.
“If you can use that technology piece to support your people, support your processes, to improve what you control, that’s a great place to start,” Schultz said.
Risk can also be managed in the field when it comes to labor by simply providing workers with the tools they need to do their jobs. In the context of our modern era, however, the word tools takes on a different meaning.
“It’s a new age, technology is a tool. If you can get the right information to the right people in the field, you’re going to reduce those issues around rework and safety concerns,” said Will Lehrman, Procore’s Head of Product for Specialty Contractors.
Historically, field teams haven’t been equipped with the capabilities needed to capture data generated out in the field, or even share information in a consumable way. Doing so empowers them to do their jobs more accurately and effectively.
Digital Processes are Essential in Overcoming Delays
Supply chain issues is another major challenge currently plaguing contractors, 93% of whom have reported problems with at least one material shortage. At the same time, prices are through the roof. According to the Bureau of Labor Statistics, construction materials’ prices increased by 12.2% in 2021, nearly triple the increase seen in 2020.
Delays in materials delivery have also become a serious problem. Some 60% of manufacturing and construction companies experienced supplier delays last year. Lead times went up 100% overall between 2020 and 2022.
Digitizing the procurement process has become essential to overcome these delays and shortfalls, not to mention keeping track of what you ordered and how much it cost. Material orders are traditionally a jumble of emails, text messages, and phone calls, usually tracked manually by spreadsheet. This might give contractors a general sense of what they spent for certain materials on one specific project, but recording information in this way offers no historic data or actionable insights once the project is over.
By recording all materials requests, purchase orders, and invoices on a connected digital platform, contractors can seamlessly get access to this key project data in real-time, helping them better understand the state of their budget throughout the course of the project. This also gives them historic data to compare against future jobs so they can improve with each subsequent project.
“Without digital processes on the procurement side, you don’t have this ability,” says Or Lakritz, co-founder of StructShare, a purchasing and materials management app for specialty contractors and general contractors.
Data Reduces Risk and Boosts Profits
One of the most effective technological solutions that specialty contractors depend on to help navigate risk is data. Every company generates huge amounts of data with every project they do, but many treat it as a byproduct instead of a treasure trove of valuable insights.
Moreover, these insights also help companies track and understand their materials inventory from the warehouse to the job site and every movement they make in between. Failing to do this could set off a chain of delays, wasted labor, and reputational harm. The key to successfully collecting and managing data is digitization, and thoughtfully centralizing it in such a way that it’s ready to be used when it’s needed.
“Effectively structuring and managing the data can mitigate risk, increase profits, and accelerate the growth of your company,” Lakritz said.
Contractors can also leverage data and technology to mitigate their risk on the labor side. When people come together on a construction site, your company is suddenly subject to a spider web of people outside of your direct control. Solutions like Levelset provide contractors with detailed, data-driven insights about everyone on their job site, complete with scores and histories so you can see how they’ve performed on other jobs.
“You can understand who’s there, and what their risk profile looks like,” said Scott Wolfe, founder and chief executive officer of Levelset.
Eliminate outdated processes with a unified platform
Procore’s mission is to support its customers as they break down silos, connect teams, stakeholders, and data, and eliminate outdated processes. Procore does this by bringing together the construction industry’s best solutions and connecting them on a unified platform that helps them gain a better handle on the multitude of complexities and risks inherent to the profession.
Specialty contractors of all sizes are discovering how this platform-based approach to their technology stacks better positions them to mitigate risk not just around labor and procurement, but every aspect of every project they tackle.