To ensure issues in the field don’t spiral out of control you need to identify and resolve them as early as possible before they jeopardize profitability. Unfortunately, how quickly specialty contractors can discover these margin-killing problems is often hung up by outdated, disorganized, or otherwise unreliable data.
Bad data can significantly impact a specialty contractor’s bottom line. For a contractor performing $1 billion in total revenue, bad data could be costing them as much as $165 million. This figure includes $7.1 million in avoidable rework, which can represent as much as 4% to 6% of a project’s total cost, according to some estimates.
The cost of bad data can throw projects off course, and it can eventually impact a contractor’s cash flow. According to a recent Construction Cash Flow & Payment Report from Levelset, this creates all kinds of new problems, including reduced profits, project delays, and companies needing to borrow more money.
Contractors work on thin margins under the best of circumstances. However, their profits can be better protected by planning, using actionable, real-time, data-driven insights and being able to make adjustments as soon as they realize their plan isn’t achieving the desired result.
Let’s take a closer look at some of specialty contractors’ biggest pain points around bad data and what steps can be taken to resolve them.
Current Pain Points for Specialty Contractors
Specialty contractors routinely miss financial projections because of internal systems, processes, and technology that are outdated, broken, or inefficient. By improving the ineffective or unused processes of their data, contractors have greater visibility into how projects are progressing. This allows them to check in on progress and measure incrementally whether or not they’re on track for success.
To ensure their companies’ financial health is in a good state, contractors need access to data that is complete, trustworthy, and accessible in real-time. Gathering information manually consumes time and resources, and it can be difficult to ensure its accuracy. Incomplete or improper documentation leads to inconsistencies, doubt, and omitted information in project reports, financial forecasts, and labor projections.
Another major obstacle affecting contractors’ profitability is a lack of standardization. With construction projects growing increasingly complex, inconsistencies can lead to profits sneaking right out the door before anybody notices. A lack of standardization can also expose a company to unnecessary project risk when internal teams cannot clearly communicate critical information, whether they’re in the office or the field.
Unfortunately, just endeavoring to be profitable isn’t the way to be profitable. You have to connect those processes to the profits.
Construction Software Built to Handle Specialty Contractors’ Unique Needs
Thin margins and complex projects mean profits can quickly evaporate. Specialty contractors need to safeguard against mistakes that expose their businesses to risks that can hurt performance. Construction project management software is purpose-built to handle the industry’s unique needs and is essential for maintaining standardized and repeatable best practices.
Achieving greater project visibility depends on company-wide access to easy, quick, and accurate real-time data. Project management software organizes budgets and contract documents to align teams in a way that makes sense to them, using language they’ll understand.
Contractors need accurate, up-to-date financial data all in one place, available right at the fingertips of the people and teams that need access to it. A construction-specific solution allows stakeholders to view this data in a way that makes sense to them while still being able to connect to ERP solutions for the accounting team.
Construction software supporting procurement must be specific to how contractors buy and bill for material. The most effective solutions will provide greater insight into the status of the complete materials lifecycle, including costs, POs, submittals, approvals, tracking, deliveries, inventory, and more.
Single Source of Truth
Lastly, specialty contractors require a single source of truth where people and teams can input, collect, and share information. It’s critical to establish the flow of information using communication best practices to ensure entitlements on changes, efficient audits, and where and from whom to get direction to proceed. In an industry as dependent on drawings as construction, having a software solution specifically made to manage them is key and goes a long way to keep everyone on the same page.
Specialty contractors looking to grow margins in this competitive market must focus on implementing standard processes and procedures that ensure financial goals are being met and exceeded. Only construction-specific software will cover all of those needs in a way that is easily adaptable for your teams.
To learn even more about how specialty contractors can sniff out and eliminate sources of lost profit, download this free ebook: Uncover the Hidden Costs of Project Silos: Real-Time Accounting to Keep Your Projects in the Black.