The COVID-19 pandemic, and resulting shutdown of global commerce, has shown just how fragile a state “business as usual” really is. In a matter of weeks, construction sites around the world became all but deserted as stay-at-home orders and social distancing measures went into effect. But the pandemic itself isn’t the only threat the industry faces.
With net profit margins for most construction projects under 5%, there is little room for error, and virtually no buffer from unpredictable disruptive forces. Increased competition, fluctuations in materials costs, and global trade uncertainties all weigh heavily on contractors’ minds. To hedge against these and other business threats, construction companies should look to technological solutions to shore up profitability and remain competitive in the face of such challenges.
Upskilling the Construction Workforce
Training your workers in new methods and technologies is a way to avoid disruption and increase their value to the company. Enhancing their knowledge and familiarity with technology when work is at a standstill can help ensure your workers return to the job with a fresh set of skills and a mindset more open to changes.
By increasing your workers’ comfort level and understanding with these new tools, your workforce will be more ready to adapt to time-and-money-saving technology implementations that might have otherwise rolled out more slowly or not at all. This can include everything from new software programs to digital collaboration tools and will better prepare your company for the next big technological disruption.
Exploring Opportunities for Differentiated Revenue Streams
Firms can look beyond the day-to-day project labor and examine their troves of data for monetization opportunities to upsell clients on maintenance or service contracts.
In order to mine data for added profits, however, companies need an effective system for gathering and analyzing that data. This can take many forms: collection through digital sensors, networked job site cameras, or even drones. Once the data is gathered, data analytics software can turn mountains of unsorted data into actionable insights, providing revenue-generating opportunities that might have otherwise gone unrealized.
Every construction firm has data, but for many, it remains an untapped source of profit potential. By implementing a system of gathering and analyzing that data, companies can approach projects more holistically. It will allow them to enhance the service on offer while also improving their own internal operations. This not only could drive more business but also opens up new potential income streams.
Benefits of Off-Site Construction
Off-site fabrication has seen an uptick in adoption by many residential and commercial construction companies in recent years, partially due to the shrinking global construction labor force. Completing some of the work off-site with an efficient manufacturing process requires fewer workers, freeing them to be reassigned to other revenue-generating activities.
COVID-19 may have been a black swan event, but it demonstrates the fundamental vulnerability of the industry as a whole.
By bringing certain aspects of construction work off-site, firms are also able to repeat processes more easily and ensure better quality control. This can shrink project timetables, reduce the chance of errors, and increase profitability and efficiency. Off-site fabrication work can even continue regardless of the weather.
Another crucial benefit to off-site fabrication is improving companies’ ability to predict and control certain project aspects that tend to fluctuate, namely scheduling and costs. If a company knows how much time and money is required to manufacture a building component off-site, they’re better able to budget and account for workers’ time.
Even after the pandemic crisis subsides, construction will find the same familiar challenges awaiting once the work resumes. COVID-19 may have been a black swan event, but it demonstrates the fundamental vulnerability of the industry as a whole.
Investing in technological solutions and teaching workers new skills might not stop another shutdown of this magnitude. Still, it will go a long way to buttress operations against the many other business challenges construction firms will continue to face down the road.