How can you improve construction project margins for your business?
We live in a time where low margins are commonplace. Single digit margins are all too frequently used to base tenders on, leaving contractors with the critical need to ensure projects are delivered efficiently to ensure a profit is made.
It goes without saying: technology is revolutionising the construction industry.
It can deliver efficiencies across construction businesses, connecting what happens onsite with the back office to provide real-time visibility, which helps contractors deliver projects more profitably.
With this in mind, how can technology improve project margins? By having clearer visibility on the purchasing of materials and plant, how does it minimise or eliminate any possible overspends to improve margins and financial stability? This article offers answers to these questions.
Reducing dependency on spreadsheets
Although manual spreadsheets lie at the core of every company’s day-to-day operation, the laborious rekeying of potentially inaccurate data is an onerous task requiring essential streamlining.
But, with many companies continuing to rely on these manual processes to complete tasks, which solutions can be adopted to quicken them?
Potential answers to making the current manual system more viable include digital solutions that ensures your contract managers and quantity surveyors can enter all project data into a single online interface.
Fully compatible with the existing accounting systems of most companies, these kinds of solutions save their accounts team time and money, and of course the reliance on multiple manual spreadsheets.
Moreover, the platforms provide businesses with the information they need to see a project’s real-time performance by connecting up what happens onsite with the back office.
By adopting digital solutions that house up-to-date data securely, businesses can make any necessary changes to increase stability and reduce the chances of overspending.
Make real-time decisions
This leads to the next point: being able to make and execute decisions at any time during a project. Introducing technology that gives contractors the power to make decisions where it matters most is extremely important.
For instance, to assure transparency for all parties involved, there are digital solutions on the market that report whether a contract is set to go over budget.
They can also see whether any variations will impact the contract and whether the responsibility to resolve it lies with the contractor or client.
Overall, with the vital assistance of these systems, contractors have reliable, verified evidence that they can return to the client should costs require renegotiation.
Moreover, there is technology that can allow contractors to track the real-time performance of their projects.
With conventional manual systems, contractors simply won’t know if they are set to make a profit until completion. To add to this, manual spreadsheets make it challenging for contractors to reconcile invoices with the correct job.
However, by adopting digital solutions, contractors can produce work in progress reports at any time, enabling full accessibility of profit margins.
Hiring or purchasing plant?
Another key decision for contractors is whether to hire plant or purchase it.
To do this, contractors have to compare how much the equipment will be used versus the cost of purchasing the plant as an asset. However, in some cases, if a contractor hires a plant item and it is not needed, it is left to gather dust onsite.
And this is a huge burden on a project’s cost and profitability.
With the use of technology, plant hire can be predicted to see whether it is truly needed. Crucially, the technology informs contractors when plant hire is redundant, so they can return the item and save money.
An age-old problem in construction is not having sufficient visibility of the materials that turn up on site compared to what has been ordered. However, using mobile technology ensures onsite teams can capture contracted details and order quantities.
This can be fed back into the office to be compared with the original order and invoice to ensure consistency.
Not only do innovative technologies provide clearer images of a project’s real-time performance, they reduce costs and dependency on manual spreadsheets.
At a time where low margins are commonplace, digital solutions control and limit over-expenditure, guaranteeing financial stability for businesses across the construction spectrum.