In the construction industry, most companies are still reluctant to invest in technology to aid in the construction process. In a 2014 IT Key Metrics benchmarking survey performed by Gartner Benchmark Analytics, “the construction materials and resources industry group had the lowest percentage of corporate revenue spent on IT, 1%, of all of the 19 industry groups surveyed.”
The use of technology provides a good opportunity for construction companies that want to gain a leg-up on their competition by becoming safer, more efficient and more effective in the execution of their work. With the efficiencies gained, this could potentially lead to margin expansion on contracts and an increased job capacity over time.
For construction companies, margin expansion is either dictated by an increase in revenue on a job, a reduction in cost on the job or both. From a revenue perspective, the economic environment of the marketplace and the individual needs of the owners for whom the work is performed drive the amount of revenue earned on a contract.
Networking, reputation and key contacts in a market lead to additional work. For contractors willing to invest in technology, a reputational competitive advantage may be obtained in the marketplace that often will lead to better and more frequent opportunities.
However, once a company obtains a signed contract/change order, the key to success (assuming an appropriate initial bid) is a company’s ability to manage its costs appropriately through good execution, as the revenues are essentially fixed based on the terms of the contract.
Costs on construction jobs can essentially be broken into four categories:
Technology advancements can assist with staff time, material/equipment/subcontractors and overhead, but the biggest area of focus with the use of technology should be in avoiding preventable mistakes.
Preventable mistakes consist of building things to the wrong specifications requiring re-work and leading to additional staff time, material/equipment costs and employee injuries that result in workers’ compensation claims and a hit to a company’s safety record, which can affect a company’s ability to bid and obtain future work.
Preventable mistakes pose the biggest threat to a contractor’s bottom line. When a particular job becomes unprofitable, preventable mistakes are often the reason for poor performance.
The following are some cost-saving and efficiency ideas and other ways a reasonable technology spend can be used to help companies.
Accounting software for contractors continues to improve by providing greater access to underlying data and providing more user-friendly reports.
Management teams can analyze the performance of jobs/business in a much more timely and efficient manner than ever before. Data analytics are expected to advance toward real-time information as accounting software continues to improve.
Jobsite layout can have a significant impact on labor productivity. Things as simple as the placement of the master toolbox, workstations and restrooms can have a significant impact on labor costs over time.
Try to place these items in a relatively close, central location where employees do not have to walk significant distances each time they venture from their work area for the day. This could reduce downtime and result in jobs being completed more timely.
Prefabrication allows for certain building elements to be constructed off-site that would normally not be completed until later in the project schedule.
The prefabricated elements are then installed on-site as larger components during the time that they typically would be constructed on-site with traditional construction methods. As a result of prefabricating the elements offsite, the timeline for completion is moved up, reducing the risk of missing target deadlines and incurring additional labor costs.
Based on a study performed by Mortensen, “For every dollar spent on prefab, approximately 13% of the investment is expected to be returned as a quantifiable benefit to the project.”
GPS tracking can provide real-time equipment location, state of equipment operation and engine diagnostics. This allows management teams to effectively and efficiently monitor the construction equipment, maximize use and reduce the risk of theft.
Many construction companies are using technology for their crews to clock in/out, which has helped in tracking labor expense to appropriate jobs.
Several tool manufacturers offer smart tools that allow contractors to track the location and even lock or disable the use of the tool remotely once it is outside of the assigned job location.
This can all be done with the tool manufacturer’s smartphone application. The use of this technology could significantly reduce equipment costs due to lost or stolen tools. It would also deter jobsite employees from borrowing tools for personal use and decrease in the remaining useful life of the tools due to extended unauthorized use.
There are now quality control tools that can compare a project as-built (in real time) against the design model. If there are deviations in the specifications or alignment, the tool can catch these mistakes early in the process to avoid significant rework. Geometric deviations early on in a project can be compounded later and lead to significant cost overruns.
BIM connects AEC professionals so they can effectively and efficiently design, build, and operate buildings and infrastructure. Project owners have found that the use of BIM has led to greater cost predictability, improved completion schedules and fewer errors that require rework.
Virtual reality (VR) and augmented reality (AR) can be used in conjunction with BIM. The main benefit of VR, is to provide virtual walkthroughs to clients or targets to showcase their plans and get input before construction begins.
While VR is common in the design phase, AR is common in the construction phase. The main benefit of AR is to overlap design details to already existing features to see how the next phase of the construction plan fits with what has already been constructed to date.
By using drones, construction companies can get the job done faster than with traditional methods, which reduces the amount of time in the field and the number of labor hours incurred.
As a shortage of skilled labor continues in the construction industry, robots may become more common, albeit current use is fairly limited.
In the not too distant future, robotics could help fill the skilled labor gap and allow projects to be completed in a faster and safer manner, all while reducing job costs over time.
Construction management teams should consider the proper application of technology and data analytics and weigh the cost of implementing the new initiatives versus the overall benefit.
Some of the ideas may provide more savings than others to various contractors. However, management teams need to be considering these items to stay ahead of their competition and try to improve their bottom line.
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