Construction businesses are part of a steadily growing industry, offering significant earning potential if the management and operations are done right. In Australia alone, the construction industry generates $360 billion in annual revenue and is expected to grow by 2.4% over the next five years. However, because of the numerous variables involved in each construction project, businesses can sometimes risk missing out on bigger opportunities, instead choosing to grow their profit to keep pace with the wider construction industry. It leaves many construction companies thinking of ways to make their operations more competitive, efficient, and profitable.
Asking the right questions may help construction businesses address this dilemma. As every construction project necessitates its own capital, equipment, timelines, and personnel, any unforeseen circumstances could potentially mean delays, setbacks, accidents, or loss of revenue. By asking the right questions and scrutinising details even before the project commences, construction project managers can address and mitigate potential problems long before they happen. This article will cover the five critical questions construction companies must ask to boost their efficiency and profitability.
How do you implement effective construction project management?
The profitability of a construction project depends on how well the project is planned and managed overall. An estimated profit can easily turn into additional expenses, even for a single mistake. Unfortunately, many factors have the potential to go awry throughout the project life cycle, and one proven way of managing these uncertainties is by adopting more rigorous digital construction tools, reporting, and insights.
Project management software has revolutionised the way companies handle their construction projects. With tools such as Building Information Modeling (BIM), engineers and architects can create a 3D construction design model, enabling them to estimate costs, time, and labor requirements accurately. Through this software, every team member can visualize the end goal, make adjustments and improvements as required, and identify t possible risks the project may face before they happen.
Construction software also streamlines task management by facilitating team and subcontractor collaboration, construction reporting, progress reports, risk identification, and more. Essentially, these tools improve the quality of your project outcome through effective project management. To try out these benefits firsthand, you can start PlanRadar’s 30-day free trial by registering here.
Five essential questions to ask to increase construction project efficiency and profitability
Once you have the right construction project management software tools, processes, and systems in place, you can then focus on the core business factors driving your efficiency and profitability.
1. How do we improve team communication and collaboration for better work outcomes?
Construction is a complex business involving various stages with different teams and stakeholders involved. This complexity and diversity among its workforce require effective communication not just to send messages across, but also to make your onsite construction operations more efficient. Lack of proper communication could lead to redundant costs and labor at the very least or a major rework at the worst. What started as a minor miscommunication could later result in irreparable damage.
This leads you to the question of how to improve your team communication and collaboration, especially for major projects. Holding regular meetings may work, but calling all the stakeholders for every discussion is impractical. Instead, the better way to improve collaboration is by making all the reports, plans, and insights available to every stakeholder involved. You can do this by utilising project management tools that offer collaboration tools, thereby saving everyone the time that can otherwise be used for other project activities.
Real-time communication is also crucial in the construction industry. There are instances where immediate actions are needed, and passing the information along the chain of command is not effective. To eliminate this challenge, you may want to adopt construction management software where team members – from project managers to onsite workers – can send updates and reports to the team. By removing the barrier in communication, you promote an open onsite culture that encourages every member to speak, ask questions, and report issues that they perceive to be a threat to the project. Open communication results in a more synchronous activities, avoiding redundant work and increasing productivity and profitability. .
2. How do we estimate the project’s budget and time requirements accurately?
Overbudget and project overrun are common scenarios in the construction industry. In fact, McKinsey & Company found that megaprojects tend to exceed their schedules by 20% and their budget by up to 80%.
By asking this deal-breaker question, you open the floor for an in-depth discussion with the project managers, contractors, subcontractors, and on-site employees. You can collect insights developed from the team’s valuable experience and use them to predict future scenarios. You can also use project management tools to digitise this process, thereby making the estimates more objective and accurate. Interestingly, the same report by McKinsey pointed to paper-based processes as the main culprit for project overbudget and overrun.
3. How do we eliminate construction site inefficiencies and boost project productivity?
This question requires a thorough reflection to identify which processes must be improved and how you can implement those improvements. Start by naming the common causes of problems and delays, and then determine if there are bigger root problems calling for attention.
Using technology for construction task management is another proven way to eliminate inefficiencies and boost project productivity. With tools such as progress trackers, digital checklists, and construction site diaries, any delays and potential problems can be addressed immediately before they escalate and cause further issues. Digitalisation will also strengthen collaboration and communication across teams.
4. How do we minimise material wastage and avoid unnecessary costs?
With the increasing costs of raw materials, construction companies must tighten up their belts, and one way to reduce their costs is by minimising their waste. Construction businesses often shoulder unnecessary expenses for raw materials that are left unused, broken, or discarded due to inefficiencies in the operations. They also incur additional charges for handling, delivery, and disposal of these wastes. Material wastage is a result of over-ordering, poor handling of materials, and subpar project output that needs to be redone. Thus, these aspects must be carefully planned and handled.
Discussing material wastage with your team informs them of the importance of high-quality work and careful use and estimates of the raw materials. In return, the company should invest in employee training to ensure they have up-to-date construction skills and knowledge. To minimise wastage due to mistakes in purchase orders, you can automate the order process for accurate quantity, cost, and schedule estimates and properly monitor order movements from the supplier to the construction site.
5. How do we keep our safety standards at the highest level?
Construction sites are prone to accidents, and any unforeseen event can cause significant damage to your project. Observing the highest safety standards can reduce the likelihood of injuries, damages, delays, and unnecessary costs. A safe working environment also boosts employee confidence, encouraging them to work harder and better and, as a result, improve their overall work performance.
But a high safety standard is not achieved overnight. Instead, it requires careful and collaborative planning to account for potential risks and prioritise them depending on their urgency and potential impact. You can start by devising or updating your project’s construction safety plan to outline the safety protocols and procedures and list of contact persons in case the unwanted happens. This safety plan would stand as your team’s guidelines when dealing with accidents and injuries, though flexibility in times of emergency should also be fostered. You can use this customisable safety plan as your template.
Another way to improve your onsite safety is by installing and using technology when applicable. For example, you can use drones to assess risks even when not in the construction site. Your team would also benefit from virtual or augmented risk management training. By installing smart devices, you can monitor the operations anywhere, receive updates about your equipment, and be notified immediately when an emergency happens. Finally, a health and safety platform allows you to deliver safety reminders, conduct safety assessments, identify recurring risks, and receive and save reports for audit.
Productivity and efficiency are key determinants of a construction project’s profitability. By asking the right questions, you open the floor for discussion to improve your current operations and processes. You can identify which areas require the most attention and what changes can be applied to achieve better outcomes. Altogether, this reduces your construction project costs, minimises risks, and ultimately increases your take-home profit.
PlanRadar can help you address your construction company’s biggest areas of concern. Our end to end site management software allows you to save and generate real-life data for more effective and objective planning and decision-making. It automates the most time-consuming and error-prone processes so you can focus on your construction project with more confidence and fewer worries. To learn more about the features of our software, you can register for our 30-day free trial here or contact us today.