The cost of living crisis and interest rate volatility are taking their toll on the construction industry. Nowhere is this more evident than at the SME level.
In March 2023, construction insolvencies accounted for 18 percent of all failed businesses. It is the worst performing month the industry has faced since the financial crisis, according to data from the UK government’s Insolvency Service.
Material and labor costs also increase. Research by construction data specialist Barbour ABI found that inflation added £23 billion to the cost of construction last year. Small and medium-sized enterprises (SMEs) are the most vulnerable to change, usually because their position in the supply chain means they often have to wait a long time to get paid.
As the saying goes, cash is king, and construction is traditionally one of the worst sectors for delinquency. Research shows that two in three construction firms are waiting for invoices to be paid past their due date, with December 2022 representing a 13-year high for insolvencies in the sector.
Construction software can make all the difference
However, to operate effectively in this economic climate, SMEs need to be proactive and look for ways to deliver their services more effectively. Construction software can help, says James Chambers, director of global industry development for Nemetschek’s building and construction division.
“The use of construction-focused software has grown at a tremendous rate in recent years. While the pandemic was certainly a trigger for many, this investment has not slowed: forecasts predict that the industry will spend 80% more on software next year than in 2018.
“That’s because tools are available for all levels of the industry, and companies are realizing they can improve their margins and deliver better project outcomes.”
Transform construction companies
James adds that these tools can be transformative, but companies choose to implement them. “Whether SMEs start small, using software that addresses one problem at a time, or decide to completely overhaul the business from top to bottom, there are tools that can improve efficiency and deliver better processes,” he explains.
“Software can help manage cash flow, deliver better quality projects, and bring teams together in collaborative spaces. These tools are more affordable than even before and, I would argue, essential at the SMB level.”
Understand what you are doing
The most important step before investing in new software is to carefully assess your specific business needs, both at the operational and project level. Setting clear goals for what you want the tool to do and understanding the potential return on investment will help businesses properly assess the market and find the right software for them.
Common areas companies are looking to improve include saving time, improving connectivity between people and systems, reducing waste, and managing quality and risk.
Nor does it have to be a case of replacing existing technology, explains James: “Software can be used to replace an analog solution, of which there are still many under construction. By seeing how software can smooth these processes, you can massively improve your workflows.”
Cash management
James recommends that businesses start with tools that help manage cash flow.
“Identifying cash flow problems should be the number one priority for businesses,” he explains. “There are tools that can monitor the cash flow in and out of the business and automate some of these processes, freeing up time for business owners to focus on projects.
“Even simple things like dashboards can make a big difference and show you those potential problem areas, whether it’s a late payment, an unexpected increase in material costs or a drop in what’s available in the bank.”
Gather the team
One way to minimize errors and avoid costly work or delays is through effective communication between the project team and the client.
Software can help formalize processes such as capturing customer requirements and sharing them with the project team. Progress can then be checked against this information to ensure that the project is being delivered the right way.
This clarity makes it more likely that the right results will be achieved, ensures that the whole team knows what they are working on, and increases the chances that any risks and problems will be caught early.
For example, Studio in Bluebeam Revu lets you invite people into a session for a cloud-based collaboration session. A live activity feed tracks all comments and changes, and you can set different permissions for different groups of users, adding an extra level of control to projects.
With built-in features that include intuitive measurement tools, plugins that integrate with other software solutions, and filters that help you manage and search data effectively, it can dramatically improve projects. All of this can also happen in real-time, meaning teams can respond to changes with ease, whether on-site or in an office.
“If you’re just getting started with construction software, use tools that are fast and easy to adopt that deliver recognizable gains as soon as possible,” concludes James. “This will lay the foundations for new additions later on and help get people on board within the business.
“Ultimately, you’ll make their jobs easier and provide accurate, up-to-date information across the company.”
To help SMEs understand how to adopt construction software, Bluebeam has created an e-book which is available here. Topics include improving efficiency, reducing waste, managing cash and helping teams work effectively.
