According to Statista, the construction industry should reach $1.4 trillion by 2021. This statistic is evidence that the construction workforce is growing, and the industry is flourishing. However, regardless of this positive outlook, the sector is struggling to reduce inefficiencies and improve profits. As a construction manager, you’re responsible for budgeting, coordinating, planning, and supervising construction projects from start to finish. In the construction industry, managers can cover a variety of projects, including the building of public, residential, commercial, and industrial structures. Construction strategies set managers up for success.
In this guide, you’ll learn of the following construction strategies that help reduce inefficiencies and improve profits:
— Implementing project management software
— Articulating a clear set of values and targets
— Basing construction plans around data
— Including training programs in operations
— Determining appropriate KPIs
— Regulating profitability and track costs
1. Implement Project Management Software
Without going digital, it’s challenging to manage a construction project successfully. Now construction management operations are automated and, thus, leading to a more collaborative and continuous workflow in regards to communication and data. Project management software allows employees to track their work and reduce inefficiencies on day-to-day tasks. For example, documenting with project management software enables you to find documents easier and not waste time sorting through multiple locations. Ultimately, project management software holds documents (Submittals, RFIs, Change Orders, or Daily Reports) in a centralized location. Having project management software is one of the most critical construction strategies for successful project management.
2. Articulate a Clear Set of Values and Targets
First and foremost, if you don’t have a target, you won’t have a result. In the early steps of the construction process, meet with your team, and lay down the project’s deadlines, targets, and goals. It is vital that all parties of the project (PM, GM, and Fieldworkers), are on the same page to avoid problems in completion time and for quality assurance purposes. If you don’t start with a definite plan with specific values and targets, there will be mistakes. Creating progress reports will help team members know what they’ve achieved so far and what to shoot for, nonetheless reducing inefficiencies on the job site.
Some examples of efficient operation goals are:
Breaking down communication barriers: Daily reports help improve the time it takes to document, communicate, and resolve issues.
Promoting safe behaviors: Setting goals around safety behaviors, such as X% of PPE compliance or workers make modifications to correct safety problems within X days, encourages healthy workers who are ready to move projects forward.
Improving labor productivity: Tracking time towards job costing allows construction companies to use historical information on actual costs against estimates to offer more accuracy in estimating.
Ensuring client satisfaction: The comments provided by customers will determine the steps you need to take to improve those scores. Thus, shedding insight for improved delivery of future projects.
Though it may sound simple, many estimators and engineers have a difficult time estimating benchmarks. Without estimating benchmarks, it becomes merely impossible to develop accurate project plans. Essentially, it is crucial to establish how you measure and how precise your estimates are. Discuss your business trends, the yearly overhead cost, and desired profit so you can set your business goals and the actionable steps to achieve them.
3. Base Construction Plans from Data
Before you start any project, a solid, clear plan needs to be in place. On any given project, the more developed and prepared your plan is, the higher the productivity rate your project will have. As you know, construction projects can be challenging at times because they move at a swift pace, and staying organized may be problematic. Improving your data-driven construction strategies in effective planning is a way to reduce inefficiencies on job sites.
One example of a data-driven strategy plan is to use BIM, Building Information Modeling, which is a popular strategy to implement if you want to improve project delivery. BIM extracts data, so all parties working on the project enable workers to see performance data and schedule maintenance and repair work. This useful tool allows you to repair and maintain before things become expensive money pits.
BIM is a useful tool to use in the planning process because it can predict job costs by calculating the cost of building materials and estimating the duration of a construction project. Ultimately, when employees understand the workflow from the planning phase, it prevents mismanagement, resource misallocation, and, most importantly, reduces inefficiencies.
4. Include Training Programs in Operations
Experienced workers can sometimes be challenging to find. Substantial training is vital for construction teams so that everyone is knowledgable and prepared to complete tasks safely and efficiently. Training may seem too expensive and time-wasting in the beginning, but it’s a long-term investment that can improve efficiency and profits. Here are some examples of construction programs:
Project planning: Assures you train your engineers and managers in processes designed to produce predictable workflows.
Contracting strategy: Consider proven methods like activity-based cost accounting, such as daily reporting) that help reduce costs and improve productivity.
Performance management: Establish performance targets for workers to meet and measure how to do so within their budget.
Change order management: For instance, teach workers how to create a detailed change order properly.
Project risk management: Instruct risk-assessment methods and ensure the knowledge of possible outcomes and solutions.
Contract management: Explain to the team the terms and conditions of the construction project. Includes strategies that your company intends to implement.
5. Determine the Right KPIs
KPIs, Key Performance Indicators measure whether a project has been successful. Many contractors choose to concentrate on tangible indicators like financials because they are easy to measure. However, several other measurement metrics are essential to improve efficiency in construction operations:
Safety: incident/safety rate, number of safety meetings/communications, number of accidents per supplier
Quality control: number of defects, time taken to fix errors, customer satisfaction, cost of reworks, number of site inspections, number of passed site inspections
Employees: turnover rate, employee reviews, training completion rate
Performance: percent of wasted time (equipment & labor), mean revenue per day/hour, amount of waste
6. Regulate Profitability and Track Costs
Last, but certainly not least, regulating profitability and tracking costs is the last of this guide’s construction strategies. As a Project Manager, you want to reach your profit goal. To do so, you have to keep your costs down and complete the project within the scheduled completion date. If you want to operate more efficiently, tracking construction costs by using job costing is an excellent way to determine labor productivity. PMs should be on top of materials management and organize the job site in a way that allows your workers to be as productive as possible.
Therefore, tracking costs on change orders can increase your profit margin because they make billing easier for construction accounting. Proactive project management contains tracking time cards towards job costing to catch early indicators that the project is going off-budget. As a PM, you should continuously be looking for methods to reduce waste and improve productivity as a construction strategy.
In conclusion, in this growing industry, it is hard to adapt to new operating models in your management. To reduce inefficiencies and improve profits, construction and engineering companies must change their work’s operations. For most companies, implementing the construction strategies above will require a significant reform in company culture. However, the reform is worth it in the long-term. Companies that understand the need for change put themselves in a winning position because they achieve results in higher productivity and profit.