Staying Afloat in Tough Times: How Trade Contractors Use Construction Software to Ensure Business Resilience

Business resilience is a struggle for trade contractors in the construction industry at the best of times, but it’s been particularly difficult in the economic climate of the past few years. Labor challenges, supply chain issues, and inflation continue to contribute to the collapse of companies in the industry. 

In her 2023 article, Jennifer French, partner and construction and real estate team leader at accounting, tax and consulting firm PBMares, notes that bankruptcy in the construction industry is the highest it’s been in 10 years. 

In an effort to stay afloat, trade contractors have been forced to find ways “to cut costs, protect their assets, and stay ahead of potential losses for their company,” writes the team at Sensera Systems, a provider of security cameras for construction sites. 

Technology plays a critical role in their ability to achieve these ends. Through its real-time data management and analysis capabilities, construction project management software, like eSUB, enables trade contractors to confront key challenges and maintain profitability in tough economic times. 

Trade Contractors Continue to Confront Labor Issues

A shortage of skilled labor in the industry continues to wreak havoc on construction companies. 

“The labor shortages are still prevalent,” says Helen Fry, former vice president of E&S Brokerage Construction at Nationwide. “Once everything else started improving, I think the thought was labor shortages would improve, and they have not.”

In fact, according to construction accounting firm Marcum’s 2023 National Construction Survey, 39 percent of respondents believe filling skills gaps will be the biggest threat to their business over the next year with 14 percent saying labor costs will also threaten their success.

“In addition to grappling with ongoing inflation, the industry is facing volatility in material prices and increasing labor costs, write Deloitte’s Michelle Meisels, Misha Nikulin, Kate Hardin, Matt Sloane and Kruttika Dwivedi. “Another significant challenge is the ongoing shortage of skilled labor, which continues to impact the sector.”

The authors cite a recent report by the Associated Builders and Contractors that says the engineering and construction (E&C) industry needs more than 342,000 new workers in 2024. The problem is that “the pipeline of workers is diminishing as support for the trades in many high schools has given way to emphasis on computer learning.”

“Due to a lack of available qualified candidates, 68% of construction firms surveyed are struggling to fill open positions,” write Meisels et al.

Because of the shortage and high costs of labor, trade contractors have been forced to find ways to do more with less in order to stay resilient. Construction project management software informs smarter labor decisions so you can maximize the productivity of your workers and, thus, the profitability of your company. 

Software Boosts Worker Productivity and Task Efficiency

The software informs labor allocation decisions by centralizing project-specific labor data gathered through daily reports, field notes, and time sheets. The tool then analyzes the information to show you where you have skills gaps and where you may have some labor waste. With those insights, you can reallocate your labor resources to close skills gaps and maximize the productivity of workers. 

Trade contractors have also been pushed to find ways to help their people work more efficiently. Software solves this problem by automating many administrative tasks for workers so they spend less time on paperwork and more time on project-specific work. 

Such capabilities help mitigate the impact of these labor issues and boost your company’s resilience in tough times. For example, as a result of using eSUB to automate some administrative tasks that were being done manually, Eckstine Electric has seen a weekly 10-25 percent increase in employee productivity.

“Instead of being inundated with paper, our workers are more focused on profit-bearing tasks and contributing to the bottom line,” says Renee McEntee, lead project coordinator of Eckstine Electrical. This will help ensure the long-term viability of the company.

Trade Contractors Face Ongoing Supply Materials Problems

Supply chain issues are nothing new for the construction industry but they have been exacerbated by the pandemic and continue to impact industry businesses. Specifically, the lack of availability of materials and the increased cost of goods is putting a strain on trade contractors, struggling to mitigate the impact of delivery disruptions and rising prices. 

In a study published in 2023, the Associated General Contractors of America notes, “Nearly three years after the onset of the coronavirus pandemic, supply-chain bottlenecks continue to bedevil contractors. One week one material is in short supply, while the next week it is a different product. This makes it hard for contractors to make reliable cost estimates and anticipate production schedules.”

And it’s not over yet: Lengthy lead times continue to plague the industry, reports business journalist Shefali Kapadia in a 2024 ConstructionDive article. “Pre-pandemic, materials such as steel and timber could be had within two to four weeks. Today, those same materials can take 12 to 16 weeks to arrive.”

Also, higher materials costs contribute to more expensive construction projects. It’s a particular problem that may not go away. “Once materials costs have gone up, they might go down a little, but they won’t go back to where they were,” says Cathy Schmidt, president and CEO of Stahl Construction.

Technology Helps With Materials Planning and Management

Materials resource planning and management is critical to business resilience in uncertain economic times. Construction project management software improves these capabilities for trade contractors so you can better manage materials to ensure on-time delivery of projects which helps your company remain profitable.

Unfortunately, you can’t anticipate all delivery delays and cost increases. The best you can do is plan for what you know based on the data you have.

Through the analysis of real-time and historical project data that is centralized in the platform, you can better determine what materials will be needed at each phase of the project and their anticipated costs. This enables you to more accurately plan resources for every step in the project which means your crews are less likely to waste time waiting for goods to be delivered. 

The technology also makes it easier to track materials in real time through automated purchase order management. Users can manage inventory and control costs by monitoring product delivery as well as comparing actual versus estimated costs for purchase orders. The platform gives you visibility into any discrepancies so you can make adjustments. 

With better materials planning and management, you will have less time and cost waste which helps you stay on schedule and on budget. In the end, your company is more resilient because it can meet deadlines when it better manages its materials. 

Trade Contractors Struggle With Project Bids 

Building a more resilient business in uncertain economic conditions requires trade contractors to carefully consider the right projects to bid on and to create realistic bids that also ensure profitability. Too often, companies submit lower bids to win projects, but this can quickly backfire. 

According to research published in 2023 by consultancy Compass International that examined major construction projects over the course of 18 months, 32 percent of cost overruns on major construction projects are due to estimating errors. In such a competitive industry, business resilience hinges on the accuracy of bids. Just as important as winning a job is being able to make a profit. 

“Chances are one wrong estimate on a construction project that loses money won’t put you out of business, but a couple of unprofitable projects may have you closing the doors for good,” writes Kaiya Barrett at ConstructConnect.

Yet, creating realistic, competitive bids remains a struggle for many trade contractors, especially those with manual documentation processes. Good bids require good data. If you don’t have access to real-time and historical project data because it is siloed in multiple binders possessed by different people, you are simply unable to create accurate bids. It’s another reason why you need construction project management software. 

The Right Tech Tool Facilitate More Accurate Project Bidding

The technology centralizes all project data so you always have access to the most up-to-date and relevant information with which to build better bids, including both current and historical project data. By doing so, it eliminates the risks of data being outdated or incomplete so you can be sure your bids are based on accurate information. 

As a result, you avoid cost overruns on projects which protects profit margins and the long-term resilience of your company.

Trade Contractors Must Mitigate the Risk of Overspending

Business resilience in tighter economic times requires tighter budget control. “No one wants to embark upon a new construction project when they are still reeling from the impact of a previous project’s cost overruns,” writes Andy Mrowicki, president of HR Green’s construction and transportation business lines. 

To avoid that slippery slope, you have to know how your actual expenses are tracking against your estimated expenses at all times so you can make real-time adjustments as necessary to avoid overspending. This capability requires accurate job costing data that only the right technology can provide.

Software Supports Real-Time Job Costing for More Business Resilience

Construction project management software compiles and centrally stores all project-related job cost data so trade contractors have better oversight of their spending. Unlike with manual documentation processes where you have to spend time gathering data from individual sources, the technology serves as a single source of truth from which trade contractors can access up-to-the-minute job cost data.

“Regularly reviewing and analyzing these reports will help you identify potential issues and make informed decisions to keep the project within budget,” says Basim Thaher, operations manager for NAFFCO FZCO. The more you stay on budget, the more resilient your business will be, especially during tough economic times. 

Construction project management software can do all of these things and more to help your business weather economic turbulence. Schedule a demo of eSUB Cloud today to learn more.

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