The construction industry is one of the oldest in the United States and can chart its history to the creation of the earliest skyscrapers and railroads. Despite this history, it is constantly evolving. Every year there are new developments and technologies with new acronyms; in recent years we have seen CAD, BIM and P3, to name a few.
Typically, disruption in the workplace is counterintuitive to productivity. But in terms of creating innovative ways to manage people, processes and technology, the concept of “disruption” isn’t such a bad thing for the construction industry. Change is stirring whether contractors are ready for it or not, and firms that have adopted new ways of managing scheduling and workflows are seeing stellar results—earning the accolades of repeat projects for key clients, as well as happy project partners.
the solutions that will streamline your company and make your processes more efficient in 2018 are here! Construction Executive took a hard look at the hottest products designed to make the running of construction businesses a breeze. From project management to payroll solutions, these Hot Products have you covered.
After this year’s hot summer, winter 2017-2018 will be a cold one, bringing up the question of how to prepare for what is expected to be the “year of the snowstorm.” The change in season will bring new hazards on the jobsite and in the office that employers need to be thinking of right now. Here are five areas contractors need to comply with to avoid any accidents or breaching fees.
If only strategic planning was as simple as it sounds. Leaders in the construction industry benefit from the action of strategic planning in addition to a mindset of strategic planning. Together, these components set the stage for sustainable organizational health. A strategic plan cannot happen in a vacuum; rather, it’s an integral part of a construction company that understands the need for driven growth.
How does a business leader in commercial and industrial construction implement inspiration in the team? There are thousands of books on leadership theory and organizational culture, but if a leader does not understand how to practically implement those theories, they will not benefit the team. There are several ways to cultivate an inspired team. Following are five ideas for construction executives to implement with field-based, office-based and remote-based teams.
According to a report recently released by Associated Builders and Contractors (ABC), the private construction industry’s value added as a percentage of the nation’s real gross domestic product (GDP) rose to 4 percent in 2016, the highest level since 2009. The report also shows annual growth in real construction spending, which rose 3.5 percent in 2016. Thirty-seven states benefited from the rise in construction activity in their state, while 13 states experienced a reduction in activity.
The majority of commercial and industrial contractors are confident about sales growth, profits and staffing levels heading into 2018, according to the latest Associated Builders and Contractors (ABC) Construction Confidence Index (CCI). Despite rising construction labor and materials costs, 55 percent of contractors expect their profit margins to expand in the first half of 2018.
Contractors need to invest in tax planning throughout the year to gain the maximum impact. While most year-end tax strategies strive to accelerate income in the current tax year and defer expenses to the next year, strategic tax planning takes into consideration many other factors, including how reducing income for tax purposes will affect a contractor’s financial statements, cash position, working capital and financial ratios.
The International Accounting Standards Board (IASB) and the Financial Standards Accounting Board (FASB) recently issued new accounting standards related to lease assets. For public companies following FASB standards, the effective date for implementation is for the fiscal year beginning on or after Dec. 15, 2018. For all other companies, the effective date of the FASB standard will be for the fiscal year beginning on or after Dec. 15, 2019.
For the construction industry, these are fascinating times. Whether grappling with off-site modular construction projects or the sustainable construction and green building movement, contractors are being challenged in bold, new ways. Along with a growing volume of work comes a rising level of risk — from the complexities of constructing a tall skyscraper to deploying drones in the field.
Ironically, this era of innovation has failed to bring about a wholesale embrace of technology — even as takeoff and estimating software, cloud-based systems and mobile apps promise cost savings and efficiencies. In particular, contractors seem less than eager to accept cutting-edge, next-generation technology like advanced data and analytics, drones, automation and robotics — even though they are designed to improve employee productivity.
Slow to Adopt and Accept New Solutions
First, let’s look at a KPMG Global Construction Survey of 200-plus senior executives showing how the industry, as late as 2016, has been slow to adopt new technology solutions. Only 8 percent of survey respondents were categorized as cutting-edge visionaries. Only 20 percent thought they were aggressively disrupting their construction business model with leading technology.
In fact, nearly three-fourths of the respondents said they didn’t use advanced data analytics for project-related estimation and performance monitoring. Think about the reams of data that most firms create — from bids to plans to projects — and the rich value of the information contained in most databases.
Of course, those who do use new takeoff, estimating and production management technology find the benefits are worth it — from omitting duplication of effort to minimizing errors to allowing for quicker communication between the field and the office. Still, many construction executives are being held back by manual processes and multiple systems. Just 20 percent of those surveyed reported having a single, fully integrated project management system.
Weighing Fears and Risks
What’s holding contractors back from stepping outside their technology comfort zone? For starters, the cost of adopting new technology may cause resistance. They’re not sure it is worth the risk when weighed against the benefits of faster, more accurate estimating and real-time data for production management. Ironically, they’re also reluctant to disrupt their business processes to train the very employees who could benefit from these efficiencies.
How bad is it? KPMG found 69 percent are either “followers” or “behind the curve,” according to the study. Inevitably, this hurts when it comes to driving consistency across projects — just 27 percent reported having consistent controls.
For some, the cost of integrating disparate software solutions fuels an unwillingness to take a new product off the shelf unless they can guarantee an immediate ROI. Another issue is a lack of know-how in choosing the right technology. When they do purchase new technology, many construction businesses have a weak implementation process and end up setting up new software to run like a legacy system.
Time to Make Better Decisions
We can all agree that new technology is essential for innovation in the construction industry. Not only can new tools and solutions accelerate contractor productivity and improve accuracy, it can also reduce the increased risk associated with complex building projects.
Ready to disrupt your firm’s technology cycle? The first step is to establish a thorough process for finding the right technology for your construction business. It can be intimidating, but all contractors should learn how to assess the potential rewards of adding new technology. On Center Software can help — read our free eBook, An Estimator’s Guide: Assessing and Picking the Right Software, to get step-by-step advice to determine where your company is and where you need to be going.
More than almost any other industry, construction contractors need to spend time and resources planning for their income taxes before the end of their fiscal year. Contractors must be sure to retain their financial statement strength and ratios while considering possible tax methods of accounting, projected taxable income for remaining months, tax vs. book depreciation and the calculation of alternative minimum taxes and available tax credits for the entity and the pass-through owners. It is important that all these variables be considered to ensure the most favorable financial and tax objectives are achieved.
There is a costly danger lurking at jobsites; a threat that isn’t easily seen until it is too late—musculoskeletal disorders (MSD). Construction managers, foremen and safety specialists who enact preventative ergonomic measures on the jobsite will not only improve safety, they will also reduce potential injuries for workers—and ultimately save a business from sinking in the red.