Few industries or job professions are immune from the economy’s cyclical ups and downs. Certainly, the construction industry experiences regular ebbs and flows, but a decade after the 2008 recession and several years of mostly increasing numbers, construction stats are not expected to change in 2019.
“Overall construction growth, which has been slowing since 2015, won’t pick up any steam in 2019 as housing shortfalls negate gains in non-buildings sectors, according to economic forecasts analyzed by ENR.”
As with any market contraction, so too should come processes to better manage costs. Large builders can adapt with diversification and streamlined processes on the construction site, in the sales office, and with vendors and trade partners. But what about smaller firms? No construction firm or contractor will apply processes the same way, but if they do what’s right for their company, they could find a lot more efficiency coming out of any slowdown.
Extending product ranges (diversification) is one way to secure your market position long term. Complement your core business with sector-related services or begin testing new types of products. Additionally, many commercial-based firms find success in expanding to the residential sector. Assess your business and look for new types of projects focusing on ones that have fewer competitors.
Revisit Your Pricing/Billing Strategy
If you’re still using the same pricing model you did ten years ago, it may be time to revisit that strategy.
Fixed Price – Fixed Project strategy might have to be shelved in favor of Not-to-Exceed (NTE) or Aggregate Not-to-Exceed as it will help win more business in a tighter economy.
Consider changes to your payment methods as well. As e-commerce takes center stage and traditional retail takes a back seat, customers are seeking different ways to pay. Providing customers with a wide range of payment methods (i.e., online, recurring subscriptions), is smart business. Customers want options and flexibility and expect companies to adapt to those needs.
Revamp Your Change Order Process
Change orders are inevitable and have a direct impact on the project’s profitability. Large numbers of submissions can lead to a disorganized nightmare of delays. The average cost overrun due to change orders is shown to be between 11% – 15% of the original contract value in large building construction while the average schedule overrun is shown to be between 10% – 20% of the original project duration.
Without a formal, reliable change control process projects can be subject to confusion, faults, and disruption. Digitizing this paper-based change order process provides a consistent, systematic and predictable way of managing change requests, reducing risks and project delays, and increasing efficiencies.
Fortunately, Rhumbix T&M Tracking is a proven cloud-based paperless solution for reporting, tracking, and approving T&M tags. Learn more today!