Why construction needs to think beyond the bottom line

Mike Doman
Technology Journalist

Mike Doman is a technology, lifestyle, industrial and education writer

Mike Doman
Technology Journalist

Mike Doman is a technology, lifestyle, industrial and education writer

Builders and project managers operate in one of the most competitive industries in Australia. And this competition means a bottom-line approach to management is no longer enough.

A close up image of an architect drawing on a construction map

A shifting environment

Successful construction operations have traditionally required significant infrastructure investment, deep and specialised knowledge in-house and investments in the capital required to give a competitive advantage.

Digital technology, however, is allowing businesses to achieve a number of these in a more scalable, more responsive and more cost-effective way. This, in turn, disrupts industries.

In a report from Ericsson, Organising For Change, a number of indicators are detailed that could determine which industries are most liable to disruption. Of particular relevance for construction operations are two: “A highly concentrated business model with high fixed costs”, and “A lack of assets needed to meet changing customer needs”.

A new way of thinking

To meet these challenges, a new way of thinking is required: risk and technology are no longer dirty words that impact the bottom line, but investments in future profitability and innovation.

When it comes to analysing the bottom line, there’s obvious importance in ensuring that a majority of figures are in the black, but having figures in the red doesn’t mean something has been badly managed – especially if there are lessons that can be imparted to other projects that can help recoup the losses. 

Cultivating communication

While cloud-based project management and communication platforms such as Aconex have been around for some time, it’s important that businesses look to their internal communications to share lessons from projects to other teams and ensure they’re implemented across other projects.

With profit margins slim, wages growing and competition intensifying, construction operations having insight into their operations can improve efficiency and reduce costs associated with unproductive staff or processes.

At a base level, gaining this insight can be a verbal debrief with key staff members at the conclusion of a project. For larger projects, this could take the form of monthly work-in-progress meetings.

As companies grow in size, however, getting the right people in the room and communicating across teams can prove challenging, making streamlining information and communications technology a must when it comes to maintaining the competitive advantage. 

Importance of investment

The Australian Industry Group National CEO survey, released in June 2013, showed that IT investment grew at an annual rate of 20 to 30 per cent in the lead up to the GFC, and has continued “unabated” since.

The same study found that CEOs of construction companies estimated that investments in technology accounted for 10 per cent of their productivity gains, with more than a quarter of respondents saying they’d invested in internet/cloud-based computer software and a third saying they had invested in computer hardware and telecommunications.

These figures aren’t surprising – sites and construction offices are seeing the benefits of technologies such as Telstra Cloud, business apps and ruggerdised mobile phones because they make business sense. They facilitate collaboration, communication and efficiencies without interrupting day-to-day operations. Not to mention that they don’t have the cost that has been typically associated with ICT infrastructure.

A collaborative future

The construction sector is arguably among Australia’s toughest – heavily reliant on economic confidence, huge levels of competition (it’s the largest industry in Australia in terms of the number of businesses involved) and it’s seen skills shortages and subsequent rising costs for labour over the past two decades.

These changes, which have fundamentally shifted the way things work, have necessitated a new way of thinking. They’ve ushered in an era of constant evolution, rather than being content with the status quo.

It’s no longer enough to think about the bottom line of an individual project – it’s now integral to think about the bottom line of the next project, and the one after that. And if that means cutting into the bottom line of the current project, so be it.

As long as it’s communicated to staff for the next one.

Staying on top of technology can help you business stay ahead.

Read about how tech is renovating the industrial sector.

Find out moreStaying on top of technology can help you business stay ahead.

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