Construction is often a rewarding and profitable business, but like anything, it also has its share of drawbacks. For starters, it has never been more difficult to find and retain a skilled workforce than it is today. Project durations may be long, forcing construction firms to attempt to manage elements outside of their control, like weather and material cost fluctuations. And finally, profit margins are notably small. According to Ready Ratios, the median profit margins for three construction categories are shown below.
Now what? Throw in the towel and start over as a banker? Depository institutions enjoy enormous 27.2% profit margins. But if you would rather learn more about how to make your construction business profitable, the smart path to higher margins is to increase efficiency, accuracy, and productivity. The good news is that recent low-cost technological advances put that goal well within reach.
In the McKinsey study, “Reinventing Construction, a Route to Higher Productivity,” global construction sector labor-productivity growth averaged 1 percent per year over the past two decades while total world economy growth was 2.8 percent, and manufacturing growth was 3.6 percent.
The study mentions that on-site productivity can increase by as much as 50 percent by implementing a cloud-based control tower that rapidly assembles accurate data in near real time that is both backward-looking and predictive. In other words, proper data management is key to success.
One way to increase productivity is for owners and contractors to get on the same page on well-defined key performance indicators (KPIs), with both parties having access to a single source of data truth.
Cloud computing has helped create the foundation for as-a-service models like software as a service (SaaS) and infrastructure as a service (IaaS). Integration platform as a service (iPaaS) is now growing in popularity because it fills a hole for engineering and construction firms. Like most as-a-service models, it eliminates the need for long, capital-intensive implementations. The focus shifts to subscription-based tech to reduce upfront costs while increasing implementation speed and enhancing flexibility for construction firms. iPaaS also provides access to the newest technologies while removing the barrier of maintenance. As-a-service providers assume responsibility for building, maintaining, and updating the technology infrastructure.
With iPaaS, accurate, actionable construction data integrated from multiple sources provides continuous value to users. Sources may include owners, architects, consultants, engineers, contractors, sub-contractors, and suppliers. iPaaS eliminates data silos and opens the door for automating processes that increase productivity, safety, and efficiency. Users continue to use the tools and interfaces they are already accustomed to, thereby increasing productivity, efficiency, and user acceptance.
Construction projects usually involve multiple parties who have already purchased their own software tools for a specific purpose, for example, to design a structural frame or analyze structural strength. Considering the significant costs already invested, these parties are highly unlikely to discard their current software tools in favor of a new, standard toolset.
As a result, investing time and resources into data integration has never made more business sense than it does today. Integration allows every party to see and share the same data, making it possible for information to be created once, in one place, and used across the project lifecycle. Project time is reduced by eliminating the need to repeatedly create the same data in multiple locations. Project quality is increased by eliminating human errors introduced, and subsequently multiplied, when data is manually recreated.
The term data mining is often casually thrown around, but what does it really mean? Like gold buried deep underground has no value until extracted, a vast warehouse of construction project data is equally worthless if it is left out of sight. Data must be made accessible to those who need it before its full potential is realized.
Data integration is one-way (unidirectional) or two-way (bidirectional.) For example, one-way data integration might involve data in a spreadsheet that flows into a construction project management system like Primavera. Two-way smart integration could involve specific, current ERP data and CRM data sending their specific, most recent data to one another so that both systems are always up to date.
After data is properly structured, cleaned, and prepared for analysis, then business intelligence (BI) solutions are able to analyze and present it visually to help make the best business decisions. And since integrated project data increases efficiency, accuracy, and productivity, increased profitability is likely to follow.
Nexus was created by Gaea Global Technologies, Inc. Founded in 2007, the Gaea team has decades of hands-on experience with construction and engineering solutions. Nexus was specifically designed to automate construction processes across applications and increase productivity. Request a demo today to see how Nexus can reduce integration time by up to 75%.