Article
5 Ways to Use Technology to Reduce Risk & Build Resilience
How construction businesses are shifting from adversity to competitive advantage
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Construction is always a risky business. Deadlines are tight and margins are slim at the best of times. But in a volatile market, when costs are rising rapidly and cash flow is in short supply, the risk of insolvency is very real.
Procore Technologies’ latest How We Build Now benchmark report shows a softening of industry sentiment on both sides of the Tasman.
Garnering insights from 760+ ANZ construction leaders, the report finds confidence has fallen 10 per cent in Australia and 17 per cent in New Zealand as fewer businesses expect an increase in the number or value of projects over the next 12 months.
Half of all businesses say dealing with increasing costs is their biggest challenge, followed by hiring and retaining skilled staff (40%), winning competitive bids at a sustainable margin (34%) and dealing with contracts and payments (29%).
The risks to construction businesses are clear. Thought leaders don’t just want statistics. They also want solutions.
Chapter 1
From here to the profitable horizon
Construction leaders recognise they must transform their businesses, but many don’t know where to start. Hesitancy is a reasonable response to change when teams are focused on getting through the challenges of each day.
But How We Build Now shows a growing cohort of construction leaders with one eye on the here-and-now and another eye on the horizon.
Learn how successful leaders manage today’s financial risk and step into the future with confidence.
Start with a data strategy
Half of ANZ construction businesses plan to design a data strategy in the next 12 months, according to How We Build Now. However, just 3 in 10 are confident their strategy will be successful. Senior decision-makers have digitisation and data aspirations but are worried about the change management required to turn ambition into action.
Those leaders who champion this change find technology is the pivot point for business transformation.
Fletcher Construction took its first steps towards a data-driven digital strategy on their brownfield Mangere Wastewater Plant project.
They did this by implementing a shared platform to input data as their project management tools that provided them complete transparency on this critical project. This eliminates uncontrolled drawings and correspondence managed in spreadsheets. Success breeds success, Fletcher Construction's change management process across its entire portfolio of projects.
"Procore offers more than document control," observes Matthew Stanford, Design Interface Manager, Project Controls Manager. “It’s helped us manage multiple complex projects with greater efficiency and faster timeframes... The direct upside of this is we can shave 75 per cent from our project completion timeline. That’s game-changing."
Chapter 2
De-risk with a single source of truth
Four in 10 respondents to How We Build Now said improving access to project information was their top strategy to boost productivity (41%) and profitability (40%).
Construction sites are awash with information. But the high volume of paper documents, PDFs and knowledge walking around in people’s heads often gets lost as projects move from procurement to planning, and from pre-construction to the construction phase.
Consider how Unispace has turned its data silos into decision-making sources. Unispace’s 700-plus people rely on Procore for the data they need to make fast, accurate and timely decisions from the moment the last set of drawings are submitted for final pricing all the way to issuing orders and subcontracts.
As Unispace’s Commercial Director Kevin McCabe notes: “No more hunting for documents on the server or emails on people’s phones. Everything is centralised. Training our team is a quick and simple process as Procore is intuitive and can be followed with minimal or even no training.”
Chapter 3
Shrink rework to grow margins
“Do it again,” is the phrase that no one in construction wants to hear, but few avoid. Rework affects schedules, reputations and, of course, bottom lines. How We Build Now reveals that 1 in 8 project hours are spent on rework – but that is down from 1 in 6 hours in 2022. This 25% improvement reflects an industry-wide focus on quality and safety and suggests efforts to reduce rework are paying off.
Many defects are unobserved until it is far too late, but with the right software, you can collect the right data and implement the right frameworks to meet and exceed quality and safety benchmarks.
With a zero defects goal, Australian fitout specialist SHAPE realised a 15% reduction in rework, meaning they could spend their time adding to their bottom line, rather than going back again.
Inspection and test plans (ITPs) and installation test certificates (ITCs) are important elements of the quality control and assurance process during construction projects. SHAPE has streamlined and, in some places, automated this process with Procore’s software.
“We’ve automated key items throughout a project lifecycle and lean on AI to check documents against each other so we can minimise the risk component of any project,” says SHAPE Project Manager Bradley Watts.
Chapter 4
Forecast the future workforce
Without real-time information on worker skills, qualifications and availability, how do construction businesses manage program workflows and tender with confidence? The simple answer is, they don’t.
Just 3 in 10 (33%) businesses are very confident they have the necessary skills over the next 12 months to grow. An ongoing lack of skilled talent has weakened sentiment in Australia (down 4% on 2022), while New Zealand sentiment fell by 8% when compared to last year.
This is why more than a third (35%) of Australian leaders and four in 10 (41%) of those in New Zealand are looking to digital solutions to boost employee productivity, reduce lost time on site and ensure the right people are on the job.
With a holistic and real-time view of the workforce, construction companies can match the right skills with specific tasks and projects, optimising program workflows and enhancing overall efficiency.
Chapter 5
Secure cash flow through new systems
Almost half of the participants surveyed for How We Build Now believe that increasing their use of construction and payment technologies would improve productivity and profitability.
How We Build Now also reveals an industry rethinking the way it manages everything from contracting to payments.
After enduring the pain of fixed price contracting in a market of runaway costs, nearly a third (30%) of construction leaders are looking to new forms of contracts; 20% considering the possibility of trading margin for advance payments and secure cash flow. These are proof points of progressive companies that are re-evaluating their practices.
How We Build Now sheds light on the current construction industry challenges and shares stories of success. But what does the future look like?
Procore Technologies’ Head of Region, Tom Karemacher, says How We Build Now presents a clear case for change.
"Our research suggests some leaders are caught in 'analysis paralysis'. They are focused on issues they can't control and ignoring those they can,” Tom says.
“There are ways to streamline processes, cut costs, enhance collaboration and uncover the insights at the same time. When construction companies embrace the right technology, they are better placed to manage today’s risky market and build more resilient businesses.”