Why is construction one of the most difficult industries?
- There are no second chances – when a project is finished there is no going back
- Plans are often changed
- There are barely any fixed costs
- High levels of competition and tight margins
Due to the high level of competition in the construction industry in the Australian market, it is essential to ensure that costs are minimised. By taking advantage of every small cost saving measure, it is easier to remain competitive. The best way to determine where money is being poorly spent is through construction software, which keeps all costs for a company in the one platform.
Back in the 70’s and 80’s…
In the 70s and 80s, construction was disconnected. At this time, there was only one computer that was capable of handling the demands of the construction industry. This being said, construction was still very much compartmentalised, with engineering and estimating being disconnected from onsite processes. Also at this time, the industry in the Australian market still followed Standard Accounting Practices. This ensured the separation of costs and accounts, and that costs could not span multiple time frames. How could a company possibly know what they’ve bought, spent and importantly have left for next year?
Although it is necessary to have a baseline budget, it is important to be able to change and adapt all while staying within the budget. We are, after all, gambling on a small profit margin. There cannot be decisions made on a gut feeling, or outdated spreadsheets. As a result, how a company performs financially, is strongly correlated with a company’s ability to be flexible. In order to be able to change, construction companies need specialised construction software, and alignment of costs and accounting.
By managing cost control mechanisms electronically and using construction software to remain competitive, a company will be able to gain a far better insight into how they are truly performing and have ‘one source of truth’.
What is ‘One source of truth?’
‘One source of truth’ is a principle at use in the industry today that provides a totally integrated view of costs, offering a direct impact on outcomes. It allows for a real-time insight into what is happening, ultimately allowing for smarter business decisions.
In construction in the Australian market, our margins are small while the nature of the industry is highly specialised, changeable and risky. Therefore it is essential to determine the impact of costs on the business. Although a cost may seem small, over the space over a long project failing to flag unnecessary or ineffective costs can have a significant impact on a company’s financial position.
So as the industry advances, it is important to ensure that companies are investing in the correct construction software in order to remain competitive. By using software that integrates cost and accounting companies can stay ahead of the challenges facing the industry and remain competitive.
What software is right for my business?
Before investing in any software for your company it is important to understand which product is best for you. Speak to an industry professional today or look at the available products to ensure you are getting the most suitable software for your company.