Economics, Opportunities, and Construction
Let’s journey back to 2018 for a second—Dec. 13, 2018, to be exact. At that point, the economic outlook for construction was the strongest it has been in years. But economists I interviewed on Constructech TV agreed there was going to be a downturn in 2020. Given the length of what was the current economic expansion at the time, an economic downturn seemed almost predictable. Some would even say it is just the cyclical nature of construction. Those who have been in the industry for any amount of time know it has its ups and downs—and we were due for a downturn. I have covered this industry for more than two decades now and I have certainly experienced a couple very tough downturns.
A new survey even supports what many economists have been saying for the past year. The 2020 National Construction Payment Report: Spring Spotlight on Jobsite Coordination from Levelset and Fieldwire shows that even in the months leading up to the COVID-19 Coronavirus pandemic, construction businesses were struggling to finish projects and get paid. No doubt, naturally, the pandemic just added to the impending pressure and made this worse.
The report collected responses from more than 540 contractors across the United States in Q1 2020, prior to the outbreak, with half reporting that they were not getting paid on time.
The numbers show that: only 28% of contractors admit to always finishing projects and on budget. Also, 70% blame poor jobsite coordination for budget and deadline overruns. Another 80% spend a big portion of the week chasing down payments. And 50% acknowledge to receiving payments within 30 days of invoicing.
Here is another reality. The construction industry operates on razor thin margins, meaning efficiency is critical to the bottomline. The survey reveals nearly 60% of construction businesses say that failing to complete a project on time and under budget results in lower payment for their work.
The survey also affirms that only half (about 53%) use some kind of digital application to manage tasks for coordinating field work in realtime. Fewer than one in three use software to organize, send, and track payments or paperwork. And some 20% don’t use any construction software at all to manage jobs in today’s digital age.
But with digital transformation there is opportunity in all this. Technology can help construction companies perform work more efficiently. Perhaps there is an even greater opportunity to consider technology in new and different ways. More importantly, there is a chance to tap into the software solutions you already have,but aren’t using to the full extent. If you have had to temporarily close your doors or furlough staff, now is the perfect time to take a little liberty to shore up and streamline your business processes. Now is the time to become more efficient and productive by leveraging new tools. At this juncture look to using digital solutions to make you more competitive. Ask yourself: How will you continue on in 2020?
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