By Jessica Kirby
The past two decades have seen huge changes in the construction industry, the most important of which include tighter deadlines, shorter lead times, and supply chain delays. As inflation, the global economy, and international pressures affect contractors across North America, business owners are reaching for agile, resilient solutions that are cost-effective and improve the bottom line.
The global crisis of 2020-2021 taught us that technology keeps the most resilient companies afloat. That’s because digitally mature companies can pivot more quickly, since many of the company’s day-to-day, manually cumbersome tasks have been automated, leaving employees free to maximize their talent.
“A company with a robust technology solution has up-to-the minute, real-time data available at all times, and can leverage this data in decision making,” says James Beveridge, CEO of BuildCentrix. “Cloud-based technology means all the right people can access the data from anywhere and on any device, facilitating collaboration and reducing the time it takes to perform certain tasks.”
In ideal conditions, businesses use their tech to increase productivity, ensure products get to the right place at the right time, and meet economic targets. In a crisis situation (such as a recession), the focus remains on these areas but sharpens to seek improvement through innovation. Here are some important areas to focus your tech investments so when the going gets rough, your company comes out swinging.
Build downtime into your overall business strategy.
“We know the construction industry is subject to economic cycles, the housing and labor markets, the supply chain, and the cost of materials,” Beveridge says. “Long-term survival and success are more realistic when you are planning effectively for the down times. This should be part of the company’s overall operational and technology strategies, so there are no surprises.”
With real-time financial and operational data, you should be able to get a sense of how vulnerable your business would be in a downturn. Review your financials and try to envision what areas of the business would be most affected and how long you would survive with disruptions to your cash flow, labor supply, or supply chain. (Besides being a good tool for forecasting, this is a good way to evaluate areas of the business that aren’t adding value or opportunities to shift direction).
Develop a reserve.
Based on this information, decide on what kind of reserve you might need to get through a rough patch. “Cloud-based technology platforms that connect all your departments are a smart way to predictably manage cashflow and help with thoughtful, forward-thinking financial management,” Beveridge says. “Seeing all stages of the cashflow, from ordering to fabricating to delivery, is the best way to get a holistic view of the system and a sharp eye on where changes might be necessary in preparation for the leaner times.”
Keep the cycle moving.
You’ll never be able to create a cushion unless there is money coming in. Online, in-field ordering facilitates tidier timelines and eliminates time-wasting errors. Even connecting the accounting, operations, and shop with the right software solution can amount to important gains in your bottom line.
Use your technology solution to diversify your business so that you have options in the event one market sector slows down. “Use the time and cost savings to refocus on the more recessionproof areas of the business, like capital projects and publicly funded buildings,” Beveridge says. “A strong technology/ERP solution makes expansion that much easier.”
Preserve your savings.
The best way to save the money set aside for a recession is to stay on budget. Avoid cost overruns, manage the project onsite, and create accessible data the entire team can leverage to help stay on budget. “This data can also be used to accurately predict and estimate future projects,” Beveridge says.
Be smart about spending.
Although the knee-jerk reaction in a downturn is to cut spending, consider rethinking your spending strategy instead. Rather than cutting back on labor, for example, which can backfire when business rebounds, use your forecasting data to lean operational costs.
“A good strategy would use real-time data to identify inefficiencies and opportunities for cost savings,” Beveridge says. “For example, rethinking how a warehouse is laid out or assigning orders to specific trucks and bays can create some great opportunities to improve productivity.”
Consider staged automation.
The best technology strategy will help your team maximize its talents and passions by automating the most crucial and repetitive daily tasks. Besides encouraging employees to operate at a higher level, automation also reduces the risk of error and saves valuable time.
Look for a technology provider that is always innovating.
Thanks to advancements like Big Data, the Internet of Things, and cloud-based tech, companies can tackle difficulties at a reasonable cost and for a quick ROI. “Choose a provider that delivers ongoing innovation,” Beveridge says. “Connect with the tech you need now but approach it as part of a long-term plan for your business, and make sure your provider can grow with your company.”
When the economy dips, spending money can seem counterintuitive, but the benefits of investing in the right technology solution can’t be understated. “There are tangible benefits to the right solution, including automating processes, gaining real-time, functional planning data, and reorganizing for maximum productivity,” Beveridge says. “Most contracting businesses are data driven—or should be—and the better the data, the better the long- and short-term planning decisions owners can make.”
Visit buildcentrix.com for technology solutions that keep you on budget and help recession-proof your contracting business. ■