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Construction is our oldest industry and yet is still full of massive backlogs, labor shortages, and cash flow problems. General contractors face an uncertain future and the potential for less income due to shortages, unforeseen events, and outdated technology. To combat the loss of gross revenue, contractors can increase their net profit with technology that manages construction WIP and mitigates risk.
While investment in construction technology has been on the rise, most has been focused on upgrading the work done in the field — but what about the back office? The industry needs to invest in technology to pinpoint unnecessary losses, predict trends, and automate work processes.
Here are five potential risks and how financial automation technology can combat them:
1. Specialty contractor revenue bleed
Specialty contractor integrity, efficiency, and quality can make or break the success of a project. Even if construction leaders follow the standard practices of subcontractor prequalification, they often end up with unexpected losses.
Consequences of a bad specialty contractor include:
- Fees for new specialty contractors and their project-related expenses can add massive costs to already in-the-red projects.
- When a project gets canceled general contractors not only lose the funds they invested but also become liable to fines.
- Going to court, and the legal process to recover expenses from a specialty contractor can take years, is costly, and doesn’t guarantee success.
To increase revenue and mitigate risk, contractors can automatically manage and monitor projects from the start with a financial automation platform. This technology gives deeper insight into the historical data to see who the most successful specialty contractors have been for any given type of project.
2. Strikes and other unknowns
General contractors review detailed technical proposals that cover all the significant features of the work. But even the best RFP can’t account for unknowns like union strikes or weather delays. Financial automation technology can be used to predict unexpected events, so contractors can plan for them or decide that a project is too risky.
3. Poor labor oversight
When a project isn’t getting done on time, more labor is typically needed in the closing months. Data analytics tools can analyze past jobs and find out where more labor was needed, when, and under what PMs the projects fell behind. This helps financial and operational executives make better decisions about what PMs have the best insight on projects, and how much labor is typically needed for a certain kind of job.
Construction technology monitors massive projects with exponentially greater efficiency than what is humanly possible. It lets PMs, controllers, CFOs and other construction leaders know exactly when and where to intervene.
4. Inefficiency and fraud
Contractors need to closely monitor the worksite for inefficiency and potential fraud and then ask probing questions without delay. The right technology can collect project data and compare it to data for the entire construction industry. Smart workflows built to integrate all your technology and departments will highlight anomalies in your data, so executives know where to start investigating inefficiency or theft that are putting job profits at risk. This data can also document a project’s liabilities or progress compared to past projects.
5. Dashboard disasters
Dashboard tools are often seen as a major initiative for a company's long-term strategy. Unfortunately, however, the implementation process is rarely simple and straightforward, and dashboard-centric initiatives often result in disappointment. Without targeted efficiencies and systems in place, the project dashboard can present more problems than solutions.
Team leaders can avoid this situation by addressing the data input and reporting processes to confirm they can naturally integrate within the company. If the data collection is too labor-intensive and results only in irrelevant information, it's not worth the effort. It is ideal to invest in an analytics platform that is already built for construction, so that IT professionals do not have to spend too much time — or resources — on making a system work.
Stop leaks and grow profit
Financial automation technology like Briq mitigates risks and plugs cost leaks:
- Predict industry trends that humans can’t spot.
- Monitor data for potential error, fraud, or theft.
- Automate high-volume manual processes like accounting.
- Forecast project outcomes by detecting patterns in construction data.
- Continuously train the platform to be more accurate and useful with machine learning.
The cutting edge
With industry-leading technology, machine learning, and data science, Briq automatically manages projects, stops financial bleed, and increases revenue. Briq’s financial automation technology is the solution for construction leaders to start using the data they collect to their advantage. Talk to us to find out more.