Business management – it might be quite a straightforward and inevitable aspect of establishing your own company, but many Australian builders have already suffered significant losses due to poor management practices.
From having unrealistic expectations to ineffective risk management, inferior pre-construction processes, and even poor communication between teams and workers – many construction business owners tend to commit some management mistakes which not only hinders the productivity of their workers in the field but also reduce the overall revenue they get in each project.
To help avoid these mistakes, we have detailed in this post the solutions to some of the most common business management problems you might encounter in your construction company:
As the adage goes, setting goals is the first step in turning the invisible into the visible.
In the process-oriented construction industry, having definite goals to achieve is essential for both short-term and long-term success. By setting goals, builders can constantly win repeat and new business opportunities while identifying obstacles that could hinder their processes.
A construction business owner must set project goals that are specific, measurable, attainable, realistic, and time-bound (SMART) not only to finish the project with accuracy but also to maximize the resources efficiently.
After these goals are identified and created, skills and resources can be constantly evaluated, and improvement areas can be enhanced.
Solution: To prevent undefined goals, you must be careful to ask the right questions to all the stakeholders of the project – client, project managers, supervisors, and subcontractors – to establish and communicate clear goals from the start.
Often, a construction project starts as agreed upon, but as it progresses, clients make requests, and the project doesn’t even look the same as the one you started. This often is a result of the expansion of a project outside of the planned objectives and proposed budget – aka scope creep.
One of the reasons, scope creep happens in construction project management is poorly defined project scope. When the project scope isn’t defined clearly early on, things can go out of hand quickly and inevitably.
Another cause of scope creep is the lack of scope management process. Without a system that manages the changes being requested by your clients as the project progress, the project will eventually go out of scope.
Solution: One of the effective ways to avoid scope creep is to determine project goals through proper planning and understanding of customer needs. Making realistic assumptions about resource availability and deadlines will also help each stakeholder stay on top of project plans.
Improper Risk Management
Identifying and mitigating business risks are part of managing a construction company. These risks can be uncertainty in the financial market, non-compliance with new regulations, minute errors in the project plan, or unknown factors that can impact the success of a project.
Ignoring risk management in your construction business can lead to the eventual downfall of your organization. For instance, failing to ensure that your business complies with all building laws and regulation can increase your chances of being penalized and sued.
You could also lose market share if you fail to forecast the risks of innovating construction industry.
You could lose significant investments if you fail to anticipate the risks of expanding your operations.
Lastly, your company’s reputation could suffer irreversible damage if you fail to manage difficulties.
Solution: To avoid shortcomings in risk management, you should gather information from all aspects of your business, develop trust between your employees, and have a good idea which parts of the project are likely to go off track.
Inadequately Skilled Workers
If your field workers and back office employees are not skilled enough to solve challenges and perform assigned tasks, it can derail the development of the project which can cost you time and money. Lack of skilled workers can also lead to poor accountability, finger pointing, and an overall lack of chemistry between teams.
The aging workforce is the primary cause of the labor shortage in Australia. The younger generation is not as interested in trade jobs as the youth in the past. Likewise, fewer and fewer colleges are invested in providing training for trade jobs. This means that most of the laborers these days have been trained long ago.
Solution: To address such issue, you must identify and document all the core skills required for each workload encompassing the project and analyze the strengths and weaknesses of the workers. If possible, provide them with on-going training to enhance their skills and fill talent gaps in your company.
You can also do outreach projects to nearby high schools and colleges to educate students who might be potentially interested in honing their trade skills and discover their career in the construction industry.
One of the major killers of work morale and productivity of employees is poor communication.
There are many causes of poor communication in the workplace, the primary being the employees are disengaged with the organization. When workers become disinterested with the company they’re working for, they lose sight of their goals, are less likely to be invested in the company’s success, and don’t put effort to contribute ideas to their co-workers and managers.
Even if you are providing your workers with the right instructions or you are asking the right questions, you must still ensure that you establish open communication between the upper management and your employees so that any feedback during the project can be voiced out more seamlessly.
Solution: In order establish open communication, you must consider investing in collaboration tools and software so that your workers will stay updated of the recent developments in the project as well as to inform the upper management of the specific issues they’re facing both in the office and in the field.
Poor construction business management is one of the leading reasons why many builders fail to reach their 5th or even 2nd-year milestone. Not a task that should be undervalued, every construction business owners should continually hone their business management skills and must take advantage of every tools and solution available such as a construction management software that can help them manage and organize their business more efficiently in the long term.