From preconstruction to project closeout, specialty contractors are under tremendous pressure to make sure their teams stay productive, achieve peak performance, and remain profitable. While focused on achieving these results on a consistent basis, specialty contractors are often met with challenges. Global labor shortages and supply chain constraints are making the jobs of specialty contractors more demanding than ever. Despite these obstacles, specialty contractors are constantly identifying new and innovative ways to ensure projects are completed on time and on budget.
To gain a better understanding of the nuanced challenges specialty contractors face, Procore partnered with Dodge Construction Network to develop a new industry report: Top Business Issues for Specialty Contractors. In this report, over 500 specialty contractors across the United States, Canada, United Kingdom, and Australia/New Zealand shared key insights about trends, challenges and pain points they typically encounter in the construction environment. The report also represents company sizes ranging from $2 million to over $2 billion in annual revenue, providing a comprehensive perspective of the industry. This research was completed by five types of specialty contractors: mechanical, electrical, plumbing, steel and concrete.
The report, sponsored by Procore, examines three key issues impacting speciality contractor businesses: workforce management, technology and profitability.
Below we have captured just a few of the insights published in Top Business Issues for Specialty Contractors.
Leading Cause of Profit Loss: Missed Change Orders
On average, more than 35 percent of all construction projects will have a major change over the course of its lifecycle. Many specialty contractors experience difficulty recouping costs associated with those changes. Approximately 30 percent of project revenue is lost because of change orders that go unbilled and unpaid, according to survey respondents.
The report also found that companies with an annual revenue of $50 million or more are more likely to suffer from missed change orders. In fact, 32 percent of these large companies report a margin loss above 50 percent as a result of missed change orders.
Looking beyond company size, the report found that certain trades bear the brunt of unbilled change orders. For example, large steel contractors report 42 percent of their margin is lost due to missed change orders. Concrete contractors report the least impact to their profits (19 percent).
To combat this risk, streamlining processes and leveraging an integrated construction platform to ensure better communication from field to office can help increase the likelihood of compensation for costs from project changes.
Mundane Tasks Are Draining Productivity
As the industry continues to become more complex, construction stakeholders are increasingly confronted with administrative work. While this work is crucial, low productivity tasks can consume team members’ time that could be better spent on critical items related to keeping a project’s schedule and budget on track.
The report found that on average, 20 percent of workers’ time is currently spent on low-productivity tasks, such as tracking down information, documenting data on paper and chasing down paperwork or documents. High percentages of time spent on low-productivity tasks are especially apparent among electrical contractors, 29 percent share that more than 30 percent of their team’s time was spent on low-productivity administrative tasks.
This data provides insight into why it’s critical specialty contractors work to combat the pressing labor shortages currently present within the industry. While the report suggests recruitment and retention should remain top focal points, specialty contractors can also find relief by making their current workforce more productive. Through implementing a comprehensive construction management solution, specialty contractors can eliminate duplicative tasks and automate workflows, increasing productivity across the entire project.
Construction's Digital Transformation Continues to Evolve and Innovate
Despite the vast technological achievements that have taken shape over the last 20 years, many specialty contractors still rely on antiquated and manual processes to manage their projects.
According to the report, 48 percent of companies with an annual revenue of $10 million or less report using spreadsheets and manual processes for their project execution needs more frequently than any other technology solution. Larger companies are moving in the right direction, but almost one third of those surveyed are still using outdated tools as well.
People, profits and projects are suffering too often from poor estimates, mismanaged labor, schedule bursts and unpaid change orders that are made worse by outdated and manual processes. Digitally transforming your organization to be less reliant on spreadsheets, whiteboards and notebooks can improve internal communication and also reduce financial losses and project delays. With a construction technology platform in place, specialty contractors can ultimately refocus their attention on what they do best–building the world around us.
Learn More About Trends Among Specialty Contractors
Our vision at Procore is to improve the lives of everyone in construction and our mission is to connect everyone in construction on a global platform. We strive to actualize these goals through developing world class software and providing resources such as this report for the industry to leverage.
Download the full Top Business Issues for Specialty Contractors Report today and learn more about the major trends the industry faces.