As the construction industry becomes increasingly more complex, businesses are implementing processes that promise predictability to avoid costly mistakes and mitigate risk. With schedules accelerating, labor in short supply, and supply chain issues on the rise, general contractors, specialty contractors, and owners are looking to preconstruction to foster more reliable project outcomes.
This conclusion and other insights are part of a new report, The State of Global Preconstruction, released today in partnership with FMI Corp. Sponsored by Procore, the report was authored, researched, and published by FMI, a leading consulting and investment banking firm dedicated to serving companies working within the built environment.
The report explores the current state of preconstruction and the characteristics of those who do it well, including what constitutes above-average preconstruction processes and the effects of efficient and digitized preconstruction.
In 2022, Procore partnered with FMI to survey 979 construction industry stakeholders worldwide. Participants were asked to describe the preconstruction practices in their organizations, tools and technologies, project experiences and outcomes. Survey participants were evenly split between North America (U.S. & Canada), Europe (U.K. & Ireland), and Australia & New Zealand. The report’s findings also represent the perspectives of construction stakeholders employed at small, medium and enterprise owners, general contractors and specialty contractors.
Here are some of the key findings published in The State of Global Preconstruction Report.
Five Ingredients for Better Preconstruction
To understand the current state of preconstruction, the report first defined the characteristics of organizations that do it well. FMI did this by examining five questions important to building a successful preconstruction process and then aggregated the results in order to distinguish three groups — organizations leveraging above-average, average and below-average preconstruction processes.
While most survey respondents suggest their organizations have developed a formal preconstruction process, less than 30 percent of general contractors and specialty trade contractors consistently follow an agreed upon preconstruction process.
By having an agreed upon or formal preconstruction process, FMI found that construction companies can foster consistent delivery of preconstruction services. If not performed consistently however, ingredients one, two and three may be undermined.
Better Preconstruction Drives Better Business Outcomes
Survey respondents with above-average preconstruction processes experience more benefits with more frequency than those with average or below-average processes. Most notably, contractors with above-average preconstruction processes cited experiencing higher client satisfaction and higher profitability.
Strong preconstruction processes can also help contractors thwart avoidable problems more frequently while controlling risk more effectively. Owners and contractors with above-average preconstruction processes noted fewer project delays more often than organizations with below-average preconstruction processes.
When performed well, preconstruction can also help organizations avoid rework, which can account for as much as 19 percent of the total project cost as reported by owner respondents.
Making Preconstruction a Priority
Industry stakeholders are placing greater emphasis on preconstruction processes than ever before. When asked to select their most important strategic priority, over half of all general contractors and speciality contractors rank preconstruction as their first or second priority.
Respondents also stated that increasing complexity, accelerated delivery schedules and supply chain were the most important reasons for making preconstruction an investment priority.
Companies are Leveraging Technology for Preconstruction
Effective preconstruction may be better coordinated and more effective when software tools and solutions are implemented.
Respondents believe that the biggest challenges for successful preconstruction are collaboration between stakeholders, leveraging data effectively and the handoff from preconstruction to the course of construction. However, the survey data shows us that the majority of respondents said they are using isolated tools for preconstruction, which hinders collaboration and the use of data.
On the flip side, respondents ranked the ability to leverage technology as their least challenging aspect of preconstruction. This tells us the industry knows technology can solve many of the pain points around preconstruction, and they are willing to make preconstruction an investment priority, but technology has yet to deliver a collaborative solution that meets their needs.
Historically, construction has fallen behind other industries with the adoption of technology, which can notably be attributed to a lack of solutions. However, among above-average respondents, the trends seem to be shifting ever so slightly toward investments in process improvement software as more technologies catch up with how work is performed.
Learn how Preconstruction Impacts Project Outcomes
Ultimately, the decisions, efforts and investments organizations make in preconstruction can have significant impacts on project outcomes, and how those outcomes vary can be markedly different.