28 May 2020 5 min read

Subcontractors: 4 main challenges of the sector & solutions

 

The Subcontractors, as “middlemen” face a lot of challenges in the construction industry. Today we wish to look at their main challenges and how a cloud based ERP solution would help them out in their daily struggle.

When looking at the Construction Industry there are certain truths that could not have been denied pre-Coronavirus epidemic. For example, the European construction growth forecasted at 2.3% in 2019 was said to stabilize at around 1% in 2020-2022 - world trade reducing the industrial production and the propensity to invest in Europe. It was also forecasted that the European renovation construction will rise, meanwhile the new construction sector will begin to weaken in 2020… nobody thought it would come to a standstill due to a pandemic.

Subcontractors are the “middlemen” in the construction sector, and they are often caught between the hammer and the anvil.

Main challenges that Subcontractors face

The top 3 Global construction challenges are well known:

Skilled labor shortage
90% of U.S. general contractors reported that they are concerned over the labor shortage);

Government red tape, bureaucracy, and delayed approvals;

Low workplace productivity
Including the inefficient and outdated work practices and the lack of digitalization in the field).

Many pain points of the construction industry have been around for years, some have surfaced just now (even more deeply with the help of the Coronavirus pandemic). Subcontractors are the most affected in the industry, as they face both internal and external pressure while doing their jobs. Responsible for their team, general contractor and outside pressures alike (eg. environment, law and the government of the land), the sheer amount of constraint can be felt on a daily basis and it can shut businesses down at a blink of an eye. We live in a new reality now, and so the new challenges may emerge as well. Let’s take an in-depth look at them:

1.

Worker shortage
The lack of skilled workers is the number one problem of the construction industry and the obvious number 1 issue of the subcontractors. The industry is becoming increasingly less desirable to the younger generation entering the workforce. Millennials and Generation Z aim for higher education, working in IT.

2.

Government ever-changing regulatory environment
The fact that the Government makes constant changes to the regulations does not help the subcontractors as they always need to stay on top of the information, making sure they are working within the appropriate rules. Not abiding by the rules and regulations of the land can bring hefty fines from the government.

3.

Communication blockades
Communication is always the key to leading efficient operations and making sure that they all fall in place according to plan. Improving communications can streamline operations and improve accuracy - no room for errors, mistakes, and miscommunication if all information is in one place and everyones on the same page. Managing documents and files can be a tough cookie to handle yourself, when as a subcontractor, you must keep all information organized. Most construction companies still use paper-based records and archaic processes.

4.

Integrating new technologies
The construction industry is shifting, now even more with the “help” of the Coronavirus threat. The need for mobile and cloud based construction management software is vital! Many people within your team may fear it and look upon it strangely, but the truth is that inefficient processes and old, outdated work practices can run your business to the ground. The future is now and subcontractor management software may be the solution that will keep your team alive! However, we know that acquiring capital to invest in such technology can be a challenge (especially to small businesses) so having a tight grip on your business finances is crucial.

How to overcome the challenges

Rome was not built in a day, so facing these challenges all at the same time could ruin anyone. Take them one step at a time and try to tackle singular challenges. You can have another look and try to see the Big Picture. Is there a solution that might help you tackle more than one challenge at the same time? Is there a solution that would help you run your business smoother, giving you the clarity you need and the extra time for harder cases that you need to solve? We encourage you to look at subcontractor management software available on the market.

Every company is different, but the challenges it faces are similar and the modern technology is here to support them. Moreover, here’s few ideas of how you may tackle them:

Fight the labor shortage by providing training
Why not start building up your team earlier and teaching junior staff how to do the job properly, the way you would like it to be done? Only 1% of employers had looked at investing in training for apprentices or inexperienced staff, to ease the skills shortfall. The Government invests in training and apprenticeship schemes (over 1 billion pounds!) but that does not guarantee jobs or people wanting to come and learn. A clear commitment from all the construction industry parties is needed! Also, to be noted: younger apprentices will have a knack for new technology and they can help you implement the software solution for your company without much hassle!

Work on communication & workflow
Having an ERP cloud-based solution might do the trick here. Keeping all information safely stored in a single repository where all your team members can access it, at any given time will help with your communication. Most solutions on the market allow you to log in from any place and at any time (where you have an internet connection, and you own a mobile/tablet/laptop/desktop either Android or Apple Tech). You can set up restrictions for certain information depending on the department that your employees are part of and make sure the access to documentation on the project is smooth.

Embrace the new technologies wisely
The subcontractor management software available on the market doesn’t come cheap! We know that some solutions might not be available with your current budget, but you need to look at the long term gain and see how the software proposed can help you make substantial cost-savings. Many construction industry companies have legacy systems - eg. estimations and quotes are still done in Excel spreadsheets - that are not even close to being as streamlined or comprehensive as a cloud-based ERP one.

The future of Subcontractors in the industry

Considering that 82% of the companies in the construction industry plans to spend the same or more on technology, it is wise to invest in a cloud-based construction management software. 82% of contractors agree that BIM is the future of design process and project information and 70% believe that BIM is still not sufficiently standardized across the industry.

As with any other industry, some issues/challenges that have plagued the subcontractors are here to stay. Some will eventually go away in time. However, with the increased number of construction companies that look towards the cloud based construction management software, the market is becoming more competitive each day that passes. As a subcontractor, you need to always look towards the further development of your business, to the future, and as we all know: Digitalisation is key for survival! You need to know how you can react to the challenges life (and the market) throws at you.

 

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