People and material make up the lion’s share of a contractor’s overhead, so it’s no surprise that efficiently managing these is the best way for contractors to improve their profitability. Even in 2021, many general contractors (GCs) use analog solutions like paper and pen to capture and understand these costs. Not only are offline methods inefficient, but they’re also prone to missing data — which can be costly.
So, why haven’t more GCs adopted technology to help better manage their costs? I’ve talked to thousands of contractors to understand what stands in the way of change and to determine what they consider essential for tracking hours and project costs. The most common essential requirements are:
- The software needs to be easy enough that employees can pick it up in minutes.
- The platform should be designed for the unique needs of the industry.
- The reporting has to capture and report on actual dollar costs segmented in ways that are specifically helpful to the construction industry, without an overly complex setup by the contractor.
- The software data must easily integrate with financial systems.
- It should link the cost data to project-level activities so you can better understand what’s working.
Truthfully, these features can be hard to find. But new platforms are available to enable contractors to better manage their teams. These platforms ultimately help contractors save money by eliminating wasteful spending and reducing the time it takes to do manual admin work. To better manage people and materials, every modern contractor should build a toolkit that includes the following tech solutions:
1. Time & Location Tracking
Since employees are one of the biggest expenses for every construction company, this is the most logical starting point in the modern GC’s tech stack. Instead of relying on pen and paper to record hours, time-tracking software allows you to easily capture hours by having your workers clock in and out with a mobile app. Time-tracking apps offer several advantages:
• Accuracy and trust — GPS location tracking drives transparency about where your entire workforce is at all times. This can have a huge impact on the overall accuracy of the time reported and paid out. I’ve seen companies save 10% on payroll costs by tightening up their time tracking. Usually, it’s not due to workers actively cheating or lying about their hours; it’s due to people guessing start and finish times because it’s cumbersome to keep an accurate paper trail.
• Compliance — Staying compliant in this industry is challenging. Built-in features like automatic overtime calculation and break reminders help you drive compliance across your team.
• Data capture and analysis — Your time-tracking system objectively marks hours worked by each employee on each of your projects. Time tracking apps designed for construction companies support workers by tagging hours to projects and cost codes.
Once you collect and organize this data, it allows you to radically improve your cost management, future bids and payroll functions.
2. Cost Management
One of the most problematic aspects of managing your costs and budget is capturing the data and making it accessible to your firm’s key decision-makers. Most accounting systems enable you to allocate costs at a client, project and cost-code level. The challenging part is getting the information from the field into your accounting system.
A modern time-tracking system designed for construction companies solves this problem by automatically feeding time entries and job cost allocations to your accounting system.
The combination of employee time tracking and cost management takes contractors from guessing how they’re doing to actually knowing their profitability.
Accounting systems are designed for accountants, not construction business owners. However, a new category of workforce management software — designed specifically for the construction industry — is emerging that provides
real-time views of job costs, budgetary goals and expenditures.
This real-time view of your actual spend versus budget allows you to make better decisions as a project is progressing and becomes a reference point to improve your future bids. These costs are automatically synced to your accounting system.
Many of the payroll tasks that have traditionally been done manually are now automated via modern software solutions. If you have an hourly workforce, your payroll system should be able to take a feed of the hours captured in your time-tracking app. Sharing this data eliminates the need to calculate overtime hours.
Plus, modern payroll systems are more efficient, as they can pay your workers electronically. Even if workers don’t have a bank account, your payroll provider can simply issue them a debit card and they can access their weekly paycheck at any local ATM. Manually writing checks doesn’t add value to your business, so this is another valuable time-saving solution.
For more than a decade, the construction industry has been suffering from a skilled labor shortage. Most construction owners do not have the internal HR resources to find talent in an increasingly competitive environment. At a certain scale, you can probably afford to hire a human resources (HR) specialist, but it can still be a challenge to find HR experts that have the technical expertise to recruit and vet for skilled trades.
Alternatively, a staffing firm can effectively help you discover talent. Be sure to hire a firm that specifically focuses on construction trades so they can properly evaluate potential workers. But, be warned: firms that have a bench of workers ready for hire will often try to send you staff that doesn’t exactly match what you are looking for. A great staffing firm will take the time to understand your business and help you promote your company to top candidates. And this way, you can hire them once you know they’re going to be a good fit for your team.
Using a staffing firm may initially seem more expensive than trying to do it yourself. But if you account for all the time that goes into reviewing applications, interviewing, background checks, onboarding, payroll, taxes and insurance. In that case, you’ll find it can be a financially attractive option.
5. Field Management
Business owners often voice frustration with fragmented communications within their company. They spend their day jumping between text, paper, email and phone. But none of this data is captured in a way that can be easily accessed and used by the rest of the organization. It’s hard to organize, and it’s siloed. Many give up doing anything with it outside of reacting to it as it comes in.
In contrast, next-gen workforce management platforms consolidate your communication and scheduling channels into one easy-to-use platform. The real win comes from matching up your cost data with the activities on that project. This combination helps you quickly understand why some projects are more profitable than others and guides you in adapting your plan to improve in the future.
The Future of GC Management
It’s time for owners to reduce their relationship with offline management — there are more dependable, accurate and time-saving options they can rely on. There’s no reason to continue overlooking software that is designed to improve profitability. High-powered phones with robust batteries are ubiquitous, mobile phone data costs have plummeted and cloud-computing makes sharing data easier. It’s about time that well-designed, world-class software has found its way to the construction industry.