General contractors (GCs) face many challenges in their day-to-day work. From low quality subcontractors to cash flow problems and a labor shortage, GCs are vulnerable to added costs creeping into their low profit margins. Construction site hazards are also a big problem and should be addressed before the project starts. By addressing these challenges proactively, GCs can help ensure profitability and project manager success.
1. Poor communication
Good communication between project managers and the construction company is the key to a successful construction project, and bad communication with a construction firm can lead to delays and added costs. Taking a collaborative approach to a project is one of the best practices to adopt if you want to reduce both conflict and claims. When construction workers work together, they can often come up with better solutions.
Project communication between construction professionals should be provided through a platform that everyone is comfortable with. If necessary, provide training to those who aren’t familiar with it. The platform must be capable of reaching office, design, and field staff.
2. Subcontractor risk
As most general contractors know, good, quality subcontractors can be hard to find. Many suffer from the challenges mentioned in this article. Having a variety of subs to choose from improves bid competitiveness and project quality.
General contractors need to find new ways to connect with subcontractors. Lead sites like PlanHub allow GCs to reach out directly to qualified subs and invite them to bid their projects. This can be especially helpful when bidding out of town work.
3. Cash flow problems
A recent survey shows that it can take construction companies an average of 83 days to receive payment for their work. Meanwhile, costs continue to roll in and there’s no cash to pay for them. Contractors in the construction sector have to plan for construction material purchases and other large expenses, or they could run out of money. Profitable businesses end up in bankruptcy because of a lack of cash.
To help combat cash flow problems, look for funding alternatives that delay payment, like material financing, or help you get paid sooner, like invoice factoring. Both will help improve your cash position so that you can continue operating until you get paid.
4. Labor shortage
The construction industry has suffered from a labor shortage for years now. Construction productivity has been exacerbated by the recent global pandemic. Contractors are finding it hard to find workers, so projects are being delayed, costing contractors and owners money.
Contractors should make their companies attractive to young workers. This can be done by providing training programs for unskilled workers and adopting technology. As an industry, construction needs to reach out to women and people of color and let them know the advantages of a career in construction.
5. Reliance on paper
Many contractors, particularly small ones, still rely on paper documents to run their businesses and projects. In today’s fast-paced environment, projects can’t wait on paper documentation. Many times, changes are made and communicated electronically before paper documents are updated.
There are many tools available to help even small contractors improve their processes and enter the digital age. Many SaaS (software as a service) products are available on a subscription basis for a small fee. Before making an investment, take the software for a test drive so you can experience it and see if it will work for your team before you purchase.
6. Safety and health
Everyone knows that safety and health should be the primary concern on a construction project, but they often get lost between budget and scheduling problems. Workplace illnesses and injuries can lead to lost time and productivity on a project. This usually leads to project delays and added costs.
Contractors should develop a culture of safety and provide ongoing training for workers. Having a consistent, well-run safety program with the best construction safety tips will increase productivity and help attract top talent.
Overcome bidding challenges
Use construction bidding websites, like PlanHub, to access general contractor software free and bring your estimating practices into the 21st century. Its robust platform gives you the tools you need to manage your bidding process and reach out to contractors and suppliers to get the best price. For a free demo, contact us today.