Published on:
March 17, 2023
The construction industry is forecasted to grow steadily over the next 5-7 years, doubling its size between 2020 and 2030. The construction market was recorded at around USD 6.4 trillion in 2020. The projected size will reach USD 14.4 trillion in 2030.
However, this projected growth doesn’t mean that the problems that have existed in the industry will magically go away. In fact, it may even magnify these problems if left unaddressed.
Some of the problems builders face include age-old issues such as regulations, communication, skills shortage, and safety. But among all of these challenges, there’s one major problem that keeps construction industry leaders up at night – resources.
From materials to labor to equipment, managing resources can make or break the viability of a builder’s business. Already faced with slim margins and logistical challenges even before the pandemic, a single percentage change in the cost of resources can mean a significant hit in a builder’s profitability – and may lead to bankruptcy.
For example, on average, materials make up 65% of the total project cost. While the price of materials is determined by markets, it’s upon a builder’s management team to make sure that additional waste in materials consumption is avoided. It’s also their job to find other ways to improve profitability, say, in improving team productivity. This is why resource management is a critical aspect of every construction project for builders. It's become an even bigger concern in countries where inflation has skyrocketed such as the Philippines because it’s the builder’s margins that are worst-hit when the cost of materials and labor go up.
We all want our businesses to grow with the uptick in the market, but this shouldn’t come at a price. Builders also need to avoid declining reliability (in terms of meeting delivery dates) and a dip in profitability because we aren’t managing resources properly.
Other than profitability being directly affected by the mismanagement of resources, builders also run the risk of tainting their reputation because improperly managing resources can also mean project delays. Builders face a lot of pressure to meet deadlines to deliver projects on time and failure to do so can lead to clients finding other builders for their next project.
Construction resource management is a set of processes to manage the use of construction resources. Ultimately, construction resource management ensures that projects are delivered on time and within budget. This is usually the responsibility of construction managers or project managers. Activities under it include:
The objective of managing construction resources is to maximize utilization, reduce waste, and (hopefully) minimize any other unbudgeted costs and delays.
Builders have been doing construction resource management for centuries. However, modern-day pressures such as prices reaching the stratosphere, ultra-short delivery dates, new competition, and complex requirements have made it increasingly difficult for construction managers and project managers to manage resources effectively.
Traditionally, site resource management is carried out manually in construction companies, which can work fine for small sites with only one or two ongoing projects. Some builders may use a combination of paper forms, spreadsheets, direct messaging, and email to manage the different kinds of resources.
However, as more projects come in, manually managing site materials becomes increasingly difficult to pull off. With bigger jobs come more processing that, if done manually, will have your team encounter many things falling through the cracks, leading to manual errors, difficulty tracking material details, overlooked updates on requests and deliveries, lost documents, and more. Companies default to hiring more employees to manage the growth in business, but this does not always ensure that process inefficiencies will be eliminated – or at the very least, minimized.
This is where digitization or using digital tools to manage site resources come in. As mentioned, modern-day companies use a bunch of online solutions to manage resources. However, this kind of “patchwork digital transformation” is hardly sustainable and scalable.
At some point, construction managers and project managers will need a more robust, more “made-to-fit” solution that can handle multiple project sites and multiple internal and external teams in one place. What is needed is a resource management software that not only digitizes forms and processes but also automates (and therefore optimizes) the various steps involved in them.
The challenge is for construction managers and project managers to manage site resources effectively and efficiently. Effective site resource management means being able to successfully carry out the 3 key activities above. Efficient site resource management is about optimizing management processes to realize time savings among management staff. And you know a software is good is if it can drive up both the effectiveness and efficiency in managing construction site resources.
A construction resource management software doesn’t only facilitate easy data entry through a smartphone, tablet, or laptop, but also stores, analyzes, and visualizes information and eventually, predicts outcomes. There are a lot more considerations to be made when assessing a software that is right for your site resource management needs, which be covered in succeeding articles. From the different features to look out for, to how buying software can be justified to the board, to measuring the benefits to clearly demonstrate return on investment – these are essential parts of the purchasing process that should not be ignored.
In addition, hiring more site resource management staff to manage more projects adds to the overhead that can, in fact, be avoided with the right software. Not to mention the time savings and direct cost savings that may seem small on a per-project basis but when looked at from an organizational level is a lot of money that can go back to help improve a builder’s profitability.
The bottom line is this: if you care about profit margins and want your company to thrive, going digital to manage site resources is the ONLY way to go.
