Construction industry margins are often razor thin, and the cost of doing business is as wide as the ocean. Competition and firm consolidation has created additional cost pressure, even as schedules compress and budgets push teams to do more with less.
In this environment, no wonder construction professionals are looking for new ways to control project costs and increase construction profits. Fortunately, new technologies and processes are making it possible. Here are 4 surprisingly simple ways to boost your profits in the new year.
1. Reduce RFIs
Construction projects are complex, and the likelihood of errors and omissions is high. The average construction project generates 9.9 RFIs per $1 million of construction cost. Considering that the average cost of an RFI review and response is $1,000, this represents a significant impact on construction margins.
Construction professionals working in a cloud-based collaboration environment can significantly reduce RFIs, as well as the time and cost associated with responding to them. Being based in the cloud, this environment can be accessed anywhere, streamlining communication and coordination between designers and builders, which improves quality and accelerates delivery.
With everyone working together, in the same platform, a change in one view is automatically reflected in all other views, eliminating the margin of error. Additionally, notifications can be delivered immediately to stakeholders, and responses provided almost immediately. Many organizations report that RFI response time can be reduced from days to hours with the use of such software.
2. Reduce Rework
Rework is costly, and can cause late deliveries, damaged reputations, and even worker injuries. The Construction Industry Institute reports that rework accounts for between 2% and 20% of a project’s total contract amount. Most rework is caused by errors and omissions during the design phase, or the correction of errors and clashes detected while the work is in progress.
[INFOGRAPHIC]Top Causes of Construction Rework
Working in a unified system can significantly reduce rework in several ways. It reduces the incidence of errors and omissions in the design phase. It ensures that all subs and trades have their hands on the latest version of construction drawings, including markups, RFIs, and change orders. And when errors do occur, managing drawings and documents from within a common data environment helps professionals identify them earlier and thereby reduce the cost of addressing them.
3. Reduce Project Duration
Late delivery can eat up your general conditions in a hurry, not to mention leading to penalties and the loss of incentives. Timeline inefficiencies start early in the process with the traditional design-bid-build process, because drawings have to be prepared twice. Once, for the bid, and then again to make the design constructible.
With a construction management platform, the process can be streamlined. Working with designers, the GC can conduct better constructability reviews with better models and sub-models for each phase of construction. A 3D model can help facilitate coordination of the steps and processes, provide useful context to 2D drawings and ultimately deliver a more predictable path to project completion.
Combined with the benefits to RFIs and rework, this has the added benefit of reducing delays and keeping the project on its timeline.
4. Manage Construction Risk
Legal claims and disputes are costly. They disrupt the process, incur costs, damage reputation, and delay schedules. They can arise at any point during construction, over almost any aspect of the project, including time and cost overruns, scope, budget, and schedule.
Construction document management software provides better ways to manage and alleviate risk by providing greater transparency and easier resolution of any disputes that may arise. In the event that a legal claim arises, the software ensures that the documentation is complete, which helps to mitigate the cost and duration of the dispute, and improve outcomes.
Project complexity continues to increase, as does owner demand for greater efficiency and quality. Switching to a cloud based collaboration process offers construction companies a way to increase profits and remain competitive in this challenging environment.
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