There’s no doubt that the COVID-19 pandemic has caused significant disruption to the construction industry. Disruption is nothing new to the industry though, and while the ENR’s 2021 forecast expects the industry to recover slowly through the first half of 2021, many contractors are using this as an opportunity to evaluate their current processes to be more efficient and cost-effective when the dust eventually settles.
In this article, we’re going to dive into operational efficiency in the construction industry – what it is, why it’s important, and a few tips to help you improve upon your current processes.
What is operations efficiency and why does it matter in construction?
Operational efficiency can be measured as a ratio between the output gained from the business and the input to run a business operation. Working to improve operational efficiency means you’re working to improve that ratio. Typical inputs would include:
Time and effort
Typical outputs would include:
Money (revenue, margin, cash)
Essentially, operational efficiency for construction is your ability to deliver projects or services in the most cost-effective manner, without sacrificing quality of work, productivity, or profit. Some examples of how to improve operational efficiency would be:
Reducing idle time for project teams
Streamlined and automated planning
Reducing defects and rework
4 Tips to improve your operational efficiency
1. CENTRALIZE YOUR PEOPLE DATA TO MAKE IT EASILY ACCESSIBLE
Construction projects produce mountains of data, with a lot of that information being stored in multiple softwares and spreadsheets. Consolidating relevant information to make data-driven decisions for your company can be time-consuming and tedious to say the least. Centralizing your data provides a single source of truth that your entire organization can build off, and ensures everyone is looking at the same information.
Why people data though? Centralizing your people data helps to create a foundation that every other department can use to inform their own decisions and processes. Sales and marketing have eyes on available resources for upcoming project bids, human resources can create informed recruitment strategies based on workforce utilization, and project operations can create balanced workloads for their teams – all from a single tool.
In short, centralizing your data creates a more efficient planning process. Resource management solutions, like Bridgit Bench, allow you to track all of your people in relation to your projects, and allows you to customize the software to track any information that would be relevant to any of your departments.
2. COMMUNICATE CLEARLY AND OFTEN WHEN POSSIBLE
Efficient and effective communication at every level of your organization will be key to driving operational efficiency. Effective, constantly flowing communication helps to eliminate misunderstandings and avoidable errors. It can also help to provide clarity for your team in regards to their role and expectations for each project. When you extend that communication to the project level you’re also ensuring that idle time is reduced for your project teams, which in turn allows you to find more productive tasks that can be done.
Creating a system of constant communication at the project level can also help to uncover new methods of problem solving from your project teams, and help to develop a more efficient process onsite to reduce lengthy pre-shift meetings and eliminate idle time.
3. USE CONSTRUCTION SPECIFIC, CLOUD-BASED SOFTWARE
Many software solutions exist for the construction industry to leverage to improve their operational efficiency. Tools like Bridgit Bench help to reduce time-consuming manual tasks and allow your team to spend more time on productive, or profit-driven, tasks instead.
Many of these software solutions can also be fully integrated into your existing tech stack, allowing you to automate many of the time consuming tasks associated with a project’s lifecycle. Cloud-based software also helps to increase the accessibility of your decision-making data and ensures your team is up to date on any adjustments or modifications to a project or resource plan.
As we discussed earlier, communication is key to driving operational efficiency. Using cloud-based software built specifically for the construction industry means that everyone is on the same page, which makes your communication that much more effective. For more information about manpower planning, check out this guide.
4. MANAGE YOUR TEAM’S TIME EFFECTIVELY
One of the biggest costs for any project will be the resources allocated to it. Having a firm grasp on the resources needed to hit benchmarks can help to mitigate risk regarding over or under staffed projects. Two areas to pay attention to will include:
A strong emphasis on utilization rates
Your workforce utilization rates will provide insight into how stretched your team is. On the flip side, your workforce utilization will also help to identify team members that are underallocated and costing you money.
Your company culture also stands to benefit from an optimized workforce utilization rate because you’re actively monitoring your team to avoid burnout. In fact, a study conducted by NewScientist revealed overworking your team can lead to certain negative health effects. These negative consequences can quickly be reflected in your organization’s productivity and ultimately – its bottom line, whether it be inconsistent attendance, or rising costs of health insurance. Managing your team’s utilization effectively is a sure fire way to keep your team healthy, happy, and engaged with the work they’re doing.
While overloading your team can lead to burnout, the silent killer for your margins will be underloaded team members. They have a tendency to go unnoticed for long periods of time, which can lead to significant costs to your organization. Resource management tools like Bridgit Bench provide company-wide insight into utilization rates to help ensure you are right-staffed on all projects, at all times. For more information about capacity planning and using utilization to your benefit, read this article.
Developing sound and effective recruitment strategies
One of the most challenging aspects of effective resource management is knowing when to bring on more team members to help with a project. Having an overview of your entire project pipeline and the respective resources being allocated to each project can help identify areas where your team is either spread too thin, or needs more work. Timing is everything when it comes to construction projects. Onboarding and getting up to speed can take weeks for each new hire. Closely monitoring your utilization can help you accurately forecast project demands well in advance to ensure your HR department can be ready when the time comes to bring on new team members. Some indicators it might be time to hire might be:
Quality of work is decreasing
Too many opportunities needing to be declined due to lack of resources
Your skilled workers are being assigned basic tasks
Your workforce utilization rate is consistently pushing 100%
Tip: A utilization rate of 100% likely means your team is spread too thin. Utilization rates are calculated using billable hours, and there are many administrative tasks that require your team’s time outside of billable project work. Make sure you understand the administrative duties of your different work teams (is. Project Managers) and calculate a utilization rate that allows them time to complete these tasks without being overworked.