No one likes a contracting market and right now, many construction businesses are doing it tough. With COVID-19 raging all over the world, businesses everywhere are grappling with what it means for them. 

Sadly, some may not survive. But for those already in reasonable shapea subdued market can still present opportunities. 

The focus for businesses in a downturn becomes razor sharp: 

  1. Survive 
  2. Emerge stronger when conditions pick up

If you plan to use this time to strengthen your business for the inevitable upturn, here’s what we suggest. 

Cut your operational costs

Regardless of how strong your business is going into a downturn, a review of all your operational costs is the best place to start.  

You should:

  • Review existing contracts and building product costs
  • Scale down your operations by reducing labour, where possible starting with contractors
  • Review non-essential expenses including office expenses (travel, entertainment, energy, etc.) and any IT expenses that do not bring a clear ROI 
  • Consider sub-letting assets that are not utilised.

Focus on your people

Uncertain times create anxiety for your people. So how can you create more certainty? CommunicateAs much as possible. Communicate what has changed, what you’re doing about it and what it means for them. The situation tomorrow may be very different from today.  

Thinking longer term, what will your team need to look like when the market improves? What will they be doing? How will they be doing it better than they are today? That may mean reassigning, upskilling or retraining. Determine which roles are crucial, and which can be combined. Upskilling your staff is a great way to control operational costs as well as making staff feel valued in an uncertain climate.

It may also mean investing in better tools to help them do their jobs.  

Either way, you’re going to need good people. How you involve and prepare them now is critical

Female engineer visiting a construction site
How you involve and prepare your people now will help your construction business rebound faster and stronger.

Review your processes and systems 

When market conditions are strong, construction businesses are busy on project delivery. But what happens when project work slows down or stops altogether? 

If you’ve cut your operational costs and you still have money and/or time to invest, now is the best time to focus on your business. What improvements can you make that will make a difference

All companies evolve and grow over time, but often their legacy business systems hold them back. Quickly you can find yourself trying to fit evolving processes to systems that don’t meet your needs anymore.

Review all your processes and systems and be prepared to:

  • make some tough decisions about which ones are holding you back and ready to retire and
  • explore other solutions that are better suited to your current and projected business capacity. 

Remove your business barriers 

When the way we do business is suddenly under duress, those workarounds you’ve been putting up with can suddenly become major limitations. Think about it. With all your office staff now working remotelyhow is your business continuity coping? How many of your current systems are starting to creak louder now your people are working from home?  

For any business that is not on the cloud, suddenly accessing files and the right version are likely to be even more problematic than it was before. Likewiseyou may find yourself wasting time chasing your people for status reports and updates or because critical business information is concentrated with certain members of your team. Accessing business information doesn’t have to this be hard. You could address barrier like this with a product such as Salesforce, which helps businesses increase data transparency.  

Ask yourself: what are the biggest pain points in our business? How could we overcome them? 

Working from home
How well set up is your construction business to have everyone working from home?

Increase transparency across business development and tendering 

More than ever, your business development people should be focused on securing the right kind of work for your business. But that can be hard when opportunities are scarce and conditions are changing rapidlyWhat systems do you have in place to keep track of your key customers, suppliers and competitors? Or even projects as they’re announced? How vulnerable are your business relationships if individuals in your BD team are no longer around?  

Use this time to stay on top of your market intelligence and your relationships to ensure you’re well positioned when the tenders flow again. Optimise your processes across other aspects of business development, too, including scoping and tendering.  

Improve your operational capacity 

When work is booming, operational staff are typically stretched to simply keep delivering to deadlines. They often lack the time and space away from project delivery to reflect, let alone follow through, on improvements that would make their jobs easier.  

If it’s not business-as-usual for your operational teams right now, put them to work instead on addressing those ideas they’ve always had in the back of their minds, but never had the time to implement. 

For example, could you free up your project managers from admin tasks by automating contract documentation or digitising equipment allocation, like our customer Western Earthmoving (read their story here)? Could you streamline processes to allocate jobs and manage your subcontractors more easily like Direct Projects (covered in this case study)?  

Identifying inefficiencies in your operational capacity is a good place to start. What else do you need to bring them to life? 

Removing silos and increasing collaboration 

Making improvements across your business development and operational functions can yield great benefits. But until everyone in your business is truly aligned and working together, there is still room for improvement. 

For example, does your business development team know the types of projects you should work on to deliver better margins? Do they know your delivery team’s projected capacity when bidding for work? How easy is it for your project managers to find out what plant, equipment and resources are available to them? 

Estimators at mechanical services company Climatech are now drawing on data from their delivery teams to improve their pricing (covered in our Climatech case study). Where could your business benefit from removing those silos?

The road ahead is not an easy one…

But the sooner business leaders take action to adjust their strategy to a new reality, the more likely they will be in a strong position to take advantage when conditions pick up.