Where did my margins go? Breaking the cycle of low profit margins in construction

The goal of most construction projects is simple – finish on time and make a profit while doing so. The construction industry has long been plagued by persistently low profit margins, even though the demand for construction continues to grow. Rising costs are contributing factor to decreasing profit margins, but there is also a general reluctance of the industry to move towards a more digital way of working which can have an impact on overall budgets and that all-important margin.

Resistance to technology in construction 

It’s an understandable objection – we've always done things this way and there’s never been any problems. Traditional processes and ways of working have held fast in construction; where other industries have adopted technology solutions and quickly adapted to a largely digital world. The upfront costs of new technology is a significant – and valid – concern for construction. Costs are high, and the pressure to deliver projects under budget is an always-present factor. Couple with the overall attitudes of a digitally-skeptical workforce and it’s really no surprise that there is a tendency towards resisting new technologies.  

There’s nothing inherently wrong with tried-and-true methods; buildings get built and projects get completed. But there’s a gap in profitability that digital ways of working can help address. 

Paper-based construction processes and delays

Admin takes time, and it’s not unusual to step into an on-site office with papers all over the wall as a blueprint for a project’s entire lifecycle. As the project nears completion, all this information will need to be collected and digitally recorded (as part of the Building Safety Act initiative, required by law). It’s a full-time job and can take weeks to complete.  

Forms, updated drawings and floor plans, RFIs, and records of regulatory compliance add to the paperwork burden throughout a build. Mishandling documents or working from out-of-date drawings can lead to huge delays, increased costs and ultimately impact margins.

Digital construction management solutions

Digital solutions are a game-changer for the construction industry. Far from being a hindrance, the tools available now can transform how construction projects operate. 

• Streamlining processes: Admin time is reduced when documents are automatically updated in one centralised source of truth. Less time spent on chasing paperwork means more time spent on building and contributing to profit margins. 
• Improving accuracy: Having a clear audit trail and accountability reduces the likelihood of costly errors and allows for more clarity in decision making. 
• Enhancing communication: Collaborative working is key to avoiding miscommunication, especially where multi-site projects mean the sharing of information across larger teams. Having a platform that pushes real-time updates across all members means everyone sees the necessary, and correct, information.  
• Boosting productivity: Having a mobile app provides on-site workers with detailed information at their fingertips without the need to chase information through phone calls, emails, or even visits across multiple sites. Instant access to information increases project efficiency. 
• Data-driven decisions: Analytics and reporting tools offer insights for better decision-making, while automatically collecting vital information for regulatory compliance. 
• Automatic collection of materials: O&M manuals are one of the biggest undertakings on any construction project, but having your build details automatically collated as a project progresses can turn a time-consuming task into one that keeps your project closer to potentially tighter deadlines. 

Ready to transform your construction management?

The construction industry’s low profit margins are tied to old practices and inefficiencies. Innovation and technology are the keys to a more profitable future in construction. 

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