The biggest construction organisations in the UK such as Balfour Beatty and Kier Group are undergoing rapid digitisation, becoming industry leaders in automation and AI. According to McKinsey, emerging digital technologies will focus on helping players overcome the industry’s biggest challenges, including cost and safety concerns.
However, many of the industry’s small businesses, contractors, subcontractors and suppliers are finding themselves left behind the digital curve.
For many smaller construction businesses, making the change to digital can be intimidating for an industry that relies on manual systems and processes. However, switching to digital needn’t be as hard as you think.
When systems are in place, digital tools can do anything from consolidating the costs of project into one system, to managing overruns or over-costings of a project, to simply organising yourself and your workers more efficiently and saving valuable time.
As competition in the sector becomes ever more intense, it is more important than ever for business owners to keep projects running smoothly and clients happy.
Digital tools and processes can automate some of the more humdrum, but essential, back-office work for business owners, leaving more time freed up to concentrate on growing the business. With that in mind, here are my top five ways to easily integrate digital into your operations as a construction business:
- Update your paper-based systems
Small businesses tend to fall into the trap of ‘making do’ with their existing digital systems, many of which may be outdated. It’s tempting to leave technology upgrades until the previous system breaks, but this can leave you vulnerable to having to accept the quickest fix solution.
However, taking the initiative to update your digital software can really help a business streamline its processes and establish quality control. Digital project management tools can automate admin tasks and centralise document management. Having the digital tool in place will save huge amounts of time on planning and working out objectives for each project, as well as centralising communications with contractors and suppliers.
- Plans change… keep track of them!
For any project to be completed successfully, robust and detailed records must be kept and maintained. It is crucial that systems are in place to ensure all amends to architectural plans and daily problem-solving are traced and communicated to everyone, particularly when a project involves multiple companies or collaborators.
Digital software can keep and maintain all documentation in one place, allowing more control and better communication between parties to deal with the inevitable changes and challenges throughout a project.
A robust document management system can save considerable work in retrieving all the information needed. Digital document management can allow multiple parties to feed into and see the plans and amends, minimising the risk of time wasted from someone onsite working from the wrong plans, for example.
- Late payments are a killer – use digital to chase invoices
The culture of paying invoices late is endemic in the construction sector, causing serious problems for small businesses looking to get paid. Before its insolvency in January last year, construction giant Carillion had built 120-day payment terms into its dealings with small suppliers. Having to wait months to be paid for their work can seriously affect small businesses’ cash flow, and in the worst-case scenario could even cause them to be unable to pay their own staff or suppliers.
Investing in software to help you chase invoices can be a game-changer for small businesses – digital invoicing can get you paid faster and with less time spent chasing clients. For example, recent QuickBooks data analysis shows that raising an invoice on mobile gets people paid after an average of 8 days, instead of 28. As a small business you should also be leveraging trade bodies and government payment terms standards to hold late payers to account, and to try to agree better terms with your customers.
- Automate time management
As an industry that uses so many contractors and sub-contractors, time management is crucial in construction to ensure that businesses are resourcing correctly to get projects completed on time, and contractors are being accurately paid for the amount they work.
There are now tools easily available that can feed the time spent by contractors onsite directly into an app, using the time and location services on their mobile phones. These real-time updates can efficiently capture all the time data needed for invoicing and payroll, as well as keep tabs on scheduling and deadlines. As well as the practical benefits of accurate time management, it also minimises conflict and can help maintain a relationship with contractors.
- Ensure you are compliant with government’s digital policies
Staying up to date with government changes is vital for businesses to avoid a slap on the wrist or even a fine for non-compliance. Timelines for implementation of these changes can often be short, so it’s important to plan ahead.
In an effort to eliminate the tax gap between what the government believes it is owed and what it is actually paid, HMRC implemented the Construction Industry Scheme (CIS) which deducts tax at source, effectively rendering subcontractors like employees. Without specialist software or advice CIS can be complex, and mistakes could potentially be costly.
And as soon as construction businesses get their head around the CIS, the VAT submission system was recently overhauled via Making Tax Digital (MTD). If you are a VAT-registered business with a turnover above £85,000 and pay VAT to HMRC, you will need to comply with MTD regulations.
If you are not already compliant, it is advisable to invest in specialist accounting software such as QuickBooks, which can make it easier to become compliant now.
Imagine being able to use artificial intelligence and machine learning data to get real-time insights into your business, to review funding options and accurately forecast.
Businesses that embrace digital and use it to their advantage will also have the benefit of freeing up time to manage and build good relationships with suppliers and clients.
Digital is driving fundamental change in how we work across all business sectors, connecting systems all along the supply chain. Those who comply and adapt are set to reap the rewards – and will continue to grow and prosper.
Carl Reader is founder of the #BeYourOwnBoss movement and chairman of business advisory firm d&t, which has over 2,500 clients in the UK.