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Industry Insight

COVID Changes in Construction

If there’s one thing 2020 taught the construction industry, it’s that flexibility is everything. Having the ability to make changes, adapt, and stay organized is important. It’s even been the cornerstone of the success for many companies through these challenging times.

 

But just how much has COVID changed construction? And how are the most adaptable companies keeping track of these changes? Read on to find out.

 

COVID’s biggest impacts on the construction industry

The Coronavirus Pandemic affected the construction industry in some profound ways. Many of these impacts are changing the way the industry operated for many years. It’s hard to tell if any of these changes will be permanent. However, construction companies and personnel need to adapt to them now.

Job site safety

It wasn’t that long ago that job site safety meant wearing a hardhat and fall protection. Now it means so much more.

 

Construction sites across the world are adapting to strict social distancing guidelines. Workers must stay six feet apart from each other. If they can’t stay clear from one another, they need to don PPE. Also, bathroom facilities need constant attention to remain sanitized and safe. 

 

One of the biggest changes has to do with personnel. Employers are telling employees to stay home if they aren’t well. Until now, sick days were scarce in this industry.

Extended timelines

The amount of time it’s taking for some projects to complete has more than doubled since the pandemic began. Regulations shut many job sites down for months at a time. This downtime cost builders and owners lots of time and money.

 

Many supply sources closed down as well. With job sites closed, suppliers from small shops to large chains had to make decisions. Many found it better to shut their doors and furlough employees. When suppliers re-opened, they found a backlog of orders to sort through.

 

All these factors have added up to increased timelines and scheduling conflicts. Owners, general contractors, and project managers need to adapt to keep projects from derailing completely.

Materials shortages

One of the rather unexpected changes to come about from COVID is the materials shortage. When authorities let sites reopen, many contractors found themselves struggling to source materials.

 

The lumber industry took a hard hit from COVID. During the shutdown, many lumber mills and logging operations had to shut their doors as well. Coupled with the fact that most homeowners were off from work during the best DIY-months of the year, lumber started flying off of the shelves.

 

Trucking was also affected by COVID. It drastically increased the amount of time it took to get materials to a job site or supplier.

 

When construction sites reopened, it was clear that there weren’t enough supplies to go around. The supplies that were available were as much as twice as expensive, potentially destroying the profit margins on most projects.

The effects

All these factors add up to some expensive and significant changes. Increasing safety measures, extending deadlines, changing suppliers, and shopping for alternative materials are all changes that no one was expecting before the pandemic.

 

So how do you survive it?

How to stay adaptable with the right technology

If there’s one way to survive all of the changes that COVID has thrown at us, it’s through adapting. The construction industry as a whole is reluctant to change. But, adapting to new policies, practices, and tools is important. They could be the difference between surviving and allowing tight margins to swallow your company or project up and spit you out.

 

The best way to implement these changes is to embrace technology. The right construction software will help you adapt and overcome these changes. You’ll be able to focus on the job at hand while streamlining your administrative work.

Forecasting

One way to stay nimble during the pandemic and any future changes the industry may experience is to use effective forecasting software. 

 

Many contractors think of forecasting as a long term strategy meant to identify trends, but forecasting is much more. While it is extremely effective at identifying trends, forecasting has an immediate benefit. It shows you how changes you’re dealing with now will effect your project as it moves forward.

 

One example of how effective forecasting software can help you navigate these changes might be purchasing PPE for a project. If you’re on a project that now requires increased PPE, your profit margin may be in serious trouble. Inputting the cost of your PPE into the right software can show you its impact across the length of a project. 

 

That same software can show you where you’ve come under budget, allowing you to shift some cash. By having a good grasp on your project with forecasting software, you can make adjustments in real time. You’ll be able to cover the increased cost of PPE instead of scrambling to find funding for the rest of the project.

 

You can run this same scenario with increased materials costs, timelines, or any number of other changes that you need to stay on top of. Forecasting is the best way to understand how these changes will affect your project.

 

To learn more about how you can forecast with Premier Construction Software, you can schedule a personalized product demonstration here.

Change Order Management

If you haven’t seen a major increase in change orders during the pandemic, it’s coming. Projects simply cannot go as scheduled right now. Materials are short, projects are over timelines, and budgets are less than stable.

 

Software that handles your change orders can save owners, general contractors, and project managers a lot of time in front of the screen. Automatic generation for budget shifts and external change orders means less human error. 

 

Project managers and general contractors can also send change orders to their customers electronically. They can then receive an approval with an electronic signature within minutes.

 

These same programs can also keep track of proposed change orders and budget transfers. Owners and project managers can use it as a road map that shows them where the project stands, how it got there, and where it’s headed.

Cost Plus Billing and Time and Material Billing

The materials shortage and increase in costs are changing how many contractors structure their contracts. Instead of shouldering the costs or submitting change orders for approval, many are opting for Cost Plus or Time and Material Billing structures.

 

While both of these structures protect the contractor’s bottom line, they can be a challenge to put together on a large project. The right software can do it for you, automatically generating reports and payment applications. You can even set markup percentages by trades and material markups automatically.

 

Providing detailed and transparent payment applications means your customer will have fewer questions. Good software keeps your accounts receivable organized and easy by removing the hassle of billing.

 

For more answers on how Premier Construction Software can help you with your Cost Plus billing or Time and Materials billing, click here.

Adapting to changes during COVID

Change is hard, and the construction industry resists it all costs. However, resisting these changes can cost you everything. Implementing new policies and tools, while staying nimble and alert to the status of your projects and profit margins might make all the difference.

 

We don’t know when the pandemic will pass or what its permanent effects will be on the construction industry. However, there are lessons worth learning; best practices change, and flexibility and fluidity are key. The industry’s adoption of streamlined tools and technology could be the most important COVID-related change to date.

 

Author Biography:

Tom Scalisi has over 15 years of experience working in the trades. Since moving to full-time freelance writing, he has developed a passion for helping construction companies grow. He enjoys teaching contractors how technology can streamline their businesses and educating them about their rights during payment disputes. 

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Industry Insight Resources

Construction Submittals: What Are They & Why Are They Important?

Construction management software is transforming the industry landscape and changing the way everyday tasks are handled by automating complex processes and creating a more efficient approach to project management. In this blog, we’ll discuss how our software can help you more effectively manage the submittals process, one of the most fundamental components to a successful project. 

What are construction submittals? 

Construction submittals are critical documents that can come in various forms and consist of multiple elements—for example, shop drawings, material data, color charts, product cut sheets, samples, and finished product components. Depending on the project, construction submittals can involve thousands of different items.

 

Before any construction actually begins, all of the equipment, materials, and specific details of the project are outlined in submittals and given to the architect and engineer for review and approval. Submittals allow the design professionals to review project details on a granular level, and to provide approval before any items are fabricated or delivered. This helps mitigate any unnecessary setbacks to the timeline or budget. The quality of submittals is extremely important as the level of detail and accuracy will directly impact the overall success of the project.

How does the submittals process work?

The submittals process begins early in the project phases and guides project execution, cost, quality and success. One of the first steps taken by a project manager or contractor after the execution of a construction contract and issuance of the “Notice to Proceed” is to submit technical specifications to the architect and engineer for approval as required by the contract documents. 

 

Once received, the architects and engineers use the information provided in the submittals to verify the quantity of materials and products needed to complete a project. The submittals process also gives design architects the opportunity to select colors, patterns and types of material that were not decided upon prior to the completion of construction drawings. It’s important to note, however, this is not an opportunity for the architect to select different materials than what was agreed upon—rather, it’s to clarify the selection within the quality level indicated in the spec sheets and the quantities shown on plans. 

 

After submittals are reviewed and approved by the product and design teams, they’re returned to the project manager which signifies they’re approved for construction or fabrication. 

How can we help? Premier Construction Software Submittals Feature with the annotational tool bar

Submittals are extremely important because they drive the accuracy of project completion, the timeline and line items on the budget. Therefore, managing the submittals process is one of the most important duties of the project manager or contractor; however, the submittals process has traditionally been considered long and arduous given the amount of detailed data and specifications required for every facet of a project. 

 

In the past, the submittals process required tedious and time-intensive manual data entry into programs like Excel, creating room for human error and inaccuracies. Construction management software automates this complex process and dramatically improves data accuracy, document management and sharing, team communication and collaboration, and more—all of which ends up saving you valuable time and money and contributing to project success. 

 

We’re excited to announce that we’ll be launching a new submittals feature in October in order to help you with the following: 

  • Create & Email Submittal Link to Multiple Parties
  • Live Collaboration with Any Third Party – No Extra Fee
  • Construction Specific Annotation Tool Bar – Add Stamps, Boxes, Comments etc.
  • Accessible on Any Device
  • Merge Multiple Files Together, Sort & Regroup
  • Track Responses, Due Dates, Version Control & Full History
  • Easily View All Submittals History
  • Customize Workflow Configuration
  • Ability to Revise & Resubmit
  • View & Share Historical Responses
  • Automate New Requests for Revisions
  • Set Due Dates & Track Overdue Items
  • Easily View Comments by Page on the Same Screen
  • Auto-Stores in Document Management

 

For more information about our new submittals feature, or to schedule a personalized product tour, click here.

 

Author Biography:

Kathryn Dressler is a content strategist with more than 10 years of experience across the spectrum of marketing services, including blogging, social media, public relations, copywriting and editorial services.

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Industry Insight

The Impact of COVID-19 on Construction Costs 

The novel coronavirus (COVID-19) has disrupted businesses in ways no one could have predicted and for a period of time longer than most anticipated. The good news is that the majority of U.S. businesses have been permitted to resume operations and are finding ways to adapt to the “new normal.” However, with that being said, the construction industry has suffered major financial impact as the cost of doing business has risen and the ability to complete projects on time has been impeded as a result of COVID-19. 

 

In this article, we’ll cover some of the major ways the coronavirus pandemic continues to impact construction costs.

 

New Standards for Workplace Safety

new safety measures implemented in the construction industry due to COVID-19

New health and safety regulations have required construction companies to develop plans for returning to work that outline how they plan to keep employees safe and operate in accordance with local laws and ordinances. Developing, documenting, distributing and implementing new safety protocols requires time and resources, all of which comes with a cost to construction companies.

 

New Personal Protective Equipment (PPE) requirements also come at a high cost. Not only is it difficult to calculate how many masks and gloves are needed to complete a project, N95 masks are still difficult to come by, especially in large quantities. As a result, some construction sites have begun to rely more on air scrubbers, HEPA filters and other dust control measures to save the N95 masks for situations where close contact is unavoidable. Sanitizing stations and temperature check programs also come at a significant cost and require rental fees, material costs and man hours for setup and management.  

 

Another factor to consider is how social distancing rules impact the pace of construction schedules. Before the COVID-19 pandemic, job sites would typically be packed with subcontractors which is no longer considered safe. With fewer people allowed to work at any one time, projects are taking longer to complete, which invariably costs more.

 

Project Delays & Cancellations

A workforce survey conducted by the Associated General Contractors of America (ACG) and Autodesk between August 4 and 26, 2020 reports that 60 percent of responding firms say they have had at least one future project postponed or canceled because of the coronavirus, and 33 percent report having projects that were already underway halted because of the pandemic. Additionally, the share of firms reporting canceled projects in August nearly doubled since the survey conducted in June, when 32 percent of respondents reported cancellations.

 

The survey also found the coronavirus has had a negative impact on firms’ confidence in the demand for future projects. Only 42 percent of firms report their volume of business has returned to the same level as last year, or is expected to do so in the next six months, compared to 52 percent who held this view in AGC’s June survey. Another 37 percent expect returning to normal levels of business will take more than six months, while the remainder don’t know.

 

Labor Shortages

The same ACG workforce survey found that while “the coronavirus has harmed the construction industry, prompting project delays and cancellations, layoffs and furloughs, it remains difficult for a majority of firms to find craft workers to hire.” Results from the survey found that 52 percent of firms are struggling to fill some or all hourly craft positions, especially openings for laborers, carpenters and equipment operators. 

 

Ken Simonson, ACG’s chief economist added, “Ironically, even as the pandemic undermines demand for construction services, it is reinforcing conditions that have historically made it hard for many firms to find qualified craft workers to hire.”

 

Global Supply Chain Disruption 

Global supply chain disruption due to COVID-19 affecting the construction industry

The COVID-19 crisis has had a global impact and caused disruption within every element of the supply chain. Suppliers, manufacturers, subcontractors, banks and the like all have been impacted in various ways, creating the need to develop mitigation plans for all aspects of business. 

 

According to Beroe Inc., a procurement intelligence firm, “the global construction industry will face disruptions for next 3-4 months from the pandemic as companies globally are being squeezed by the coronavirus outbreak, through labor market and supply chain disruptions.” Furthermore, “companies with worldwide supply chains may see tier 2 and tier 3 suppliers highly affected by disruptions related to the pandemic. The construction industry may experience constant supply issues surrounding construction equipment and materials from Asia.”

 

Final Thoughts 

Now, more than ever, it’s imperative to keep a constant pulse on your company financials and project costs—and we can help. Premier Construction Software’s all-in-one, cloud-based solution allows you to easily compare the original, current and estimate at project completion and account for anticipated costs. With over 20 customizable fields, and full drill down capability, project managers have access to all the job costs and accounting details they need to make more informed decisions.

 

And while the increased costs and other financial implications caused by the coronavirus pandemic are beyond any one person’s control, there are ways you can reduce other costs in order to mitigate the overall financial impact to your construction business and future projects—for example, by improving efficiencies across your team through automating complex processes to save you time and to reduce human error.

 

To learn more about how our software can help you save time and money, click here to schedule a personalized product tour. 

 

Author Biography:

Kathryn Dressler is a content strategist with more than 10 years of experience across the spectrum of marketing services, including blogging, social media, public relations, copywriting and editorial services.

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Industry Insight Tips & Advice

Protecting Tight Margins in a COVID-Affected Construction Industry

COVID-19 has had a massive effect on the construction industry. From closing job sites to stretching materials thin, owners, general contractors, and project managers are seeing the consequences on their projects.

 

 

One of the most notable impacts of COVID was a drastic reduction in cash flow for almost all project participants. When the industry slows, everyone involved in a project tends to grab hold of what cash they have, holding onto it until we’re in the clear. Sometimes, it’s just the result of less available cash, as financing and projects begin to dry up.

 

Let’s take a look at the impact COVID has had on cash flow and what you may be able to do to shore up your bottom line.

COVID Cash Flow: Where’d it go?

The COVID pandemic has had a significant impact on construction projects across the globe. Owners, general contractors, Project Managers, and subcontractors have been scrambling to grab their share of the cash before it seemingly runs out altogether.

 

Jobs are becoming more expensive to complete. With the new rules on social distancing, personal protective equipment, increased regulations, rising material pricing, projects that used to be profitable now seem to be bleeding profits. Between purchasing masks, hand sanitizer, adding new safety regulations and paying for full-time cleaning crews, projects that were underway with profitable margins are now taking on water.  

 

Factor in that social distancing can double the amount of time it takes to complete a task, and it’s easy to see how timelines and schedules are suffering. While unloading a material delivery that used to take two hours with a full staff, it might now take four hours. You’ll have to budget time to unload the same amount of materials with half the manpower. After all, pinch points like entry doors and elevators could bring workers on your crew into close proximity to each other. 

 

Materials shortages are also stifling cash flow. If you’re lucky enough to find the materials you need, the prices are way up. Many plants and lumber yards had to shut down for some time during the height of the pandemic. As a result, materials are low, trucking costs are through the roof, and deliveries are becoming more difficult to schedule. 

 

All of these factors, and many more, are shrinking profit margins. They’re also leaving project managers, general contractors, and project owners wondering what they can do to survive. 

How project managers can handle tighter budgets

Most of the burden of these tighter margins falls on the project managers. They have to recognize the changes in these margins and adjust the project’s course to maintain some semblance of profitability. Holding project managers accountable to their variances and tracking the movement each month is vital to any construction company.

 

If you’re a project manager, all is not lost. There are some techniques you can focus on to ensure you maintain these tighter margins to the best of your ability.

Job forecasts and cash flow projections

To understand which direction the project might head in, you need to maintain detailed cash flow projections. This data is the baseline that helps you determine the health of your company or projects on a monthly basis. You’ll be able to recognize and budget for trends, allowing you to save for leaner times and make the most of your busiest season.

 

Effective cash flow projections need to account for income and operating expenses. They also need to track other incidentals like investments and equipment purchases. Thinking about taking out a loan? Your cash flow projection will take the payment and interest into account and show you how it will affect your monthly bottom line.

 

One thing cash flow projections do very well is point out trends. If you’re maintaining a proper forecast on a monthly basis, you’ll have years of data to look back at. You’ll see which months are the most profitable, which months are the leanest, and what might cause both of those scenarios.

 

For more information on how you can forecast with Premier Construction Software, you can schedule a personalized product demonstration here.

Estimate at Completion

With the right software, you can track your project’s progress with real-time updates on the Estimate at Completion. Your Estimate at Completion, or EAC, is an important tool for maintaining these tight COVID-related margins.

 

As the project moves along, and you’re updating your cash flow projections with actual costs, the EAC changes. For instance, say a one-time event occurs unexpectedly, like a change in materials, subcontracts or suppliers. You can input the change order and it will automatically impact the EAC. 

 

The effects of some other scenarios on the EAC can be a lot harder to track. An on-going change, like purchasing extra PPE for the duration of the project, can be a challenge. This is why it’s important to factor in pending commitments, pending change orders and anticipated costs in your EAC so you have a more accurate picture of where you will finish on the job and won’t be caught with any surprises. With the right software, the EAC should automatically calculate and should be easy to adjust. It should be easy to view the history, and raise budget transfers so you can more accurately determine the long-term effect on the margins and adjust on future jobs.

How owners can hold project managers accountable

For project managers to be effective, owners need to let them manage. But this doesn’t mean that owners shouldn’t hold them accountable throughout a project. Owners need to give PMs the room to make decisions but also maintain the ability to override the decisions when needed.

 

A smart way to allow your PM to operate is to use effective forecasting software. The PM can make adjustments, enter change orders, account properly for anticipated costs, or even transfer budgets through this software. With an all in one software that provides both accounting and job costing, it can auto calculate the EAC. This way you can trust the data providing the owners with a real-time update on the project’s progress and a more accurate picture of where they will finish on the job and account for all the variances. 

 

The owner can choose the information they want the PM to have access to and keep updated as the project progresses. The PM will then have all the data they need to make smart decisions to keep the project on track. They can compare line items on a project that are under budget and transfer those amounts to items that might come in above the targeted amount. This way, the PM can account for line items like sanitation costs or materials that have gone up in price.

 

To ensure that the PM is staying on budget and within these tighter margins, owners can track, approve, or deny these requests. Owners can also lock the previous months, giving them a baseline to judge the PM’s performance against.

Maintaining tight margins during COVID

Protecting what profitability you have left is the key to surviving the changes COVID has had on the construction industry. Some solutions are easy, like shifting budgets, creating change orders, or simply planning for the leaner months. But, you still need to track those items effectively to make smart decisions. You need whatever advantage you can get.

 

By equipping your project with the right software, you can shore up your bottom line against these profit-robbing changes. Be sure to keep an eye on your Estimate at Completion as well as your regular forecasting. These records will give you an up-to-date record of your project and where it’s heading.

 

What’s Next?

 

This new pandemic has influenced the construction industry to adopt technology and refine their business processes to help streamline operations. Traditionally the construction industry are ranked as late technology adopters as it is structured with in-person meetings, hard copy documents,manual signatures and more. In the wake of this pandemic, businesses are becoming more reliant on cloud technology, digitization, virtual meetings, real-time collaboration, and electronic sign-offs pushing the industry to a new world of collaboration and automation.

 

Cloud technology is now essential. Schedule a personalized product demonstration here and learn how Premier Construction Software can help empower your business. 

 

Author Biography:

Tom Scalisi has over 15 years of experience working in the trades. Since moving to full-time freelance writing, he has developed a passion for helping construction companies grow. He enjoys teaching contractors how technology can streamline their businesses and educating them about their rights during payment disputes. 

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Industry Insight Tips & Advice

5 Ways to Make Your Construction Company More Environmentally Friendly

The construction industry is undergoing a massive shift as businesses are realizing the long-term benefit of investing in the environmental movement. And while “green” and “sustainable” are terms often used interchangeably, it’s important to draw the distinction between the two. 

Green construction entails building projects in an environmentally responsible and resource-efficient manner to reduce carbon footprint. Sustainability construction includes the preservation of the environment, with a focus on social responsibility. Both contribute to the overall goal of becoming more environmentally friendly, but in different ways. 

Below we’ll discuss five ways to incorporate green and sustainable construction practices into your business to better protect the environment and its resources, and to demonstrate your commitment to social responsibility to key stakeholders.

Go Paperless

Getting rid of paper is one of the easiest first steps to begin your environmental transition. Paper uses a massive amount of raw wood, and even recycled paper requires numerous chemicals and water be used in the production process. Paper is also expensive, and unreliable compared to digital resources. 

When you start to consider how much paper is used every year on construction blueprints alone, it’s easy to understand how an all-in-one construction management software will save you time and money by digitizing construction document management and reducing paper waste. 

Create a Sustainable Supply Chain

According to the EPA, “Sustainability is based on a simple principle: Everything that we need for our survival and well-being depends, either directly or indirectly, on our natural environment. To pursue sustainability is to create and maintain the conditions under which humans and nature can exist in productive harmony to support present and future generations.”

The construction industry is capable of making significant contributions to these objectives. One major way is by building a sustainable supply chain—because a construction company can’t be truly sustainable if its suppliers are not. To achieve this, work with your suppliers to let them know your sustainability goals and how you expect them to contribute. 

Use Eco-friendly Alternatives

The construction industry’s reliance on non-renewable materials has had a long-lasting impact on the environment and remaining resources. Fortunately, with green building initiatives on the rise, more builders are looking for eco-friendly alternatives to traditional building materials. 

A few eco-friendly materials gaining popularity in 2020 include:

  • Timbercrete: Timbercrete is made from combining sawdust with concrete. The result is a material that’s about two and a half times lighter than pure concrete, and with fewer emissions than concrete. 
  • Hempcrete: Hempcrete is a composite made of natural materials, lime and hemp. It’s a light-weight, “carbon-negative” building material that can be used for insulation.
  • Fast-growing bamboo: Bamboo grows quickly and requires little water, thus making it a dynamic eco-friendly crop that can be used in many building materials. It can be as strong as wood or concrete, yet its light-weight nature makes even its transport more environmentally friendly. 

Adopt Lean Construction Practices

Lean construction is an extension of the lean production system—that is, a business approach intended to maximize value, increase efficiency and minimize waste. Under this system, every person involved in the construction project—from architects to tradespeople—are taken into consideration to ensure projects are completed quickly, efficiently and as low-cost as possible without sacrificing quality or integrity. 

Premier Construction Software’s all-in-one solution provides the gold standard business playbook to ensure all processes are optimized from start to end. By minimizing manual data entry and leveraging automation, we transform how people work and how your business operates.

Get Certified

LEED (Leadership in Energy and Environmental Design) is one of the most widely used sustainability rating systems in the world, and LEED certification comes with many benefits. For one, it lends credibility to an organization’s ability to develop a sustainable project and shows the public the organization cares about being environmentally and socially responsible. 

LEED certified buildings are more energy and resource-efficient, meaning they also reduce stress on the environment. Additionally, its focus on using reduced and renewable energy sources also helps to reduce operational costs.  

The construction industry will continue to shift toward more environmentally friendly practices and processes as the need, expectation and demand continues to grow. To learn more about how Premier Construction Software can help your business become more environmentally friendly by improving construction document management, reducing waste, boosting productivity and streamlining processes, click here to schedule a personalized product tour.

 

Author Biography:

Kathryn Dressler is a content strategist with more than 10 years of experience across the spectrum of marketing services, including blogging, social media, public relations, copywriting and editorial services.