Despite improvements with efficiency, firms are losing money
Despite the inconsistent growth that had plagued the sector for much of 2015 and the uncertainty brought upon by Brexit earlier this year, the construction industry has not only endured these tumultuous conditions, but has come out of them reinvigorated. In fact, according to the most recent key performance indicators (KPIs), 64 per cent of projects were on or under budget in 2015, compared to 56 per cent in 2014. In addition, 55 per cent of projects were completed on time or before schedule in 2015, compared to 48 per cent in 2014. Yet, even with these positive developments, there is an important area that has gotten worse—profitability.
Profitability has dropped from 2.8 per cent in 2014 to 2.5 per cent at the end in 2015 (the second-lowest on record). An explanation for this decline, in spite of growth in other areas of the sector, is that clients are increasingly expecting a higher level of quality for their money. And, whilst client satisfaction with the final product rose from 81 per cent to 85 per cent in 2015 (a four-year high), the effort to maintain this level of quality is threatened by a number of factors, including higher material and labour costs and lingering effects of the recession.
However, there are several ways that your company can counter this financial pinch. Productivity and quality can be improved by investing more into workers’ skills, since the more knowledgeable employees are, the more efficient and effective their work becomes. This effort would also help address the skills shortage that is currently troubling the sector. One way to improve workers’ skills would be to ensure that all of your employees hold a Construction Skills Certification Card, which shows that they are up to date on their training, along with confirming that they at least meet the standards for National Vocational Qualification (NVQ) Level 2.
Another strategy that your company may want to consider implementing is to invest in digital technology to help streamline your operations. By adopting digital devices and processes, you can increase your productivity, the safety of your employees and your profitability.