How can construction businesses in MENA become more profitable? The answer to this, today, is down to how clearly you can see what is going on at every level.
Many MENA construction companies are faced with significant opportunities for growth over the coming years, especially in the context of government-sponsored expansion and diversification plans. In a recent Procore survey, How We Build Now, 45% of MENA construction leaders said they were “somewhat confident” about construction market conditions in the next 12 months, with an even larger number (48%) saying they were “very confident”. Fully taking (and benefiting from) these market opportunities, though, will involve changes to ways of working and how businesses are run.
Visibility and deployment are the keys to profit on the next stage of the development journey for MENA contractors and owners. If construction business leaders have good visibility, they can deploy resources better, leading to more efficient operations and ultimately more money available to invest in growth and change. The ability to see risks and opportunities early, and to respond to them, is the difference between a construction business that is merely surviving and one that’s thriving. This is only possible when you have a clear view of both the bigger picture and the finer details.
Construction Management Software and Profit Fundamentals
Certain disciplines cannot be overlooked if a construction business is to be profitable. In today’s digitalised business environment, having a user-friendly construction management platform is chief among them. This is the engine through which a construction firm will run, monitor, share and communicate what is going on in the business — on site, off site, in terms of costs, safety, labour, risks, everything. Such a system is so important because it supports success and alignment in other key areas.
For example, more streamlined information flows can help decision making, connect teams, minimise waste and increase resource productivity to optimise construction schedules. The scale of projects, in KSA in particular, demands better information to support partnerships and cultures of continuous innovation.
Accurate project cost estimation before construction begins is essential. Getting this wrong can wreak havoc with profitability. If you agree on the project’s price, but your costs shoot up, you’ll have to deal with a lower profit margin. The more accurate your estimates, the more likely you are to achieve your profit goals. Construction management software improves the estimation process by using historical data to predict future costs, reducing guesswork and enabling more accurate budgets for better profitability.
From there, your ability to control costs will be decisive once procurement and construction are underway. Construction management platforms enable profit-focused businesses to build customised reporting dashboards and track real-time spending, build project budgets, monitor actual costs against projected figures and set automated alerts to flag when you’re over budget. Timely delivery and visibility of this information allow your business to become more agile and more able to manage the course corrections which are part of any significant construction project.
Teams that connect and collaborate effectively, work efficiently. This means less downtime, fewer delays due to questions or approval requests and a more independent workforce, all supporting the journey towards greater profitability. The corporate confidence instilled by the right construction management system encourages businesses to experiment with industrialised construction methods, including modular construction, which are known to reduce construction timelines by up to 50% in some cases, say McKinsey.
From workforce planning to continuous improvement
A profitable construction business is one that plans for the workforce it needs to do the job, now and in the future. Hire, train and retain in the right way and you’ll build a team eager to go beyond simply following instructions. A construction management platform should help you visualise your current capacity and understand where you need to fill gaps with short-term labour, or make more strategic long-term hiring decisions. Take care of the people you value and need the most, so that they want to give their best, stay with the business and develop over time — a profit driver in itself.
Becoming more efficient in the office and on site, and ultimately making fewer building errors in the construction phase, is key to delivering work profitably. Procore’s How We Build Now report found that one in four of business leaders say 25% of project time is spent rectifying building problems and rework. When asked what would most help boost productivity in their businesses, 25% of our survey respondents in the region said “implementing best-practice processes and protocols in pre-construction”, while 24% said “improving access to project information”.
Project efficiencies and productivity can also be maximised by using technology at the pre-construction stage to bring together key stakeholders, including the supply chain, as early as possible. Indeed, 22% of our MENA survey respondents said that “maintaining a surplus supply chain for commonly used materials,” was the action most likely to increase profitability.
Risks are always present in construction, and many are sure to materialise during a large, complex project delivery. The better a business manages these risks, the lower their threat to profits. A company can protect its ability to be profitable though, by identifying risks and planning mitigation strategies with the right software. It can develop and maintain policies for adverse scenarios, for example, or pre-screen contractors and communicate risks to support project managers to keep projects running smoothly.
Creating a culture of continuous improvement should be the objective of every construction business that wants to make and sustain healthy profits. Only 11% of the MENA construction businesses we surveyed consider themselves a “digital-first business”. Indeed, some 43% of businesses said that they are only at the beginning of their digital transformation journeys. Use your software solution to analyse results before moving forward with process improvements.
Making the leap
Our report shows that many MENA construction businesses accept the need for fundamental change in their operations. Some 34% of businesses surveyed plan to introduce a construction management platform in the next 12 months, while almost half (47%) are already using one.
If you haven’t made the leap so far, make this the year you turn the profitability key and onboard the systems needed to manage your business in this way. In a digital world, this can only really happen with integrated software that covers the whole construction life cycle. Excel or paper solutions can only address the most basic of operations and will not enable companies to make many of the improvements that lead to sustained profitability and meet the demand of MENA’s large-scale projects.
Finally, choosing the right solution is not a quick process, but rather a project in itself, and one which must be properly managed. Let us help you prepare to make the best choice for your business.
To read more insights from Procore’s ‘How We Build Now’ report, visit here.
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