There is a genuine paradox in the Australian construction industry. On the one hand, we see headlines about major builders going into liquidation and continued high rates of stress and financial struggle for subcontractors and suppliers. At the same time, we know there is a desperate demand for increased volume of residential construction to address the current housing crisis and growing numbers of people struggling to find a place to call home.

In addition, we are seeing a growing number of renewable energy projects being approved, continued rollout of major nation-shaping road, rail and aviation infrastructure projects and ongoing activity delivering new student accommodation, healthcare, aged care and commercial/retail buildings.

So, lack of demand is obviously not the factor pushing some businesses to the brink.

There is in fact no single cause in play. Factors leading to challenges for construction businesses include the rising cost of materials, the cost of finance and labour shortages and a general need for greater innovation. Construction methods need to change and industry is beginning to have a voice to propel forward.

Business as usual needs to change

Clearly, doing things the way we have always done them is not going to deliver a productive, profitable and progressive construction industry that can meet and beat the challenges we all face.

One of the foundations of the industry, the workforce, is key to success. That means both the quantity of workers and the quality of their skills and productivity. Given the constraints on the availability of experienced, qualified and available workers, especially for key speciality trades such as concreting, carpentry, plumbing, electrical and formwork, for project managers and head contractors there may be a need to find ways to achieve project timelines and deliverables with a leaner, more agile workforce approach.

This could include using labour management or labour pooling approaches that share workers between projects or enterprises in a collaborative arrangement. It may also involve adopting elements of Modern Methods of Construction (MMC) – or ‘smart construction’ to shift part or most of the construction delivery process offsite and into a manufacturing environment.

Changing up the construction process – including design and procurement – to factor in the different timelines and supply chains involved in prefabrication, modular or design for manufacturing and assembly. Timelines will vary compared to traditional on-site build sequences, so the project managers will need to innovate in their thinking and planning.

And of course, new technologies and innovation in process will have an impact too. While larger players in the industry are adept at construction technology adoption – either by way of in-house purpose-built tools or procured options, the mid-market and smaller players are still early in their adoption curve, contributing to the low-tech adoption statistics that construction is too often cited for.

Navigating union issues

Often, union disputes and union demands have been regarded as a major difficulty. However, the trigger for issues with the worker organisations is often disputes arising between a specific project delivery team and the project proponent around scheduling, accuracy of pay and entitlements, renegotiation of Enterprise Bargaining Agreements, site workplace conditions, safety matters and effective matching of tasks with the appropriate personnel.

One way to head some, if not most of these potential conflicts off at the pass is to improve the processes used to manage people, payroll and scheduling. Construction management software can support a builder or subcontracting business to ensure all the requirements of EBAs are being properly addressed. It can also streamline rostering and payroll, improve communication and coordination and support improved management of workplace health and safety.

Smarter supply chain planning

For many builders and trade subcontractors, project procurement and estimating have often been based on the information and data used on recent past projects. This means many tenders are written without a significant investment of time and energy into drilling into the specifics and testing a range of supply chain options to find the most cost-effective solution to embed into the bid.

However, prices have been changing rapidly recently, as the cost of raw materials, labour in the manufacturing sector and shipping and logistics spiralled upwards. It can be hard for estimators to keep up, and it is a challenge for bidders as the prices at the time of tender may prove to be different to the final purchase price for materials and equipment once the project breaks ground.

This is another area of risk that clever thinking can convert into an opportunity to review all standard procurement information and supplier information and test the market for new suppliers, new products or new delivery approaches that can trim costs and improve profitability.

This also positions a construction business to be able to crunch the numbers for options such as Modern Methods of Construction to see how well it might stack up. For example, will precast be more cost-effective than in-situ pours? Only doing the research will provide the answer – and right now doing the research is a form of insuring a business against losing competitiveness and an essential step in becoming a leaner, more agile enterprise.

Contract models are changing too

As the Design and Construct (D&C) contract becomes the dominant model for the delivery of major projects, for subcontractors it becomes imperative to adopt digitised business systems to improve efficiency and ensure back office time costs are effectively reined in. D&C incentivises the head contractor to tightly manage costs and maximise margin – which means subcontractors need to manage their own costs carefully.

The relationship between head contractors and the specialty subcontractors can also be challenging. Streamlining reporting, accurate digital site diaries, smooth invoicing processes, effective communications and transparent evidence of quality of completion all help reduce the risk of disputes – and help a subcontractor back themselves in the event an issue does arise. Aussie subcontractors love how well Neo does all of this for them as a purpose-built subcontractor operations management tool.

The future awaits

There’s no doubt that times are tough in the industry – as the saying goes, however, when the going gets tough, the tough get going. For Australian construction, that means moving forward with innovation – in processes and digitisation with tools – to improve how construction businesses are managed.

It means tackling materials and workforce shortages through adopting advanced approaches to the production of buildings and finding ways to become agile in how we recruit, retain and deploy the skilled labour that makes it all possible.

We should always keep in mind too, that while we do need to evolve our methods and approaches, the value of our industry is indisputable. Our strength still lies in our ability to imagine and construct the buildings and infrastructure that will take Australia into the future.