Specialty contractors are under intense pressure to ensure that their teams remain lucrative, productive, and at the top of their game, from preconstruction to project closeout. Despite being committed to consistently attaining these goals, specialty contractors frequently face difficulties. Specialty contractors’ duties are now more difficult than ever due to the global lack of skilled workers and supply chain restrictions. Despite these challenges, specialist contractors always come up with fresh, creative solutions to keep projects on schedule and within budget.
According to a recent survey, more than 500 specialized contractors from the US, Canada, the UK, Australia, and New Zealand gave important insights about the trends, difficulties, and pain points they frequently face in the construction industry. The research offers a thorough view of the sector and includes firm sizes with annual sales ranging from $2 million to over $2 billion. Mechanical, electrical, plumbing, steel, and concrete specialty contractors participated in this study.
Workforce management, technology, and profitability are the main challenges examined in the Procore-sponsored paper that impact specialist contractor organizations.
Concerns for Specialty Contractors
1. Missed Change Orders Are The Primary Cause Of Revenue Loss.
Over the course of their existence, more than 35% of all construction projects see significant changes. Many specialized contractors have trouble recovering the costs incurred due to those adjustments. According to survey respondents, unbilled and underpaid change orders account for about 30% of lost project revenue.
According to the study, businesses with yearly revenues of $50 million or higher are likelier to have missed change orders. In fact, 32% of these big businesses claim that missing change orders caused a margin loss of more than 50%.
The analysis discovered that particular trades suffer the brunt of unbilled change orders, regardless of the organization’s size. For instance, major steel contractors claim that missing change orders costs them 42% of their profit margin. The least detrimental to their profitability is reported by concrete contractors (19 percent).
Process optimization and the use of an integrated construction platform to guarantee improved communication between the field and the office can help reduce this risk and raise the possibility that project changes will result in cost recovery.
2. The Drain of Monotonous Tasks on Productivity
Construction industry participants are more challenged with administrative work as the sector continues to become more complex. Despite the importance of this work, poor productivity jobs might take up team members’ time that could be better used on vital duties connected to maintaining a project’s budget and schedule.
The study discovered that, on average, 20% of workers’ time is now spent on low-productivity activities, including looking up information, writing down data, and looking for papers or other documents. Among electrical contractors, where 29% report that more than 30% of their team’s time was spent on low-productive administrative chores, high percentages of time spent on low-productivity tasks are particularly noticeable.
This information sheds light on why it’s crucial that specialist contractors work to address the severe labor shortages that the sector is now experiencing. While the survey advises that recruitment and retention should continue to be priority priorities, specialist contractors can also benefit by increasing the productivity of their present personnel. Specialty contractors can reduce repetitive operations and automate workflows by deploying a comprehensive construction management solution, which will boost productivity throughout the project.
3. The Digital Transformation of Construction Is Continually Changing and Innovating
Despite the enormous technological advancements that have occurred over the past 20 years, many specialist contractors still manage their projects using outmoded manual procedures.
The study finds that 48% of businesses with yearly revenues of $10 million or less use manual methods and spreadsheets more frequently than any other technological solution for project execution needs. Even if bigger businesses are progressing in the right direction, roughly one-third of those polled still utilize antiquated technology.
Poor estimates, poorly managed labor, schedule blips, and underpaid change orders, all of which are made worse by antiquated and manual processes, frequently harm people, profits, and projects. Your company may increase internal communication, reduce financial losses, and shorten project timelines by implementing digital transformation to become less reliant on spreadsheets, whiteboards, and notebooks. Specialty contractors can ultimately return their attention to what they do best—build the world around us—with the help of a construction technology platform.
Understanding Specialty Contractors
Did you realize that the construction sector has about forty different specialties? They raise the bar for knowledge, education, experience, and specialized competence above general contractors. They also take trade construction to an entirely new level of complexity. The depth of the products that need to be installed is overwhelming. Learning how to perform a trade while comprehending safety implications, code requirements, and governmental regulations is challenging. Many subs are required to have a license and the fundamental construction management skills found in the general trades, though these abilities are more difficult.
These specialized contractors are crucial to the success of any commercial or residential construction project because they are the most knowledgeable and experienced in the field.
Specialty contractors are those who are tasked with finishing a single task that is necessary to complete a building project. Most of the work that specialty contractors do is on the construction site. However, they are adaptable enough to finish minor jobs in privately held workplaces. Plumbing, lighting, painting, concrete pouring, HVAC systems, and alarm installation are a few examples of specialty contractors.
Of course, there are many more subcategories of specialist contracting; on a project, the contractors are solely in charge of their particular job assignment. Specialty contractors manage the creation and fulfillment of their unique assignment, not the project’s progress.
Project owners decided to employ a specialized contractor to maximize their budget and get the best value for their money because they have the most training and experience in a particular construction area. Depending on the size of the project and the particular requirements of the Owner or General Contractor, specialty contractors may be recruited as independent contractors or as members of a larger overall team of contractors.
Since they are qualified to do a particular task and are licensed to do so, specialty contractors can also be held accountable for the ongoing maintenance, repair, and upkeep of the items they were contracted to install.
Most small specialist contractors “bootstrapped” their way up in the field, frequently picking up skills on the job before going out on their own. This means that they frequently take up their own marketing initiatives. If you want your business to expand quickly, you can decide to contact Inside Advisor Pro for assistance. This specialized company promotes your services as a contractor, and you will quickly receive a lot of visitors.
Recognizing The Distinction Between General And Specialty Contractors
It’s critical to understand the distinction between general and specialty contractors. To complete a project successfully, both partners are equally important. Their duties, however, are different. A specialty contractor specializes in successfully completing a specific task, as opposed to a general contractor, who is hired to oversee the overall status and completion of a construction job. To perform particular installation tasks, a “self-performing” general contractor can also be hired; however, if they lack the necessary licenses, a specialty contractor is required.
If they have the required licenses, specialty contractors may be hired to perform many tasks, depending on the project. For instance, rather than employing two different specialty contractors to accomplish each operation, a general contractor (GC) or project owner frequently chooses to work with a specialty contractor who holds dual licenses that enable them to handle electrical and heating or cooling installation.
General Vs specialty contractors: Relationships
It is crucial that both parties uphold their end of bargains made with one another and maintain concentration on their assigned jobs while cooperating with one another. They do not necessarily report to one another but must cooperate for the benefit of the project’s efficiency if a specialist contractor and a general contractor are contracted separately.
When a general contractor pays a specialty contractor for their work, it’s crucial to be explicit and establish a written contract so that the specialty contractor will be paid upfront for labor costs when the task is finished. To prevent disagreements over a down payment agreement and when the specialty contractor should be paid, general contractors and specialty contractors should communicate openly with one another.
Risk Categories For Construction Projects In General
It’s critical first to comprehend the main categories of hazards to fully appreciate how software may aid in risk management for a project. Risks on construction sites typically fall into one of three categories: financial, schedule-related, or design-related.
1. Finance
Although going over budget on projects has been standard practice across the business, planning, and coordination problems are the main cause of financial problems. Megaprojects are notorious for easily going millions, if not billions, over budget. Nevertheless, even a tiny percentage budget overrun on a project could have a negative impact on future liquidity for the management firm, make it impossible to pay employees for their efforts, and even bring the project to a halt.
2. Schedule
The adage “time is money” has a lot of meaning in the construction sector. Undoubtedly, sloppy scheduling can seriously harm a budget. Your schedule could be delayed by days, weeks, or even months due to needs like rework and rebooking subcontractors, not to mention that it could result in significant cost overruns with just one small misunderstanding or error in a report. Even a minor delay might have far-reaching effects on the project and completely alter the planned schedule. This requires the project team to alter their overall strategy, which invariably results in additional misunderstandings or errors.
3. Design
Construction design management is a developing risk that needs to be carefully handled. For construction to begin on schedule, a project team may ultimately accept an incomplete design that is “good enough” to build. The project team will then attempt to back-manage this risk during construction by striving to catch up on the design. In the current market, when speedy construction starts are the main owners’ request, this scenario is becoming more and more typical. When the owner, designers, and contractors can work together more closely, construction risks associated with design can frequently be better addressed, beginning in the preconstruction planning stage.
