Despite current-day market stressors, commercial real estate seems well-positioned to navigate economic turmoil due to the influx of sector investment and spend. With the expected increase in capital funding and an influx of projects, CRE owners have an opportunity to evolve the way they manage their job sites – reevaluating the way they track funds, control costs and deliver real-time status updates on projects across teams. The industry is also being tasked with combating one of its long-standing challenges: attracting and retaining employees.
To achieve the goals put forth, the solution is to drive efficiencies into a historically inefficient process. In an industry lacking data-driven solutions, technology provides a clear and accessible path to building more efficiently.
Construction’s Achilles’ heel is project rework, which is predominantly caused by poor communication. This causes low labor productivity and mistakes on job sites. Large projects across asset classes on average take 20 percent longer to complete than scheduled and are up to 80 percent over budget, according to a survey by consultancy McKinsey & Company.
Meanwhile, according to payment software platform Levelset’s recent contractor survey, 75 percent of contractors reported their company spends less than half of their time doing actual construction work; 60 percent reported that failing to complete a project on time and under budget resulted in lower payment for their work.
The takeaway? Wasted activities, such as schedule overruns from poor coordination and low labor productivity lead to additional material costs and labor expenses that represent unnecessary spend – both for building owners and consumers. Construction rework ultimately results in wasted materials while also requiring owners to purchase more materials – which, in turn, necessitates more spending.
Utilization of data and clear communication is crucial to managing project costs, and data-driven solutions are the key. In construction, 96 percent of data goes unused. Maintaining clear communication across teams throughout a project’s lifespan and tracking project financial data allows owners to make informed decisions that ultimately signify cost savings.
Better construction processes keep astronomical rework costs from being passed on to the consumer, representing a saving that they can put toward other expenses. More broadly, construction efficiencies can benefit the global economy.
In today’s dynamic economic environment, leveraging technologies that capitalize on data assets to streamline and track financial expenditures will be key. Better insights and improved communication can significantly reduce change orders, resulting in major capital gains in the long run.