Construction is an industry filled with opportunity. In fact, there has likely never been a better time to be a contractor than right now.
Consider that over the last few years, the US government has made significant investments in roads and infrastructure.
In 2015, the Fixing America’s Surface Transportation (FAST) Act was signed into law. This five-year bill provided $305 billion in funding for transportation projects, including $226 billion for highways and $61 billion for public transit. The FAST Act also included provisions to streamline the project delivery process, increase transparency, and improve safety.
In 2021, the US government passed the American Jobs Plan, which includes a $2 trillion investment in infrastructure over eight years. The plan includes funding for roads, bridges, transit, rail, airports, ports, broadband, and more. The plan also includes provisions to support the transition to clean energy and to address climate change.
In addition to these larger initiatives, the US government has also provided funding for specific infrastructure projects. For example, in 2020, the Department of Transportation awarded $1 billion in grants through the Better Utilizing Investments to Leverage Development (BUILD) program. These grants supported a range of transportation projects, including road improvements, pedestrian and bike infrastructure, and transit projects.
Now consider the rapid growth of cities around the country as new homes, condos, and office buildings are constructed and this is truly a great time to be in the construction or contracting industry.
So why are so many contractors seeing margins shrink and growth slow?
As in many industries, the challenge is not in growing top-line revenue but in making sure the bottom line grows with it. Time and materials are wasted. Cash flow slows. Tasks that should take a few minutes absorb hours – or even days – of employee time that should be spent on more strategic tasks.
In this post we will explore a number of ways that contractors are losing money inside the walls of their own offices. Further, we will detail 10 areas of potential improvement that will optimize back-office efficiency and put your contracting business on track to have the brightest future possible.
Signs of Back Office Inefficiency
The back-office operations of general contractors can often be inefficient due to a variety of factors. Here are a few of the most common reasons:
Many general contractors still rely on manual processes for tasks such as time tracking, payroll, and invoicing. These manual processes are tedious and prone to errors, which can lead to delays and additional work. Employees cannot take vacations without training someone to cover for them in their absence.
In some cases, different departments within a general contractor’s organization use different software systems or even paper-based systems to manage their tasks. This can lead to data duplication, communication breakdowns, and inefficiencies. The concept of best practices is applied unevenly, as each PM has their own way of doing things.
Lack of Integration
Even when systems are used across departments, they may not be integrated. If a general contractor uses separate systems for time tracking and payroll, data must be manually transferred from one system to another. This is time-consuming and prone to errors.
Inefficient workflows lead to delays and wasted time. For example, if a purchase order requires multiple approvals, manual communication and waiting for approval signatures can cause significant delays.
Communication breakdowns can cause inefficiencies in the back office. If an invoice is missing important information, multiple emails or phone calls may be necessary to get the payment information, which can delay payment and cause frustration.
General contractors may not have real-time visibility into the status of projects or the performance of their back-office operations. This lack of visibility can lead to delays, errors, and missed opportunities to improve processes.
A contractor experiencing even one of these inefficiencies is creating drag on a business that might otherwise soar. As each of these broken or inefficient processes comes to light, the organization will suffer greater and greater missed opportunities for growth and prosperity.
10 Tips for Optimizing Contractor Back Office Efficiency
Thankfully, there are a few straightforward tips that can quickly make a positive impact on back-office efficiency. Some of these tips require a shift in thinking while others simply require recognizing a problem and deciding to tackle it head-on.
1. Automate as many processes as possible.
Automating processes can help eliminate human errors and reduce the time spent on repetitive tasks. Frequently, defining a process for automation takes about as much time as doing the process 2 to 10 times. The objective return on investment begins when the cost to define and build the solution equals the cost spent doing it manually. Subjectively, automated processes should immediately improve employee satisfaction and efficiency, and provide them the freedom to work on higher-level tasks.
2. Use integrated software solutions.
Integrated software solutions can help reduce the need for manual data entry and ensure that information is shared across multiple systems seamlessly. If data is entered in two places, it can be really difficult to identify and solve discrepancies.
3. Implement a centralized system for managing employee data.
A centralized system can help ensure that employee information is accurate, up-to-date, and easily accessible.
4. Provide training for employees on how to use back-office systems effectively.
Effective training can help ensure that employees are using systems correctly and can minimize the time spent on errors. Companies frequently review workflows and use of their systems five years or so after system implementation and discover significant improvements can be achieved without purchasing any new software.
5. Utilize cloud-based technology to reduce the need for on-site hardware and maintenance.
Cloud-based systems can help reduce hardware and maintenance costs and ensure that data is accessible from anywhere. A cloud system is easier on you, because you do not need to worry about a server going out of date or whether your intrusion protection is best-in-class. A cloud system helps the vendor prevent and solve problems more easily, because every customer is running on a single platform.
6. Use data analytics to identify areas for improvement.
Data analytics can help you identify inefficiencies in your back-office operations, such as time spent on repetitive tasks or errors in data entry.
7. Adopt a paperless system.
Eliminating paper-based processes can help reduce errors, improve access to information, and reduce costs associated with printing and storage. Retrieval and search of paper is archaic.
8. Leverage mobile technology to improve access to information.
Mobile technology can help employees access information from anywhere, reducing the need for manual processes and improving productivity. Obtaining answers from a tablet or phone can be much easier on the user than logging onto a computer.
9. Consider outsourcing certain functions to reduce costs.
Outsourcing functions such as payroll or HR can help reduce costs and free up internal resources to focus on other areas of the business. A good outsourcing solution adds expert insights, scalability, and experience to a company that may not have the scale to do it on its own.
10. Regularly review and optimize processes to ensure ongoing efficiency.
Regular reviews can help you identify areas for improvement and ensure that your back-office operations continue to be efficient and effective. A process that worked well five years ago could now be obsolete. Without periodic and intentional review of processes, a company can be left in the past.
One Simple Tool to Gain Immediate Back Office Efficiency
SelectView Data provides tools and solutions for helping contractors get the most out of Trimble/Viewpoint’s Vista so they can grow their contracting businesses. One pain point for project managers and office staff is searching for invoices and creating billing backups. As a result, SelectView offers Invoice Search to save time and speed up the cash-conversion cycle for contractors across the country.
In fact, Invoice Search helps contractors create complete Billing Backup files for an entire job in as little as 5 minutes.
Here are just a few of the other ways that Invoice Search from SelectView Data can help contractors save time and money:
With Invoice Search, Project Managers can quickly and easily locate invoices for specific projects or vendors, without having to contact the back office for details. This improves Project Manager efficiency and saves valuable time for back-office staff, allowing them to focus on higher-level tasks.
Manual invoice searches are prone to errors, such as misplacing or losing invoices. With SelectView’s Invoice Search, contractors can ensure that they have accurate and up-to-date records for all of their invoices, reducing the risk of errors and missed payments.
Improved Cash Flow
By quickly and easily locating invoices, contractors can ensure that they are paying vendors on time, which can help to improve cash flow and avoid costly late fees.
SelectView’s Invoice Search provides real-time visibility into invoice status, allowing contractors to easily identify outstanding invoices and take action to resolve them. This can help to improve project cash flow and profitability.
By reducing the time and resources needed to search for invoices, contractors can save on administrative costs and reduce the risk of paying duplicate invoices or missing payments.
Invoice Search from SelectView can help contractors to improve efficiency, reduce errors, and save time and money. By adopting digital solutions like Invoice Search, contractors can position themselves for long-term success in an industry that is becoming increasingly reliant on technology.
Build a Brighter Future
Turning your back office into an efficient and effective engine of productivity is not as far away as you might imagine. The right processes and workflows combined with the right tools will unlock opportunities previously unseen for your organization. To make the most of your construction or contracting business, spend the necessary time supporting your back office resources to do their best work. To learn more about how SelectView helps contractors and construction companies unlock their full potential, contact us here.