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By Erica Konieczny
April 1, 2016
Small and medium-sized construction firms have traditionally faced major difficulties in consolidating their IT infrastructure. While modern software, reduced data sprawl and superior information governance can all serve as the foundation for a more efficient business, many SMBs have moved slowly, if at all, to replace their existing processes and tools.
The reason for this common approach to procurement is not just inertia, either. According to the official summary of a July 2013 meeting of the London Assembly Economic Committee, small and medium-sized construction companies were particularly hard-hit by the late 2000s global recession. The ensuing downturn in construction activity prevented many firms from investing in technological upgrades, such as cloud-based project management software.
Is it time for these SMBs to begin exploring these options again? As is the case in many other industry verticals, the IT department can no longer exist on its own island within a construction firm, isolated from the rest of the business.
In light of all the challenges in winning new clients and then dealing with delays and low profitability during projects, flexible and cost-effective software tools may just be the ticket for small and medium-sized firms looking for a boost. Here are a few things to keep in mind when dealing with common project issues, IT-related and otherwise.
Medium-sized firms have been caught in a problematic cycle:
They often do not have the funds to invest in software licenses and infrastructure upgrades, which means they have to make due with older tools such as spreadsheets, complicated VPN access, and 1990s-era client-server applications.
These utilities, however, lead to delays and miscommunications, which sidetrack the project, drive down profitability, and leave the firm in the same spot where it began––not well-equipped to move on to something better.
Delivering project management software to any IP-enabled device, via the cloud, addresses all of the problems in this cycle. First, it is a money-saver; maintenance fees and hardware upgrades are no longer necessary, since the cloud service provider takes care of these responsibilities. Accordingly, firms can buy in with confidence, knowing they are getting a highly capable solution that puts less of a burden on IT.
Moreover, being able to access software over the Internet means that VPNs, terminal servers, and other elaborate communications mechanisms are less necessary. Paper logs and emailed spreadsheets can give way to easily shared project data repositories, available to any company phone, tablet, or computer.
Medium-sized firms, like small ones, face the distinctive challenge of scaling what may have begun as a modest business into something much larger. For example, they may struggle initially to pay off their mounting incremental debts with the new projects that they’re working on.
Indeed, growth management is one of the most common causes of failure for construction firms. It may take the form of being short-handed with technical staff, slow to adjust to technology upgrades, and/or unable to foster easy communications between teams.
In this context, it is important to regularly reassess the firm's makeup and capabilities as it grows. Conducting thorough training for new tools like cloud software, for instance, can help ensure that everyone is up to speed and capable of contributing to the company's evolution.
Personal guarantees used to be a fixture of small and medium-sized construction operations. Since many firms are simple LLCs or sole proprietorships, these guarantees provided a straightforward way to place debt liability on company owners.
Following the recession, though, issues with debt management have made many construction organizations reticent to provide signed personal guarantees. Unfortunately, this reticence can complicate the process of getting a loan.
The solution is to work closely with a lender you know. That way, it may be possible to reduce the need for a guarantee and get started on the project sooner.
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