In recent discussions with business leaders from all parts of the construction industry it is obvious that there is huge concern about what will happen next and how long the downturn will last. This started me thinking about what needs to be done to ensure successful exit from this recession..
Is winning new work a new beginning or the start of your next set of problems asks Brian Jukes from Business Fix? We are certainly at another change point in the economic cycle, where that will take is nobody really knows. In addition there are massive changes ahead from “Green Regulations” and Government cutbacks..
All of the companies supplying construction services - architects, contractors, quantity surveyors, engineers or specialist contractors are under extreme pressure to cut or eliminate margins to win new work to keep their businesses going. This may be expedient in the short term but will undoubtedly weaken their company for years to come and possibly fatally.
The Solution won’t be found in the past but in a new future
What business leaders need to do now is to develop a strategy for making margin. The market won’t suddenly change, and the pricing levels are set for the medium term ahead. So you need to change your approach from survival to managing in the current market for profit.
There is not a business out there that is not capable of improving their overall performance by 10% or even 15%, I know it might not be obvious or easy but in an industry that is at best only 50% efficient there is huge scope for improvement.
Many people or organisations will offer you the simple solution, do this and your business will gain massive benefit. It is unlikely there is a simple answer. The answer may be to dramatically redesign your business and start to do things differently. There are hundreds of bright and talented people in the construction sector with tremendous technical skills. They deal with many difficult issues with imposed constraints and provide brilliant service to clients. In return they are rewarded with the opportunity to tender for the next job at an even cheaper price.
What if we were able to engage that talent to improve the business rather than solving the same construction issues time and time again? This is now not an option but an absolute necessity.
A completely new approach is needed; it’s about everyone working on improving the business as well as serving the clients’ needs. It’s about taking action now to remove the internal constraints that stop your business from operating efficiently. It’s about working to generate margin at all levels in the business.
The process will be incremental, 1% at a time. But who wouldn’t want a 1% improvement right now?
Business Fix provides strategic business improvement advice to construction businesses, contact us at brian@businessfix.co.uk to begin your recovery.
