For contractors and other construction professionals, data-driven decisions are critical for the profitability of the company. Growth relies on not just gathering the right data, but also analyzing and drawing accurate correlations.
Don’t get caught in “analysis paralysis;” what story is your business data telling?
Recently, I was interviewed by Ellis Talton, Briq’s Head of Growth, for his podcast, The Download, to speak on this important topic of data analytics for the construction industry.
The nature of this business can be challenging and complex. The day-to-day issues that arise can easily take up most of your time. But if you are operating your construction business based only on financial statements, you are missing out on significant insights that help drive significant growth. Commit to investing in your business with data analytics, and start making your data work for you.
Data as a Strategic Asset
Businesses tend to operate in silos, and it’s important to understand how helpful accounting can be for operations and for the people out in the field. Making the accounting meaningful can facilitate more knowledge, more understanding and better decision making. Without good data analytics, operating your construction accounting can lead to a breakdown of communication and missed opportunities.
With the advent of new construction tech tools such as wearables, lasers, drones and robots, we’re receiving a lot of data from the field in real time. But how do we best leverage all the combined data to make it a strategic asset and not just a virtual paperweight?
One of the valuable ways that construction business leaders can use their data is by assessing the productivity of their people out on the jobsite—superintendents, regulators, inspectors etc. Leaders can then draw conclusions and make decisions based on this information. You can measure when someone is up to speed and fully trained and use data to examine patterns from various team members to project into the future. You can also identify and address potential problems before they occur, as well as measure performance.
“Construction accounting is a bit of a tale of two cities, namely between accounting and operations. On the one hand, you’ve got the business people who do the numbers, and on the other, you have the operations people who don’t always understand how helpful the accounting can be for them. There is a level of difficulty in making the accounting meaningful for the field, which can manifest in miscommunication and missed opportunities.” – Read the complete Blog post and listen to podcast here.
A New Industrial Revolution
We find ourselves in another industrial revolution where data analytics is the new frontier. In this new era, there will be winners and losers in the pursuit of growth. Businesses need to consider data as a strategic asset, and we need to optimize the use of all of our assets—people and data—for success.
Solid data analytics is critical in the construction industry. Case in point: analytics practice is reflective of the market overall. The construction industry is not typically fast adopters. There is a lot of opportunity to learn how analytics are working elsewhere and adopt best practices. I’m excited about the prospects. We need to be future-focused and continue to be assets to our clients in the future. We’re in the information business, and information is imperative for decision making. Data analytics is important to our core service, and it’s an extension of what we already do.
Remember this solid advice:
Data without a decision is a distraction.
Garbage in, garbage out.
How to Begin Producing Meaningful Results
As a construction business owner or leader, you need to be able to produce meaningful results. Business decisions impacting a behavior in the field or in the back office depends on it. For good results, start by asking the right questions. Then, build robust tools. You need to be able to meld industry and technical expertise and help the team understand what it all means.
Contractors: where should you begin? Take the initial steps to be a more data-driven business. Start on the path to become a data company. Gather your data all under one roof, so you have a single source of truth. Get your house in order. Find out why things don’t match. Become a data company, then move on to analytics. You can then take it a step further and build a dashboard, as well as decide what key performance indicators (KPIs) to monitor. But you need to start by asking the right questions.
It's important to make your data work for you. It’s not enough just to gather it; you must be able to make sense of the various data and make informed decisions based on it.
How you can use your construction data:
Some critical data analytics functions that can strengthen your construction accounting include:
If this all seems daunting, don’t get discouraged. This is an issue and opportunity across all industries. Once you start laying the proper data framework and build upon it, you will be moving in the right direction. There are experts, like those on my team, who are passionate about data analytics for construction and are willing and able to help.
Make sense of your data to proactively grow and manage your business.