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Risk is an inherent part of business. In construction though, risk mitigation isn’t always easy. Not only are there multiple moving parts in any project to keep track of, but reporting also isn’t always accurate or fast enough to allow for proper risk analysis and management. In an industry with narrow profit margins and high costs, few industries can stand to benefit more from effective risk management than construction.
Fortunately, data analytics has opened up brand new avenues of risk identification and mitigation than ever before. Modern analytics tools are giving companies rapid, detailed insights into their business as well as the tools to manage resources better than ever before. For the construction industry, this technology could take companies leaps and bounds ahead of where they currently are on risk mitigation. Some companies are already leveraging these tools to get ahead.
With that said, let’s go over three ways data analytics can help construction companies identify and mitigate risk for better business outcomes.
Labor management
Managing labor is essential in construction. The cost of labor ranks as one of the highest expenditures in a project. That’s why it’s important to make sure you have the right amount of people, at the right place and time. Having too many workers on a single job site or a poor distribution of labor can cause costs to increase unnecessarily. Conversely, being understaffed will cause operational inefficiencies and prevent a company from properly keeping a project moving on time. It’s hard to know the capacity and the right numbers for certain until the job is in action.
Data analytics has changed this completely. Financial software that leverages data analytics can aggregate large amounts of data and perform complex math to help your business. What this means is that the right financial automation platform will be able to forecast your labor needs for various bids in just a few clicks. It can look at your running projects as a whole and determine how to best distribute the resources you have on hand. With data analytics, companies won’t have to take the risk of over or underspending on labor ever again. They’ll have clear-cut answers before the first worker is even on-site.
Analyze project trends
Sometimes, the unpredictable can happen. However, when something happens multiple times, it stops becoming unpredictable. It becomes a pattern. In construction projects, it isn’t always easy to spot those patterns. When labor and material costs are fluctuating, and change orders pile up, it can be hard to pinpoint a consistent source of problems for a project timeline or billing cycle. Combing through a long backlog of project data to try and find these trends is a huge undertaking.
Luckily, data analytics was built for exactly that task. Construction companies can now input all of their project information into financial automation software and get accurate trend analysis. The analysis can reveal incredibly detailed insights about where risk is highest for your business and how to mitigate it. It can drill down into timelines, project categories, billing cycles, and more to reveal whether or not your projects are as profitable as they can be. Whether it’s a subcontractor relationship, material costs, or labor distribution, construction companies can now find out which areas of their business they need to pinpoint for better results.
Test for every possibility
The best antidote for risk is preparation. However, scenario testing can be a complicated process. CRMs aren’t easy to extract data from, and forecasts take time to create. Getting regular cash flow forecasts can be a hurdle in and of itself. Adding a forecast for a project that may not even happen on top of that can be a big ask for your team. This can lead to construction companies taking a chance on bids, based on gut feelings and rough estimates.
Fortunately, a financial automation platform like Briq will use data analytics to solve this problem for you. Briq can pull information from your CRM and mesh it with a forecasting workbook to give you a look at the future of your business. Construction companies will be able to get an automatic forecast for every scenario, from viewing a report that only shows guaranteed projects to one for every possible project acquisition at once. This allows businesses to eliminate the risks associated with the rough estimates made before a bid. Construction companies will have exact numbers on the profits, cash flow, labor availability, and more for every possible bid. This puts companies in a position to only take the most profitable choices, and plan ahead of whatever strains might occur from concurrent projects.
Minimize risk with the right tools
With analytics tools, risk management takes on a completely new form. It’s not a guessing game that could leave you overbilled on insurance, or lacking in appropriate labor due to allocation. It instead becomes a math equation with exact numbers that can be tackled head-on to deliver the best results. Data analytics puts construction companies in a proactive risk management position instead of a reactive one.
Companies looking to bring these tools into the fold can call on Briq to get the job done. Briq is a financial automation platform built to help construction companies run a better business. It joins your financial and operational data into one platform, empowering you to make more informed decisions, faster. Contact us here to speak with our experts and see how Briq can help you improve your business.
