Using Analytics to Drive Profits in Construction
“If you choose not to decide, you still have made a choice.” - Rush
- Bad decisions happen in construction, even from those with lots of experience.
- Most contractors know profit fade is happening, but it is very difficult to catch it before it’s too late.
- Data analytics gives contractors the brain and the muscle to detect these signals faster than they could do it in Excel.
Someone, somewhere in your business at this exact moment is making a decision that will lead to profit fade. Of course these errors are never intentional and as good financial, operational, or technical leaders we do everything possible to prevent these poor decisions from being made. Yet, they happen.
Why is this? In a complex environment like construction, decisions are often made on the fly. How much labor will it take to install this conduit? How should I deploy my equipment to effectively maximize utilization? Where should I be investing extra capital into the business? These questions are typically made using years of experience as a guide, but still most contractors find themselves scratching their heads not knowing why they were left losing money on a project that they felt was a sure win. Or even worse– they know they’re losing money, but they don’t where it’s happening.
In a world of intuition and educated guesses, data analytics is the antidote to help gut check the most experienced and talented of us all. If you are wrong, you want to know sooner. Data analytics is simply the technology to make it happen faster.
The Enemy of Insight
If data analytics is the hero in our story, who’s the villain? When it comes to getting deep insights fast and accurately, there is clearly only one answer: Excel Spreadsheets.
It’s no secret that construction companies depend on Excel for a large majority of their reports. It’s also well known that it takes weeks or sometimes months to get the right information to produce the reports you need to understand what is happening in your business.
The biggest problem with Excel, however, is that it lacks automation to help you be more efficient, and it is generally disconnected from your technology so it lacks the controls you need to run better forecasts. Because you have to manually export data from your systems, you or your team spends most of their valuable working hours working to source accurate information. Unfortunately, this process is never done quickly enough and it ultimately has a huge impact on your profitability. It is entirely possible that, coupled with a few clerical errors to form the perfect storm, a missed number could take down your business.
Data analytics isn’t just about pretty charts and graphs. A robust analytics platform also gives you automation so that you no longer have to manually manage your information. This means you can suddenly automate tedious workflows to ensure your data is always fresh, up to date, and is centrally located to gain the insight you need. Analytics is more than dashboard reporting– it’s the brain and the muscle to help you make accurate decisions, faster.
Pulling together the information you need to make better decisions is tedious, and in many cases can take months to sort through. Once you finally get the information you need, that information is outdated or wrong and leads to many qualified executives making decisions based on a guess or bad intel. A good data analytics platform helps you to detect the signal from all of this noise, and gives you insight into what is actually happening in your business.