How Subcontractor Management Software is Mitigating construction labor shortage issues
Labor shortages are pushing the construction industry to its limits. The Associated Builders and Contractors reports that hundreds of thousands of construction jobs are unfilled, partly due to an aging workforce and a lack of new entrants. The labor shortage presents significant challenges for general contractors, including longer project timelines and difficulty meeting demand.
This is a nationwide issue. 91% of US contractors struggle to find skilled workers, and 45% of contractors have to turn away work due to labor shortages — according to U.S. Chamber of Commerce research.
There is a misconception that conversations around digital transformations focus on robots and 3D printers. But some of the biggest benefits are gained when digital transformation is centered on how technology can improve people management. Many labor shortage issues, for instance, are mitigated with construction technology that enables general contractors to better manage their subcontractors, strategically optimize worker productivity, and allocate the right resources to the right tasks. In this article, we explore how subcontractor management software can help you unlock these benefits. Let’s start by unpacking the promise technology holds for construction businesses.
In Construction, Necessity is the mother of invention
The skills shortage has accelerated the pace of digital transformation within the construction industry. In Canada, for instance, 46% of construction companies are spending above 11% of their operating budget on digital transformation — according to the Financial Post.
While companies move to adopt technology, many still lag behind in vital areas. Our latest research report shows that many general contractors still rely on manual and error-prone processes. Only 4% of general contractors without digital tools, for instance, are considering adopting software to track subcontractor certifications of compliance. Representing the highest demand, only 36% of general contractors are looking to enhance their processes with software that tracks schedules of values. These are low adoption numbers.
General contractors who continue to resist change will keep feeling the sting of skills shortages. In contrast, construction businesses that embrace digital tools enjoy many benefits such as higher productivity and improved profitability. To stay competitive and continue thriving in a challenging marketplace, general contractors should consider adopting construction software — as a matter of necessity.
Skills Shortage Issues Mitigated by subcontractor management software
Subcontractor management tools have many features that limit the impact of labor shortages. With the right tool, you can:
Reduce the need for back-office staff
The skills shortage is not confined to builders, plumbers, and other key subcontractor roles. Competent back-office staff are also in short supply, and they have a massive impact on ensuring no projects are delayed.
By automating and streamlining time-consuming tasks, subcontractor software enables you to take on more projects without needing to hire additional back-office staff. The right solution can automate multiple tasks, including invoicing, payment applications, processing and exchanging lien waivers, and document management — significantly reducing the administrative burden on your team.
Technology can also free up the existing workforce, enabling them to add more value to projects. As implementing new technology is almost always cheaper than hiring new staff, these tools not only help manage the labor shortage but also increase overall efficiency and cost-effectiveness.
Drive project and business efficiency
Subcontractor software provides a centralized platform to track, store, and easily access all project-related information. As the single source of truth for all project information, subcontractor software helps general contractors effortlessly track project progress and labor and cost allocation. This visibility enhances decision-making, reduces errors, and speeds up project timelines.
For instance, by automating the approval process of payment applications, general contractors can accelerate the payment cycle and improve cash flow. Other top project issues construction solved with software include managing subcontractor compliance and enhancing communication with instant and easy sharing of project updates. In a nutshell, digital tools help you to do more with less, which is a key factor in navigating labor shortages.
Strengthen team cohesion and talent retention
The relationships within a general contractor’s internal team directly affect the success of construction projects. Positive, cohesive, and enduring team dynamics offer flexibility for project adjustments, improve accuracy in project planning, and lead to potential cost savings by fostering operational efficiency. These factors ensure projects are delivered on time and within budget.
The inverse is also true. Tensions within the team can result in communication breakdowns, leading to a lower-quality product. Subcontractor management software, while primarily designed for subcontractor relations, also offers benefits for internal communication and collaboration. This software provides a transparent platform for team members to connect, reducing misunderstandings and fostering trust. In a market where top talent is difficult to find, using tools to bolster internal communication and collaboration is key to ensuring your best personnel remain committed and engaged.
Subcontractor Management Software as the key to success
The labor shortage in the construction sector presents serious challenges, but it also offers an opportunity for innovation and growth. By leveraging technology like subcontractor management software, general contractors can optimize their resources, build stronger relationships with subcontractors, and navigate the market with greater ease and efficiency.
At GCPay, we recently partnered with the Dodge Construction Network to produce a comprehensive report on how general contractors are using technology to improve their businesses, processes, and project performance. Click the button below to access the report and kickstart your journey toward a more efficient, productive, and resilient future in construction.