All builders know how to build a house, it is in business management that many struggles. Yet the management side of the business is equally important as the onsite work to the success of the business.

Construction is a process in which an organisation takes on a project (building), assigns a team (people) to build it, and provides systems (tools, equipment, processes, and procedures with which the team can complete the work. In order to meet the expected level of quality and contract terms of the project, it is crucial to maintain and enhance efficient procedures and processes that will allow people to perform at an optimal level – hence, the importance of management.

Construction Business Pitfalls: The Extreme Danger from Disorganised Business Management - Infographic

Management: Key to Business Growth

Small construction companies are often over-led or under-managed. A business owner who stays involved in every aspect of running the company and puts no procedures and processes in place will inevitably suffer from unforeseen problems and general chaos. Conversely, larger construction companies are often over-managed and under-led. With no one willing to think innovatively and stray from the rigid structure, workers become bored and unmotivated.

Regardless of their scale of operations, many construction companies still engage in poor management practices that lead to suboptimal results. What’s worse is that many more repeat these practices time and time again with predictable results. There are many indications of poor management; these are just a few that can tip you off to current issues and future problems:

  • Crews are poorly supervised or not supervised at all.
  • Jobs are completed late.
  • Change orders are improperly administered (leading to collection failure)
  • Continual threat of litigation
  • Increased backlog
  • No management resources
  • Bidding using “guestimates” instead of proper costings

Understanding the consequences from disorganised business management may provide a way to minimising some of the problems faced by the people involved in project delivery.

Common Poor Business Management Practices and Their Consequences

Following are common pitfalls in construction management that often affect the results of the projects and the overall organisation:

Poor Management Practices

Consequences

Unrealistic Assumptions

  • Schedule and budget overruns
  • Dissatisfied client
  • Team fatigue
  • Considerable rework due to errors arising from the lack of due diligence

Ineffective Risk Management

  • Poor record of completion of cost and time
  • High levels of disputes and litigation
  • Intense competition for work
  • Low margins and profit risk
  • Poor safety and occupational health record
  • Pressure to produce a high return on funds invested
  • Pressure to save time and money
  • Pressure on health and safety provision

Inferior Planning

  • Poor time management
  • Unclear definitions of project’s objectives
  • Accurate Budget not set out
  • Lack of buy-in from key stakeholders
  • Exposure to unpredicted risks and problems

Poor Preconstruction Practices

  • Poor schedule
  • Inaccurate budget, staff selection, and metrics
  • Poor subcontractor selection
  • Late delivery of materials and equipment

Misaligned Strategies and Systems

  • Conflicting directions and objectives
  • Desynchronised tactical operations
  • Reactive spending
  • Decreased revenue
  • Cultural erosion and morale problems

Little Cross-Functional Communication

  • Culture of distrust
  • Limited employee engagement
  • Uncertainty and confusion with processes
  • Ineffective client interaction
  • Sluggish decision-making and problem-solving

Insufficient Company Oversight

  • Poor risk governance, leadership, and discipline
  • Prejudiced focus on the short term
  • Reckless risk-taking of teams

Not Analysing Performance Metrics

  • Misaligned work prioritisation
  • Inaccurate compensation and promotion decision
  • Stagnant skill development
  • Stagnant improvement in quality of work

Lack of Conflict Resolution Process

  • Poor worker performance
  • Project delay and Cost overruns

 

Conclusion

Bad management plays a very crucial role in destabilizing the company. Everything from inefficient bidding and preconstruction assessments to hiring the wrong crew and the inability to complete the project on time and budget points to management failure. Recovery can be tough if your organisation also suffers from misaligned processes, measurement of the wrong metrics, and ineffective hiring practices. In the worst case scenario it may be impossible.

With lots of administrative functions at play, it can be very challenging for construction business owners to track and monitor everything without the assistance of specialised software. To avoid the dangers of loose construction business management, you need to use construction management software.

Construction management software like Bizprac will allow you to monitor the most important aspects of your projects – from cost estimation, ordering and procurement and job management, to accounting, payroll, asset management, and builder retentions.

To learn more about our construction management software, visit our website today at www.bizprac.com or send an email to sales@bizprac.com