The 4 Biggest Challenges Faced by Contractor Businesses – and How to Get Over Them
"If you operate or work at the heart of a contract-based business, you’ll be only too familiar with the numerous challenges involved in keeping the project lifecycle streamlined, and the contract profitable."
Whether you’re in construction, property, facilities, logistics, raw materials and components or any type of business that works on a contract or project basis, it’s likely you’ve hit stumbling blocks somewhere along the line that have threatened your reputation or resulted in a knock to your profit margin. And I’d hazard a guess that those stumbling blocks had something to do with mis-communication and stunted information flow from one area of your business to another.
When synchronicity is lacking…
For contractors it is seriously important to bring together, in cohesive fashion, everything from project schedules and progress to quantities, costs, service and client care measures and billing.
There is an enormous amount of information involved in a single contract. The trouble is that this information is more often than not VERY disjointed and distributed over an excess of different technologies. Processes between departments or teams will often vary too.
You need to synchronise a vast number of reports and data. But they are in contrasting formats. In other words, data from one section of the business is not compatible with data from another section. It makes running current reports a major challenge, and this can be incredibly damaging for a business.
To my mind, the major challenges faced by contractor businesses can be summed up as follows.
Client requirements are not properly communicated. Between sales and deployment, crucial information has been lost in translation or simply not passed on. Clients don’t get what they ordered so reputation is punctured. If you do get to keep the business, it’s going to cost to put it right. If you don’t, all the time and costs involved in acquiring the business will go down the drain.
2. Ordering discrepancies.
Materials are incorrectly ordered or not ordered on time, with quantities wide of the mark one way or another. So now there is wastage, or project delays while you wait for suppliers to make up the balance.
3. Lack of status feedback.
Lack of feedback on contract or project status leads to missed key stage deadlines. Contracts are like jigsaw puzzles with all the pieces fitting around each other. Clear feedback on current status is vital so that whatever is needed materials or manpower wise in order to move to the next stage can be prepared at the right time. Too early and you could experience storage or cashflow difficulties. Too late, well that speaks for itself.
4. Invoicing delays or inaccuracies.
Unless a job-complete report reaches the billing department, invoices won’t be issued as soon as they could be, leading to cashflow problems as well as loss of interest. Materials have been paid for, so it’s vital to get the job invoiced without delay. Invoices need to be accurate too, so if additional work has been bolted on at the point of sale but no one has thought to let billing know, valuable profit could be lost.
Departmental voids are dangerous. So, what’s the solution for the contract-based business?
In a contractor business, individual departments so often function as separate entities rather than a cohesive team. And there is regular conflict of priorities between general management, operations and onsite personnel.
So, how to bring everything together and get that critical information funnelled into one place so that costly, reputation-damaging mistakes become a thing of the past?
What’s needed is a central business intelligence platform into which data of all types and descriptions can be funnelled, regardless of the technology or process used to create it. Everything from specific client requirements through to materials and manpower quantities and levels, critical key stage deadlines and current status reports, all available to view and delve into via a neat dashboard that you can access from any device, anywhere you happen to be.
The data will of course need to be real-time, so that the snapshot you get is bang up to date. What’s more, through the dashboard, you’ll be able to see precisely how profitable a project is proving, and spot any discrepancies early on so they can be rectified before they start to cause issues. Crucially, the platform will be customisable to the individual requirements of your business and the type of contracts you expedite.
There are only so many stumbling blocks you can hit, so much reputation damage you can handle and so many times your bottom line can be dented before your business seriously starts to suffer. But if you can capture and funnel all that essential information that is floating around the four corners of your organisation, you could be sitting atop a highly successful and profitable goldmine.