From Risk to Reward: The Importance of Effective Project Management for Mid-Sized Construction Companies

Construction Project Management Software

Effective project management helps ensure that all the tasks in any project, irrespective is size and scale, progress smoothly. Project management makes project delivery speedier and helps create the circumstances in which better decisions are made. A study reveals that organizations lose out on at least 12% of their resources due to poor project management and poor budgetary allocation. Often, the lack of proper planning proliferates the risk of delays and cost overruns.

In effect, the likelihood of the project getting derailed while in progress is reduced with effective project management—one that facilitates flexible planning, risk identification and management, financial management, and efficient tracking of all moving parts across the construction site.

In essence, effective project management allows managers to be able to find opportunities to save time and money on the project.

Let’s quickly take a look at the five stages of project management for construction businesses:

  • Initiation – Planning and determining the feasibility of the project. Coming up with building drawings and final documents.
  • Pre-Construction – In this phase, the project team is put together, and the site is tested for construction.
  • Procurement phase – Here, the raw materials and tools are acquired by the team.
  • Construction phase – This is where the construction takes place, and the project starts materializing. In addition, quality checks, reviews, and RFIs are performed by the managers.
  • Post-Construction – Here, the site is cleared up, and rented equipment is returned. Companies may also carry out a review in order to understand what could have been done better in the project.

Risks of Poor Project Management

Companies that leave planning up to chance run the risk of facing several unwanted complications that may derail the project. This section will discuss some of the most prominent ones that most companies run into.

Compromised Productivity 

Without a streamlined workflow, it is extremely likely that the amount of work that gets done will not be optimum. Unwanted issues such as missing equipment, lack of coordination, and indecisiveness can all hinder the team’s productivity and make it difficult to carry out even the most basic tasks.

Delayed Project Schedule 

Problems like unclear tasks and conflicts can all result in the project being delayed. This is why it is crucial that, before the construction starts, managers take stock of all the resources they have at their disposal and come up with an accurate estimate of when important milestones can be achieved.

Project Cost Overruns 

Alongside delays, the cost estimates can also be well off the mark. And this would result in the project going well over the budget, especially if a lot of rented equipment is being used. A much-cited study by McKinsey outlines how large construction projects usually wrap up 80% over budget. Another recent study points out how cost overruns of 28%  due to several factors, such as improper cost-benefit analysis, lack of cost monitoring and control, and incomplete specification requirements, among others are hurting construction companies.  To avoid this, it is important that project managers have the maximum information laid out in front of them so that they can find ways of saving money in that unique context.

Poor Reputation 

If you’re constantly undergoing delays in your project or going over budget, your company is eventually going to develop a bad reputation. And when that happens, potential clients are going to want to steer clear of you. This will also result in difficulty in hiring and maintaining staff, threatening the business itself.

Demotivated Team 

A well-coordinated team can get things done and wants to work together. But not being on the same page will certainly prevent team members from giving their all to the project. Without being disciplined, having well-defined goals, or communicating properly, it’s almost impossible to have a functioning and productive team.

Benefits of Good Project Management

Now that we’ve seen how poor project management can impact your business, let’s look at how effective management can help.

A Cost-Effective Measure 

The likelihood of going over budget is minimized by estimating equipment, raw material, and labor expenses early and laying out proper facts in front of project managers. As such, they can look for ways to cut expenses and make execution more economical.

Helps Avoid Conflicts 

It’s no secret that teams function better when they’re not confused about who’s doing what. Assigning tasks to specific team members and appropriately scheduling meetings and procedures alongside proper communication can eliminate conflicts within the team by clearly laying down responsibilities. This will help maximize productivity and ensure that morale doesn’t drop.

Timely Execution of Work Schedules 

Going back to the McKinsey study, construction projects often take 20% longer to wrap up. That’s a sizeable duration when you consider the resources involved, the overall scale of operations, and the client’s urgency. Of course, timely execution is directly associated with client satisfaction.

In fact, moving on to other projects also becomes easier for construction companies when they adhere to schedules developed via detailed and informed planning. So, the benefits are not only limited to client satisfaction but also having a clear timeline between different projects.

Helps Keep Up with Industry Standards 

Earning a good reputation takes years, and having a proper project management system in place can help you with that. By carefully laying down the details of how you’ll be going about your work, it’s much more likely to be at par with the leaders in the industry. This will eventually lead to an easier expansion of the company while keeping up with the industry standards.

The Way Forward

In order to be competent in the construction industry, it is vital to have a clear work procedure. To that end, having the right project management software in place is the first step towards building a workflow that can allow the team to collaborate and work towards their goals in a well-defined manner.

One of the best ways of realizing this is to use a robust and feature-rich project management software. Two of the most significant benefits include convenient access to project details and the ability to keep others updated in real-time.

Book a demo with us today to learn more about the construction management software solution your company needs!