CONSTRUCTION SMARTER SMALL BUSINESS REPORT Top tips you can t afford to miss

CONSTRUCTION SMARTER SMALL BUSINESS REPORT Top tips you can t afford to miss

CONTENTS 4 6 9 10 11 12 14 15 PRODUCTIVITY POTENTIAL IN AUSTRALIA S CONSTRUCTION SECTOR MANAGE PROJECTS ON TIME AND ON BUDGET ATTRACT AND RETAIN THE BEST CONTRACTORS REDUCE THE IMPACT OF RISING COSTS THRIVE THROUGHOUT ECONOMIC CYCLE CHANGES STORIES FROM SMALL BUSINESSES LIKE YOURS BUILDING FOR THE FUTURE FOUR THINGS YOU CAN DO TODAY 2 3

PRODUCTIVITY POTENTIAL IN AUSTRALIA S CONSTRUCTION SECTOR Construction is the largest industry in Australia in terms of the number of businesses involved. However, according to Peter Barda, executive director at the Australian Construction Industry Forum speaking at the Australian Construction Industry Forum, There is no such thing as a construction industry. It is a series of tribes. Peter Barda, executive director at the Australian Construction Industry Forum. Yet they all depend on each other, all have to deal with cash flow challenges and the wild card of weather, and they can all benefit from the latest technology. Take mobile technology for example: a 2012 Smarter Business Ideas case study reports that construction managers could increase productivity by 20 per cent, if mobile technologies such as smartphones and tablets are used with appropriate software, according to new research by an Australian construction software company. 1 TOP 4 CHALLENGES FOR CONSTRUCTION 1 PROJECT TIMEFRAMES AND BUDGETS 2 MOBILE WORKFORCES AND CONTRACTORS 3 RISING MATERIALS AND COMPLIANCE COSTS 4 DEPENDENCE ON CONSUMER AND BUSINESS CONFIDENCE PIPELINE MANAGEMENT IS EVERYTHING. Construction projects will always end, so to keep cash flowing and retain staff you always need to have new projects in the pipeline. CONSTRUCTION IS CYCLICAL. The construction industry is a canary in the economy s coalmine. If just one sector slows, the whole industry can suffer as we ve seen with the current slowdown in mining reducing demand for engineers, equipment providers and even housing construction to service that sector. 314,000 EMPLOYEES ARE IN THE TRADES. A third of all employees in this sector are tradespeople, despite continuing skills shortages across many trades. Source Private Sector Construction Industry, Australia, (2011-12) http://www.abs.gov.au/ausstats/abs@.nsf/ Latestproducts/8772.0Main%20Features22011-12? 98% OF BUSINESSES ARE SMALL. Construction services comprise 77 per cent of these small businesses, and small construction firms employ more than 500,000 Australians. Source ABS 8165.0 - Counts of Australian Businesses, including Entries and Exits, (Jun 2008 to Jun 2012), http://www.abs.gov.au/ausstats/abs@.nsf/ latestproducts/8165.0main%20features3jun%202008%20 to%20jun%202012? AUSTRALIA S LARGEST BUSINESS SECTOR. Australia is home to 347,197 construction businesses, making construction the single largest sector in the business community. In addition, with 950,000 employees, it s Australia s fourthlargest employer. Source ABS 8165.0 - Counts of Australian Businesses, including Entries and Exits, (Jun 2008 to Jun 2012), http://www.abs.gov.au/ausstats/abs@.nsf/ Latestproducts/8165.0Main%20Features3Jun%202008%20 to%20jun%202012? 1 Source Australian Bureau of Statistics 8165.0 - Counts of Australian Businesses, including Entries and Exits (Jun 2008 to Jun 2012); ABC Photosigns case study in How mobile is your business Tech-Zone feature, Smarter Business Ideas (July 2012), smarter.telstrabusiness.com/abcphotosigns.htm 4 5

MANAGE PROJECTS ON TIME AND ON BUDGET Construction projects are always complex to manage. They depend on so many different suppliers, materials and specialists, and many of these can be hard to find. Peter Barda, executive director at the Australian Construction Industry Forum (ACIF), says, Builders need good information systems and resource management tools. For example, he sees great potential for smartphones to photograph work as it progresses, making it easier to monitor progress. Ross Morley, founder of GJ Gardner Homes, suggests tools that improve project management as you grow are essential. You can keep maybe three or four projects in your head, he says. Busier builders can t hope to control budgets and schedules without help. 1 CHOOSE A PROJECT MANAGEMENT SYSTEM THAT CAN SCALE WITH YOUR BUSINESS You can t manage what you can t measure. Tools that let you capture data about your projects and view key metrics can be the difference between predictable projects and open-ended messes. 65.7% OF BUSINESSES REPORT DIFFICULTY IN RECRUITING QUALIFIED LABOUR, AND 59.4 PER CENT EXPECT DIRECT LABOUR COSTS TO INCREASE. Source Australian Industry Group and Australian Constructors Association Outlook (May 2013) http://www.aigroup.com.au/ constructionoutlook Push your systems into the Cloud let partners access key systems by using Cloud-based construction management software, or Software-as-a-Service (SaaS) on a per user, per month subscription, which can help reduce up-front costs Customise this software. A project calendar tool lets you email a contractor about working on a certain day, and in one click they can accept the booking. The contractor can use their smartphone to capture the completed work, so you can check on progress without a time-consuming site visit. All from a single login on your smartphone, tablet or laptop. Builders need good information systems and resource management tools. Peter Barda, executive director at the Australian Construction Industry Forum KEEP TABS ON PROJECT PROFITABILITY You need to be able to reforecast costs quickly and send variation quotes for approval. Your project management software should be able to support this and track the time it takes for contractors to complete the work so you can make sure everything is running to plan. Take your tools on site by accessing these systems and documents from your smartphone or tablet. Make or receive payments, change rosters, update quotes and schedules and place orders Take credit card payments onsite after a job is done, using mobile payment systems, and you ll find it much easier to stay on top of cash flow Look for Cloud-based invoicing systems that speed up and simplify payment tracking a few days can make a big difference when you re paying contractors upfront. 1 Source http://smarter.telstrabusiness.com/features/me-and-my-mentor-gj-gardner-homes.htm 6 7

48% OF CONSTRUCTION BUSINESSES BELIEVE SOURCING SUB-CONTRACTORS IS DIFFICULT. Source Australian Industry Group and Australian Constructors Association Outlook (May 2013) http://www.aigroup.com.au/constructionoutlook ATTRACT AND RETAIN THE BEST CONTRACTORS According to the Australian Industry Group s and Australian Constructors Association s May 2013 Outlook report, hiring reliable tradies is a daunting task given the current skills shortages and competition from the mining sector. Even with the boom easing, demand for sub-contractors is still expected to grow a further one per cent by June 2014. So, it s imperative to find ways to better identify, attract, manage and retain staff, especially sub-contractors. Happily, that s just what dedicated construction management software is designed to do, so investing in technology is one way to ease workforce worries. OVERCOME SHORTAGES OF SKILLED LABOUR The decline of young workers entering the construction industry has been made worse by the mining-led construction boom, which has seen many workers move, lured by the high rates of pay. Creative sourcing use a reviews site to source a tradesperson. Although they are typically for domestic trades (plumbers, electricians), those workers may meet commercial needs and could provide available local talent Offer more mobility if you want a supplier to work for you more often than they work for your competitor, offer them a better experience. Make it easy for them to access their job information, organise their schedule, issue quotes and invoices by using mobility tools like GeoOp that they can access from their compatible tablet or smartphone. We care about our people, we want to give them the very best job and because we look after them they want to give our clients the very best job as well. Elizabeth Newbound, Australian Pressure Testing Services EMPOWER YOUR STRATEGIC ALLIANCES You don t need to add more people to your books to provide a seamless service to customers. Create a virtual enterprise build your network of trusted suppliers into a group that presents as a single entity, but is actually made up of individual operators. Do more with fewer staff productivity tools can let you grow without having to take on more people. If you minimise arduous admin tasks and make it simpler for tradespeople to get the job done, they may be able to fit an extra job into that day. 8 9

REDUCE THE IMPACT OF RISING COSTS THRIVE THROUGHOUT ECONOMIC CYCLE CHANGES There are two big cost constraints for construction businesses: the rising cost of materials, and the time spent away from a project meeting compliance needs, notes a Housing Industry Association press release in August 2013. In the press release, Wilhelm Harnisch, CEO of Master Builders Australia, is quoted saying, time spent dealing with red tape and duplicative compliance processes diverts precious resources from the industry and stops it from doing what it does best creating jobs, driving the economy and building homes, hospitals, schools, roads and other vital community infrastructure. You can make it simpler to track data and generate reports by using new technology or outsourcing it to a third party. And while you can t control the costs of materials, better project management can reduce the impact of last minute order changes, and by managing your supplier relationships you may be able to negotiate better terms. 74.2% OF CONSTRUCTION BUSINESSES EXPECT INCREASES IN MATERIAL COSTS. 1 INCREASE EFFICIENCY FOR BOTTOM-LINE IMPACT Reduce the time it takes to process paperwork. Automate data capture with mobile applications like Canvas to quickly produce real-time reports, and transact as much as possible online Manage materials better: manage schedules more effectively so you buy the right materials at the right time freeing cash flow for other priorities Use Cloud-based mobile accounting software. Generate invoices and variations on-site, enter timesheets or contractor invoices, generate real-time profit and loss reports for a given project, and capture receipts and do expenses all on your smartphone or tablet. MAKE MORE PROFITABLE DECISIONS WITH REAL-TIME DATA Make sure your accountant can access your bookkeeping software, as real-time data will help you both make better business decisions If you re buying materials on the go, keep a running expense tally using photo capture on your smartphone instead of handing your accountant a box of receipts months later Set up mobile payment systems make it easier for clients to pay you immediately by offering mobile credit card payments on site. Are you focused on where your projects will come from over the next 12 months or are you looking at the bigger picture? If you use financial management software, you should be able to see the peaks and troughs of a year and once you ve used it for a few years the patterns across longer periods. These patterns may be seasonal or linked to changes in the general economy interest rate changes, policy changes or specific industry booms and busts. Importantly, that data can help you spot opportunities before your competitors do. GROW THROUGHOUT THE ECONOMIC CYCLE Economic cycles are just that: cyclical. Businesses that understand those cycles can manage them. Look for niche opportunities if there s demand for activity-based workplaces or solar panel installation in your area, become a specialist and bring together the required skills to make it happen Manage your referral network. Follow up to make sure they re happy and give them an incentive to recommend your services to friends or colleagues. Automate a follow-up email a year after completion to check how things are going Be competitive on price, quality and service you may not want to compromise your margins by competing on price, but become known for at least one of these things. If you don t want to go for low budgets, make sure the quality of your craftsmanship is number one Make it as easy as possible for customers to find you and work with you. Do you have a website? Are you listed in the relevant directories? Can a prospective customer reach you by mobile, and how quickly do you respond? Do you have a phone system that helps you better manage your calls? It seems simple but this can make all the difference when it comes to winning new business. We take the attitude that no job is too small, including risky projects our competition may reject because they re not seen as profitable. Those jobs might not always make money, but they often open the door to large, ongoing and very profitable projects. Andrew Beattie, Rudds Consulting Engineers 1 Source Australian Industry Group and Australian Constructors Association Outlook, May 2013, http://www.aigroup.com.au/constructionoutlook 10 11

STORIES FROM SMALL BUSINESSES LIKE YOURS INNOVATE FOR BEST PRACTICE PROJECT MANAGEMENT When Michael Snare launched Point Project Management (PPM) with business partner Brendan Bilston in 2006, he borrowed from his parents to cover cash flow. Today PPM manages projects worth $2 billion annually for clients, including the Department of Defence and Qantas, and Michael believes structures and systems have been crucial to his business success it s what happens behind the scenes that allow things to run seamlessly. Click here to find out more. IN A HIGH-PRESSURE ENVIRONMENT, PEOPLE MATTER MOST Australian Pressure Testing Services (APTS) is boosting safety in resource projects, big and small, with its essential pressure testing service. But it s the care this family business takes of their customers and staff, as much as the quality of their work, that ensures their success. Click here to find out more. MOBILE BILLBOARD TRACKING BOOSTS PRODUCTIVITY With 131 employees and 77 vehicles on the road, family-owned real estate billboard company ABC Photosigns is using tablets with mobile broadband to help make its staff more efficient. The firm designs and erects about 9,000 real estate billboards every month around Australia. Drivers were returning to the office to email photos of the signs to real estate agents at the end of each day, which was time-consuming work. ABC wanted a better way to manage that process and also gain an edge on competitors. Our challenge was finding [mobile] devices big enough for drivers to see their run sheets, but not too bulky to take photos easily, says managing director Mick Hollingsworth. Telstra provided ABC with 45 Samsung tablets connected to the Telstra Mobile Network. It was important to use devices our IT department could work with flexibly, and Android devices were the best option, Hollingsworth adds. Meanwhile, ABC also developed a specialised application for near real-time customer communications. Now, drivers take a photo of billboards with their tablets, and the app automatically assigns a job number and emails the photo to the estate agents for approval. The combination of new devices, apps and a reliable network has delivered great results for ABC. Drivers are spending 20 per cent more time on their core job of installing and removing boards. We forecast the business could grow by 15 per cent before we need to employ more staff. Customer satisfaction has also increased because we re installing more boards correctly the first time round, says Hollingsworth. SOFT SKILLS ARE A COMPETITIVE EDGE IN A TECHNICAL FIELD Rudds Consulting Engineers has grown to have over 40 employees in the ACT and Victoria and continues to thrive in a tough sector. Andrew Beattie and Lou Forner say the smartest decisions they made include training their workforce from the ground up, never saying no to a project, and keeping their accounts receivable on a tight rein and they believe the soft skills, including communication and integrity, are key when competing in a tough market. Click here to find out more. 12 13

BUILDING FOR THE FUTURE 1REPUTATION MANAGEMENT Visit some online tradies reviews sites, used increasingly by consumers. You ll soon see why building and maintaining a good reputation online is just good business people are only too happy to share negative feedback and that can win or lose a new building contract. You may not be able to control the social media conversation, but you can respond and manage relationships, and you can ensure you include positive testimonials received from your customers to your own website to reassure potential new clients. 2DATA ANALYTICS Data analytics is a new but very valuable source of market information. It can show, for example, how long after build the average new home is first renovated. Knowledge like this could change how you market your services during the first build, and increase opportunities for additional revenue from your existing client base. Software-as-a-Service (SaaS) tools make client data analysis a realistic option for small construction companies. 3BUILDINGS THAT TELL YOU WHEN THEY RE FINISHED With advances in M2M (machine to machine) and sensor technology, it won t be long until construction firms start seeing the productivity benefits. For example, gadgets could send you an alert when paint is dry enough for another coat. 4WEARABLE COMPUTERS Google Glass is a pair of spectacles that puts a very, very, small screen just in front of one eye. It delivers augmented reality so you can look at a project and call up information about it without even reaching for a laptop. Head-up displays give us the technology to improve engineering efficiency, and also have potential for just-in-time training - if you re not sure just how something goes together, instructions could be transmitted directly to you. FOUR THINGS YOU CAN DO TODAY 1 BUY A RUGGED SMARTPHONE Here are a few simple, readily available digital tools that you can begin implementing today to help you start building for your business s future. You can t afford to be onsite without access to your phone and internet. But if you stayed away from smartphones because early models didn t survive a construction zone, things have changed. For example, the Samsung Galaxy S4 Active is dustproof, waterproof and tuned so you don t need to remove gloves to use it. The new Telstra Dave is a rugged Android phone that s resistant to dust and waterproof to one metre for up to 30 minutes. Use your smartphone camera features. Ask your team to send photos of their work, or even a short video, at the end of the day so you can see what s going on without dropping in to visit. Share those photos with clients to strengthen your relationship. 2 USE COLLABORATION TOOLS TO IMPROVE PROJECTS FOR YOU AND YOUR CUSTOMERS Business applications delivered by the Cloud make project management software easier and cheaper to access. Produce real-time schedule updates, and communicate better with suppliers and customers so they have more timely information. For example, Microsoft Office 365 is a simple way to share email, calendar and working documents. Specialist construction industry tools such as Trade-Up let you benchmark productivity for specific trades. 3 MAKE IT AS EASY AS POSSIBLE FOR CUSTOMERS TO FIND YOU AND MAKE CONTACT Check your website is optimised for search engine results, especially for location and specialty skills. And make sure it s user-friendly and engaging include images of your previous work, testimonials, safety and quality certifications and ways to contact you (including email and mobile phone so you can get calls while out of the office). Make sure your phone system can handle multiple calls via a single contact number, with smart switchboard features such as auto attendant, call forwarding or voice-to-email. Add a click to call link to your website, so clients can reach you directly from their smartphone. 4 INTEGRATE YOUR SYSTEMS, SECURELY Make sure your business management software can be synced with your key supplier and customer systems to get the full time-saving (and any cost-saving) benefits. Keep it secure and password-protected. Back up data rigorously and use virus protection. If you re using the Cloud to access and manage software, security tools and updates should be part of the SaaS package. If you d like to discuss your communication needs or get more ideas on how to work smarter, feel free to drop into your nearest Telstra Business Centre. 14 15

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