As we start a new year, it’s always interesting to reflect on the many industry challenges, successes, and progressions that have taken place, and make assumptions on what we can expect to see evolve in the year ahead.
Prophix has done just that for the construction industry and, based on Prophix’s work with its many customers in the construction industry, has offered a number of insights below.
SUPPLY CHAIN TURNS STRATEGIC
The pandemic stretched global supply chains, triggered fluctuations in supply and demand, and exposed major weaknesses in the ways construction companies manage inventory—and these supply chain issues won’t let up in 2022. Instead, the continued volatility of the raw material market is exposing the risks of relying on an “on-demand” method for material purchases, buying per job, or when needed. In 2022, we will see an increasing number of construction companies developing individual, future-oriented inventory and supply chain strategies to combat material shortages, price fluctuations, and other repercussions of a pandemic-addled supply chain.
1. VCS BOOST CONSTRUCTION TECH GROWTH
In 2022, we will see investment from venture capital firms and funds in construction technologies continue to increase. In 2021, we saw the beginning of a wave of capital investment entering the construction technology market, which had previously seen little money come in from investors outside the industry. This influx in capital within the construction technology industry will spur rapid growth, innovation, and profitability in the construction technology space, ultimately leading to a construction technology boom in the coming year.
2. PROCESS BECOMES A PRIORITY FOR THE CONSTRUCTION C-SUITE
The pandemic highlighted for many construction companies that their inefficient, out-of-date processes for everyday business tasks were not just slowing them down—they had real business impact on productivity and profitability. In 2022, moving to digital, data-driven systems for these processes will become a top strategic priority for members of the construction C-Suite. While previously these efforts may have been managed on a department level, increasingly, construction executives will take over the task of driving digital strategy as they come to recognize their previous processes are holding them back.
3. CPM TECHNOLOGY AND PLANNING
In 2022, smart corporate performance management (CPM) technology will be essential for connecting separate systems of construction companies—from surveyors to builders to finance teams and beyond—and allowing these teams to appropriately plan for the future. Construction companies have been, and will continue to be, buyers of technology and data that will run various parts of their businesses. As a result, there has been and will continue to be an increased investment in CPM technology that connects these systems together to give decision makers a full view of their business all in one place. CPM software also provides construction executives with accurate and integrated forecasting, which will be key to winning construction projects and deftly managing budgets and cash flow on those projects throughout next year and beyond.
4. INFLATION AND MATERIALS
Rising rates of inflation will grip the global economy well into 2022 as constrained supply chains keep prices high, and will continue to impact the acquisition of raw materials for construction companies working on projects across the country. The construction industry is often slow to evolve with changing market conditions, but to survive, construction companies will have to act more like a stock market trading business—planning and forecasting based on what the future might hold, as opposed to current market conditions.
CLOSING THOUGHT
Organizations that prioritize developing a strategy for managing their supply chain of materials and labor will be well poised for maintaining their growth and profitability levels well into the future. The impact we are feeling from material and labor shortages are not a blip; they are our new normal.
Prophix began as a software distributor. After years of implementing financial applications, the company’s founders, recognized the need for an innovative planning and reporting system; Prophix’s Corporate Performance Management platform was born. Prophix’s software helps financial professionals reframe their everyday challenges into genuine opportunities.
About the Author:
Chris Porter is director of vertical product marketing at Prophix. For more, visit www.prophix.com.
Modern Contractor Solutions, February 2022
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