Note: BuiltWorlds members will have access to the full recordings of this and the other BuiltWorlds Summit Sessions over the coming weeks.
Leading Construction Industry Consulting Firm, FMI came out in force Wednesday with a diverse team of senior leadership discussing the need to assess and adopt quickly and providing context on the current construction environment from the broader economic perspective into management and operational concerns and then connecting those efforts with technology strategies. Russ Young, FMI Technology Consultant, moderated the sessions.
In terms of the overall environment, Jay Bowman, Principal and Managing Director, Research and Analytics kicked off the session with a discussion of economic factors “beyond the four walls of construction.” He identified the pharmaceutical and medical device sector, distribution and cold storage sector, data communications infrastructure, and intelligent transportation systems as stronger. Lodging, amusement and recreation, and even office were some sectors where he saw a prolonged downturn. He challenged industry leaders to be considering whether they are building a company that is best positioned for a point in time or a company that can adapt for all times.
Management Strategy Considerations for Adapting. The Need to Be Responsive
Moving into management strategy, Brian Moore, Principal in Strategy practice, offered a short list of things firms should have done by now, including having financial scenarios in place, recognizing the productivity impact of the Covid pandemic, addressing people issues and the human factors of the current environment, and developing contingency planning around projects. He further offered that they should now be turning attention to the next twelve to twenty four months with a need to be focusing on strategy, not to forget to invest in people to avoid future holes in leadership teams, and to focus on growth through acquisition if they have a balance sheet to do it.
Performance Considerations: Short Term and Longer Term Risks Considered
Moving from strategy and markets, Tyler Pare, Principal and Performance Leader, highlighted three areas of risk:
- Cash flow risks as payment terms slip beyond industry 45 day average and maybe head to 90 days and as pick-ups in work drives more cash demands.
- Risks associated with payments for disruptions to projects, as projects shut down, restart, or simply face resource delays during projects.
- Backlog risks as contractors scramble to replenish backlogs. He cautioned that contractors need to be very careful about what work they take on right now to ensure the work “drives profitability long term,” and not just cut margin and take risky work in an effort to absorb overhead and keep teams together. The biggest thing, he said, is knowing who you are partnering with.
Technology Adoption in the Industry: An Emerging Dichotomy
Moving past broader management concerns, Jay Snyder, Technology and Innovation Practice Leader, painted a picture of an emerging “dichotomy” in the industry in terms of technology adoption. Some companies have realized they have a strong tech stack during this time and are looking to expand with more labor and productivity tools, pushing into advanced pre-qualification analytics, augmented robotics, collaboration tools, automated take off and scheduling solutions. Others are noting more fundamental short comings in their tech stack that may have been masked by being able to be together in the office. Those organizations will be focused on foundational things like accounting, project management, HR system, and possibly learning management. They won’t be focused on point or expansion solutions.
Wrapping up the session Tyler observed that “as leaders, this is your finest hour. You may feel that you just ended a marathon, but you are about to begin another one…”
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