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© Copyright 2007 Work-4 Projects Ltd.
Economic Downturn: Retreat or Invest?

By Don Fornes

Recall the spring of 2000, when dotcom startups were all the rage. Stock prices of tech companies with no earnings were through the roof. It seemed that everyone from venture capitalists to "day traders" was making a killing.
A downturn followed and companies began slashing costs, laying off employees and consolidating to stay alive. Most didn't survive. But for those that made it through, the downturn was a chance to increase efficiency, streamline processes and take market share. What didn't kill them made them stronger.
Although commercial construction is doing reasonably well, the dramatic slowdown among home builders can be approached with lessons learned in 2001. Amidst a contraction, it's natural for companies to consider a retreat. But for those that aspire to emerge from the rubble as a stronger, more efficient market leader, it may be time to invest.
Invest? Yes...and particularly in project management software systems. Properly implemented and adopted systems can play a critical role in improving efficiency. Here are four aspects of your business that project management software can help improve in a slowing market.

If a sub misses a deadline, he can easily plague the entire construction process. With software, you can keep better track of tasks assigned to others and monitor their performance, especially the time required for completion. By staying more on top of contractors and the work assigned to them, you can avoid the back-and-forth behaviour that you cannot afford when profits are tight.

Communication and collaboration
How many times have you worked on a project that suffered from poor communication? Material specifications, finishes, and plan changes all too often get lost in the shuffle. When this happens, it can seriously hurt your - or another - business, and in a slow market, you can't afford to let this happen. By implementing software that allows contractors to communicate and share information, users dramatically reduce the chances of miscommunication. Most home builders would probably agree that they would benefit greatly just by improving communication with their trades.

Tighter scheduling
If you're managing several projects at once, or would like to be able to isolate areas that could benefit from improved scheduling, you can benefit greatly from project management software. Most systems allow home builders to set up critical path schedules and keep a close watch on project milestones, and you can certainly bet on the software notifying users of areas or tasks that take too long and cause trouble.

Cost management
Simply enter the expected cost of a job, and then update your actual costs as you go. Software systems automatically tell you which areas of a project are coming in over or under budget, giving detailed reports of the project history. You will also be able to track the profitability associated with change orders, another area that is notorious for being a money pit for home builders. The more you stay on top of costs during a tough market, the more successfully you'll please customers and keep your head above the water.
It may be tough to justify investing in new software when business is slow. However, the software-as-a-service delivery model has dramatically lowered upfront costs of new software. Such systems are accessed through a Web browser and do not require anything to be installed. You pay as you go and can therefore get a system live without a big up-front investment. This on-line platform allows you, your subcontractors, and your homeowners to communicate schedules, specifications, and project progress over the Web, making it much easier for everyone to stay on the same page. If it doesn't work for you, you can turn it off without a large sunk cost. Chances are you won't, given the improved collaboration and accountability.
Keen home builders will note that an industry slowdown can be a great opportunity to invest. By increasing accountability, improving communication, tightening schedules, and keeping better track of financials, you'll improve your chances of survival. When the market comes back around, you'll likely find yourself one step ahead of the competition.

Don Fornes is CEO and President of Construction Software Advice, a Big Sky, Montana-based Web site dedicated to helping home builders research and select software. E-mail Don at don@softwareadvice.com or visit www.SoftwareAdvice.com to compare software and find a project management system that is right for your business.

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