Three Disruptive Trends for Builders in 2019
Learn how home builders can confront their most pressing challenges with data-driven insights and technology.
As every builder knows, there are factors that are beyond control. From fluctuations in the economy to weather conditions, construction companies are constantly adjusting to waves of change. How can businesses maximize their profitability regardless of market conditions or industry challenges they face?
Here’s a look at three of the most disruptive trends builders face today, and how to confront these challenges with a data-driven approach.
#1: Price Increases & Rising Interests Impact Affordability
Builders report that economic factors, including interest rate hikes and price increases on construction materials, are forcing a significantly higher price point for their inventory which, in return, creates reservations from the home buyer around affordability. Builders who want to maintain affordability without sacrificing quality must get creative about how to bring exceptional value to their customers. Builders can leverage data to gain insights and flexibility to make better business decisions, extract value and efficiency throughout the building process, and ultimately satisfy customer demand for affordable options.
#2: High Costs Erode Margins
Rising costs instituted by suppliers and trades are eroding margins for builders. While builders can’t control these external costs, they can leverage tools to pinpoint where questionable profit margins may be occurring and adjust their decisions accordingly. Analyzing variances in pricing using real-time data can help builders take informed action when accepting or rejecting contracts for pre-sales, analyzing bid comparisons, and awarding business to trades with the most profitable outcome.
#3: Labor Shortages Diminish Efficiency
According to a recent NAHB/Wells Fargo Housing Marketing Index survey, the availability of labor is the leading concern for builders in 2019. Not having enough skilled workers can result in delayed closings and construction quality issues. Unfortunately, labor shortages are often beyond a builder’s control. What builders can control, however, is maximizing efficiency through tightly-managed labor scheduling, efficient and effective 24/7 communication, and the ability to sign-off on orders and process payments from the work site. Builders must keep projects running smoothly to ensure they are prioritized by the most dependable trades, as well as monitor issues to proactively pinpoint quality concerns.
Overcoming Challenges with a Data-Driven Approach
While there will always be factors beyond a builder’s control, these issues are magnified when builders lack visibility due to siloed systems and unreliable data. Having a single version of the truth provides better insight into the business in a critical time when it is facing labor shortages, pricing increases, and affordability issues with potential home buyers.
To navigate today’s challenges, builders should leverage a single global database to drive real-time business decisions, gain insight into true costs, and more easily collaborate with trades. By centrally managing data across every department, builders can identify efficiencies and transaction margins at every point during the selling and construction process. Access to this real time data will ultimately position the organization to better react to outside variables that may negatively impact business.