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Benefits of Integrated Management Systems in Construction Business’s

Construction professionals are recognising the need to focus on the materials management process as a proactive, identifiable entity which has a significant impact on the cost of construction. In recent years, both construction contractors and owners have developed integrated materials management systems that combine and integrate the takeoff, vendor evaluation, purchasing, expediting, warehousing, and distribution functions.

The costs and benefits of integrated materials management systems have been examined by researchers at Auburn University and Texas A&M University as part of a recently completed CII research project. After examining data from twenty construction projects, the researchers concluded that properly designed and implemented materials management systems will produce very tangible benefits in the areas of improved labor productivity, reduced bulk materials surplus, reduced materials management manpower, and cash flow savings. The most significant benefits occur in the areas of improved labor productivity. A basic materials management system can be expected to produce a 6% improvement in craft labor productivity. When sophisticated computer controls are implemented and the crafts use the system to plan their work around bulk material availability, another 4–6% in craft labor savings can be expected.

The costs associated with system development and implementation are substantial, and frequently questioned by top management. It is not uncommon for a contractor to spend $500,000 to develop a computer-aided system that will track bulk materials on a requisition line item basis from the initial quantity takeoff to field installation. This same system will also have substantial costs associated with computer use, data transmission, and personnel training. But the old adage, “You have to spend money to make money” has never been more true. The general knowledge of materials management concepts and the development of the state of the art has reached the point that with a reasonable amount of planning by the owner and the contractor, a cost effective materials management system can be put in place. The alternative is the continuation of the costly process of materials handling which has too long haunted project costs—for materials do exist and are required, and they will be handled some inefficient, unplanned way unless owners and contractors require a planned materials management effort on their projects

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5 Keys to Expanding Your Client Base

While not all-inclusive, the following five tips can help your business get on a faster track of growth by expanding your client base significantly:

1.      Find Your Niche Markets

When it comes to expanding your client base, it is imperative that you identify your niche markets. This requires great passion, interest, and a combination of skills. Begin by asking yourself: What markets would be a fit for your business? Do you have personal interest? Do you have personal experience in handling clients in this niche?

Focusing on an industry will allow you to target customers who have actual interests in receiving your products and services. It will further enable you to tailor your marketing efforts to get customers to interact with you. At the same time, it will allow you to check out competitors already dominating the market. This gives you a chance to understand their strategies, while customizing your own for maximum results.

2.      Get to Know Your Clients/Prospects

Understanding your clients’ needs, demands, and requirements is crucial for figuring out what they require. It gives you improved insights into your audience’s mind and enables you to develop services that are aimed at pleasing your target clients. Gaining knowledge regarding your prospects also helps you stand out from your competitors, as you know their preferences.

This gives you the ability of telling them when certain things are coming or when they might require a specific product/service. In simple worlds, it enables you to personalize your marketing messages. Subsequently, you can feel assured to receive an improvement in conversions and sales.

3.      Offer Great Customer Service

As mentioned earlier, customers are the lifeblood of your business. If they buy your services, only then can your business survive. In order to get them involved into buying your offerings, you need to provide top-level customer service. This keeps your existing customers content and forces them on coming back, promoting repeat business.

At the same time, it increases the chances of your repeat customers to refer your business to other prospects. This not only has a positive impact on your customer base, but also promotes loyalty. If you really take customer feedback seriously and communicate with them to improve your services, you can feel assured to see your customer number grow as a result.

4.      Make Use of Social Media

This may sound a bit cliché, but it is important that you adopt social media marketing in your business strategy. Without a social media presence, it can almost be impossible for customers to get to know YOU. Over the past few years, social media has revolutionized the way businesses and customers have conversations and share information. Using this important tool can help you get insights into your audience.

So, do not hesitate on creating profiles on LinkedIn, Twitter, Facebook, Instagram, and other networks. Which ones work for you will depend on your business, the way you like communicating and the way your audience likes to be approached. Regardless of which networks you choose though, it is vital that you stay genuine and original in your communications. Show your audience that you’re different and can go the extra mile in providing them top service.

5.      Dispel Distrust

Customer confusion, indifference, skepticism, and indecisiveness are the top sales killers in the business world. It’s up to you to portray an image of excellent customer service, dependability, quality, and experience to win prospects/clients confidence.

Communicate solid reasons and advantages for them to do business with you, and overcome potential feelings of distrust by offering references, customer testimonials, guarantees of satisfaction, and by joining well-known and respected organizations like the Industry Associations, Better Business Bureau, and Chambers of Commerce.

In addition, use integrated marketing to penetrate awareness of your target audience. The more “ways” the public gets to know about you, the better chances you have to achieve brand credibility and recognition – both of which are crucial for expanding your customer base.

Last, but not the least, as you try out new approaches for expanding your client base, be sure to monitor which sources offer the most value, where your customers come from, and what product they like most to refine your approach, or scale up activities that can help in growing your client base further.

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Handling Difficult Clients

Handling Difficult Clients

It is quite easy to say, “We exist to serve and please our customers”. At first, winning a tender and commencing a project seems like an exciting challenge to overcome. However, what you should know is that clients come in all types of varieties. Some are cooperative, others have unrealistic demands that coerce us to get things done their way. If the difficulties continue, dealing with the client can become frustrating and tedious. We may be left with submitting or defying their wants.

During these times, stress levels rocket up, and work onsite goes down. So, how can we handle difficult clients? Effective client management requires keen knowledge of sales tactics and psychological traits, which sway the relationship in your favour by building mutual understanding, trust and respect. As Yoda (master of mind-tricks in “Star Wars”) would say, “A Jedi uses the Force for knowledge and defense, never for attack.” Look at these tips below to deal/handle difficult clients and maintain retention.

Set the Right Mood and Attitude

The old adage, “the client is always right”, even if they are indeed wrong still rings true. This is because clients are the core of every business. Without them, your business can’t operate. Therefore, no matter what the situation is, you should maintain respect and remain professional. Bear in mind that emotional intelligence can be used for calming the storm with irate clients.

If you respond with anger and hostility, don’t expect understanding and friendliness in return. As a result, always try to select your words carefully, refrain from finger pointing/name calling, avoid writing/saying anything that can be used against you, and maintain a professional tone, while also being assertive. Learn how to calm them down when they feel they have been wronged.

Use the Non-Sale Approach

If you are dealing directly with difficult clients, make sure that you aren’t being too pushy. If you allow your desire to make money eclipse the value of a project you are delivering, chances are you will never be able to retain clients. Never make prospective clients feel suckered, pressured, or rushed into signing something. Instead, opt for a tactic known as the “non-sale” approach.

Build the client’s trust by your sales pitch for the project or variation and hold off on additional expenditures. Your words should make clients feel they need the product, without actually saying they need it. This approach is a good way to show a prospect you have their best interest in mind, without forcing them into unwillingly proceeding. If they proceed with their own choice, it’s even better for YOU.

Conflict Resolution

Some clients place intense demands on you and the project team, because they have invested heavily in the company’s services and require high-quality support and service. Others just want to simply see how much they can get out of a company. When evaluating how to handle a client situation and avoid conflict, determine if the customer is simply being opportunistic or has a long-time value.

Act according to the customers’ worth. If the customer is being pushing too hard, calmly state what the normal policies are and ask whether they are interested or not. If the customer is worth a lot, do everything in your power to make sure they are satisfied. Regardless of the situation and client type though, it’s essential that you take each concern seriously. Learn to listen and deal with problems right away to avoid further misunderstandings and promote damage control.

Never Apologize

Some difficult clients do all their research before considering an attack on company services. While most don’t agree with this premise, “sorry” will only make you look weak. Apologizing also gives the client an upper hand and puts you on the defensive. It’s best not to backpedal and if your company has indeed made a mistake, instead of saying “I’m greatly sorry for the inconvenience caused” try this “it’s unfortunate that you had to deal with this”.

You can further go on saying, “My team is aware of the problem and how it’s affected your business. We thank you for your understand and patience, while we resolve the matter.” The use of words like “unfortunate”, “understanding”, and “patience” typically plant a psychological seed in the clients mind. Therefore, using these words can reverse the tension, even if the client hasn’t really been understanding and patient.

Recognize a Personality Conflict

There are some days where the shit hits the ceiling and you can’t really find a way to work with a specific client, regardless of how hard you’ve tried. The best solution is to recognize the conflict in personality and find another member of your staff to assign to the client. Preferably, ask the client who they’d consider handling their account.

Therefore, now that you are familiar with the tips mentioned above, handling difficult clients will not be a problem.

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Benefits of Integrated Management Systems in Construction Business’s

Construction professionals are recognising the need to focus on the materials management process as a proactive, identifiable entity which has a significant impact on the cost of construction. In recent years, both construction contractors and owners have developed integrated materials management systems that combine and integrate the takeoff, vendor evaluation, purchasing, expediting, warehousing, and distribution functions.

The costs and benefits of integrated materials management systems have been examined by researchers at Auburn University and Texas A&M University as part of a recently completed CII research project. After examining data from twenty construction projects, the researchers concluded that properly designed and implemented materials management systems will produce very tangible benefits in the areas of improved labor productivity, reduced bulk materials surplus, reduced materials management manpower, and cash flow savings. The most significant benefits occur in the areas of improved labor productivity. A basic materials management system can be expected to produce a 6% improvement in craft labor productivity. When sophisticated computer controls are implemented and the crafts use the system to plan their work around bulk material availability, another 4–6% in craft labor savings can be expected.

The costs associated with system development and implementation are substantial, and frequently questioned by top management. It is not uncommon for a contractor to spend $500,000 to develop a computer-aided system that will track bulk materials on a requisition line item basis from the initial quantity takeoff to field installation. This same system will also have substantial costs associated with computer use, data transmission, and personnel training. But the old adage, “You have to spend money to make money” has never been more true. The general knowledge of materials management concepts and the development of the state of the art has reached the point that with a reasonable amount of planning by the owner and the contractor, a cost effective materials management system can be put in place. The alternative is the continuation of the costly process of materials handling which has too long haunted project costs—for materials do exist and are required, and they will be handled some inefficient, unplanned way unless owners and contractors require a planned materials management effort on thei

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Project Bank Accounts. Great for Creditors (but not Lenders).

Across Australia various state and federal governments are rolling out Projects Bank Accounts on major projects above $1m+. Whilst this form of contract payment structure has been running in WA for some years now, momentum is gathering to roll out Project Bank Accounts across the Nation at state and federal levels. Forming a similar payments matrix that underpins the UK and USA downstream payment cycles to subcontractors and suppliers. The introduction in Australia of this structure is not uniform and vary considerably between jurisdictions and clients, if we follow the oversees models it will present some challengers to in our current industry context.

The Project Bank Account (PBA) ring-fences funds for subcontractors when the Builder receives money from the project owner/client. A Builder holds in trust any funds received from an owner to pay subcontractors and suppliers. Significantly, a Builder does not “own” that portion of the money it receives under the contract that is owed to subcontractors. Subsequently, this means that a Builder is not entitled to keep the full amount of a receivable under a contract. The Builder may only retain the difference between the amount paid by the project client and the amount owed to the subcontractors and suppliers. Example:

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The Project Bank Account can present challenges to secured lenders seeking to enforce security interests on the Builder’s debtors or invoices. The Builder may only use funds that are not subject to the trust, which might be a percentage (usually around 20%) of its total progress claims, to pay lenders.

A PBA claimant (subcontractors) has priority claims to collect from funds generated on the project, at arm’s length from the lender’s security interest. A builder may not use those funds to pay turnaround professionals if the project was distressed. A lender who receives an improper payment from a Builder risks facing a disgorgement claims from a PBA claimants.

From the example above, if the lender received $500,000 of the project client’s $1,000,000 payment to the builder and applied that money to the builder’s debt, the lender may have to repay $300,000 to the PBA claimants because the Builder had a right to only $200,000 from the total payment. Raising the possibility of disgorgement claims resulting in a lender having greater exposure than its original facility to the Builder. Lenders can mitigate this risk by demanding certified progress claims and validation that PBA claimants (subcontractors) have been paid, and by installing a structure that provides for payments to the financiers in amounts that would not include amounts allocated to PBA claimants.

Another aspect that is yet to be tested, Unconditional Bank Guarantees as security for the builder’s contract, in the event of a project client calls on the guarantee following a builders default. What avenues does the bank have to recover? Banks typically enter into a general agreement of indemnity with the owners of the building company, which may create security interests in the receivables (debtors) of the builder. Obviously, these issues have an impact on the rights of a secured lender in such assets.

In an industry renowned for delayed payment and disputes, PBA’s provide security of payment to the subcontracts and suppliers. It’s uncertain how lender will provide cash flow to builders and head contractors and maintain security in this matrix.