Why are construction companies closing in Australia?
Since the global pandemic, the construction industry has been in a transformative period of deep change. And 2022 has certainly proved to be a challenging year for Australian construction companies.
In Australia, growth in the construction industry is high. The latest report by the Australian Construction Industry Forum (ACIF), November 2022, revealed growth is exceeding expectations, forecasting project growth of 2.7 percent, bringing the level of building and construction work up to $243 billion in 2021.
However, in a constantly changing landscape, significant challenges remain. And despite their best efforts, the industry’s seen the collapse of some pretty big players this past year.
In this blog article, we’re going to explore why this is happening and how you can prevent it from happening to you.
Why are construction companies going bust?
There are a few reasons for this, most of which are out of the hands of most companies. But it’s good to explore the different factors nonetheless.
The aftereffects of COVID-19
This has definitely reared its ugly head in 2022 and will continue to be a challenge for many years ahead.
The pandemic has created an unpredictable economy, with some experts even predicting that we may be experiencing another global recession.
This has forced construction companies to deal with a perfect storm of challenges – that being rising costs of materials, supply chain disruptions, and trade shortages.
And with JobKeeper no longer available, inconsistent cash flow adds another layer of difficulty and uncertainty.
All of these factors, including staff shortages, also limit the number of construction projects companies can take on. Projects start to increasingly dry up over time, which impacts revenue even more.
While this is great news from a growth perspective, it does imply increased competition within the construction industry.
And when you throw into the mix supply chain disruptions and companies being incredibly mindful of their project budgets, it becomes all the more important to set yourself apart from competitors. The construction companies that do succeed are the ones that focus on innovation and creating a technical ecosystem that works holistically together.
How can construction companies prevent this from happening to them?
Although we’re still living in unpredictable times, there are some easy wins you can start implementing or at least start planning so it’s ready to go in 2023.
Innovate with construction technology
When the stakes are high, traditional methods like pen-to-paper are no longer a viable option. Construction companies should be identifying ways to innovate their workflows as much as possible with the help of technology.
There’s a plethora of software you can choose from, all of which are designed to improve your workflow and give you better insights into your operations. Matrak is one of them, as we specialise in materials tracking and end-to-end supply chain visibility. But there are other options too, like Autodesk.
Having a high level of visibility through data not only helps you plan ahead for the upcoming but mitigates potential risks in your projects before they even arise. You’ll be able to make choices based on data, rather than instinct.
And by planning ahead, you can ensure you don’t overspend your budget, preventing bad cash flow.
Practice lean construction
Because of supply chain disruptions and limited materials, being lean in your operations will benefit you in the long run.
Some simple ways to start this could be:
- Be considerate with what materials you order and their quantity, so there is no excess or wastage (both waste to the environment and waste on your budget)
- Look at the scope of the project and make sure it lines up with your supply chain. Could your supply chain be shorter to reduce delays, disruptions, and risks?
- Work smarter, not harder – create a streamlined process that works for everyone in your team to ensure construction projects are finished on time and efficiently
Book a demo with Matrak today
Matrak was founded in 2017 and provides innovative mobile-first end-to-end supply chain tracking software solutions to the construction industry. We believe in the significant benefits to Site Managers, contractors, developers, and construction supply chains generated from data-driven insights through the materials tracking process.
Industry-wide challenges are best solved through collaboration, and Matrak’s material tracking app strives to bring the construction industry together around its most fundamental component – materials.
Our app is available on all iOS, Android and Windows devices and has helped more than 157 projects in over 5 countries to enable the power of supply chain transparency.
Book a demo with us to see how Matrak can help track all your projects.Book a demo