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Why General Contractors are Thinking Differently about Data

Why General Contractors are Thinking Differently about Data

It’s time for general contractors to take a page out of the marketing playbook. Here’s how you can incorporate data in your decision-making process.

August 12, 2022

8 min read

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Edward Gonzalez

Edward Gonzalez

Founder at Buildr

Data, data, data. It seems data's all we ever hear about nowadays. From the data centers that store our critical information to the cookies which follow us on our online journeys, data's reached such a ubiquitous degree that data's PR team deserves a raise.

While sales and marketing teams in non-construction industries have long been the harbingers of data analysis and implementation of learnings from that analysis, general contractors (many, but not all) and the construction industry at large are still dragging their feet in comparison. But with the right motivation to capture and extract learnings from data, followed by the right tactics to do so (hint: tech fills this gap in the most cost-effective way), general contractors can finally catch up to the how every other industry is already operating.

Why the sudden emphasis on data in construction?

Many construction tech companies before us have highlighted the Autodesk/FMI study that points out that bad data has cost the construction industry upwards of $1.84 trillion. Shrinking that number for a GC that builds $1 billion a year—that's as much as $165 million lost with $7.1 million in avoidable rework as a direct cause from acting on bad data. The case for good data is simple: return on investment. GC profit margins are already tight as it is. Let's loosen the belt a bit.

Throughout the consumer landscape, it’s clear that most brands use data-driven marketing strategies. Focus groups, surveys, Google Analytics—there are a number of ways to gather consumer sentiments. But for general contractors and the broader construction industry, it’s assumed that the volume of data isn’t high enough to drive decision-making. While a B2B industry likely won’t have as much data to work with as one that’s consumer-facing, there’s plenty to go around.

An example is how construction firms meticulously track their hours per project for billing purposes, or when general contractors record labor hours, material costs, safety numbers, and time onsite. There are high-volume data sets available, only they’re far different from what you’d see in a B2C setting where a massive amount of data can be collected automatically in a very short time. Of course, deciding on a new pair of sunglasses is a different sales process than a GC building a project for an owner.

With this newfound data, you can gain insight into where you’re losing money and pinpoint areas of inefficiency. You can even determine which markets to exit or break into. Most importantly for general contractors: you can finally dedicate more focus to proposal strategies, instead of tirelessly searching for information or just submitting with your fingers crossed. Repeat business is less a guarantee than it's ever been, and it's because younger, hungrier GCs are finding ways to go above and beyond to steal clients from their competitors who are still stuck in the past.

And as contractors come to this realization that their data sets are actually plentiful, like a poor man winning the lottery, a certain perspective change is necessary—a mindset shift. Without a radical shift in perspective, that newly rich man will be broke in a matter of months, and contractors will fail to incorporate data into their daily decision-making. 

In other words, data is a practice. It’s not a one-off tactic. In using data to its fullest potential, construction firms can decide which projects to go after, how to boost efficiency, how to implement their most skilled staff on which projects, and so much more. Data collection is an upfront investment, sure. But with the insights that'll keep your company afloat beyond any random worldwide virus (knocks viciously on wood) and long-term savings you’ll reap, it’s a worthy one.

Today's a better day to start than any

You've likely heard that the optimal day to start going to the gym was yesterday (especially if it happens to be January 2). The same is true for shifting your mindset to being a data-driven contractor. If you’re unsure about which data to start with, or how to start, look at your next project proposal and break it down piece-by-piece. 

What kind of contract and project is it? Take note of the market, the location, and anything else your firm deems relevant. Then, guesstimate how much time you spent working on that proposal. The primary metrics here are the total hours put into it, and whether your proposal won or lost. Rinse and repeat for your next proposal, and the one after that. As you continue to track those finer data points, you’ll see the constellations. 

Being data-driven is a practice not a tactic

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The beauty of data is that, after some time, patterns will emerge. And you can unearth that information through daily, disciplined proposal tracking. Contractors will especially find value in the stories told by data. 

Say your leaders are still pressing for hard-bid jobs, but your success rate for those jobs is historically slim. Your data from the last several months will quantify that story, showing how you’ve only won 3% of the last 60 hard-bid proposals. Data is a convincing guide.

Being data-driven is a marathon, not a sprint

To reiterate, data is a practice. Just like any sport, skill, or profession, it’s useless without consistency. So do what you can to make your mindset shift stick.

There are plenty of habit-building changes you can try out, such as commitment strategies or operant conditioning (i.e. Earning some M&Ms after tracking a proposal). However, we’d suggest habit stacking to lock-in those daily data practices. 

According to behavioral scientists, stacking habits is the heavyweight champion of forming new ones. When you stack your habits, you tie a new habit to an existing one. So, identify some habits throughout your day. If you grab your coffee first thing in the morning, or tend to check your email towards the end of the day, stack data collection on top of those behaviors. 

With a knowledge of how data can guide the work of general contractors, plus a new habit-building technique to try out, it’s time to take action. Knowledge is powerful, but not without action. It’s like watching a DIY YouTube video as entertainment. Yeah, you now know how to attach a muffler, but will you ever really risk getting your hands all black?

It could serve you well to establish a formal review process each month and quarter to go over your findings, and constantly look for additional data points to consider. Identify the patterns, build the story, and gain insights from the numbers. You can also set aside time to discuss collected data with your manager, or ask to make it public. At the end of the day, formalizing your data collection process is the end goal. Set it in stone. 

It’s time to forget the industry-wide excuse of data scarcity, and for contractors to start thinking like marketers. As marketers have proven, data is a powerful guide for the businesses of today. Building is your forte. Why not build data-drivenness into your work culture? 

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