The 6 Biggest Challenges Facing Small Construction Businesses

The 6 Biggest Challenges Facing Small Construction Businesses

Even though the economy is improving, small construction businesses continue to face various issues which can prevent them from advancing. Here in Australia, the construction industry is extremely competitive, which makes this type of work even more challenging.

Here are six of the biggest challenges confronting small Australian construction businesses, along with some considerations and warnings.

1 • Labour Shortages

One of the main issues facing small construction businesses in Australia is a lack of skilled construction workers. Because of an ageing workforce, it's hard to find enough skilled construction workers to meet the increased demands in this growing industry. In fact, eight out of nine construction companies, surveyed in 2018, were experiencing a shortage in workers.

What's more, since many millennials fail to find constructions jobs that are well-paid, they're going into other industries. Therefore, it's critical to find ways for improving employee benefits, besides make the construction trade more appealing to young Australians.

2 • Rising Material Costs

Another one of the top challenges concerning small Australian construction businesses is an increase in the cost of materials. As the costs for raw building materials and land can quickly change, there's not as much leverage for small construction firms. This can significantly impact changes in cost from the moment a building project starts to the date that it's completed.

3 • High Insurance Premiums

Contractors are typically paying high insurance premiums for different kinds of insurance. For instance, there's general liability for construction defects and delays in construction as well as insurance for accidents at a worksite. As a result, the continual increase in insurance has been financially overwhelming for many smaller construction businesses.

4 • Poor Planning

Inadequate planning is a huge problem in the construction industry. It's important to map out an all-inclusive business plan that includes items such as operations and finances, along with a marketing strategy for your business. By doing this, you have a better idea of your manpower and what you can afford. Also, to be able to stay on track, you need to include all of the details for each stage of a project.

5 • Worker Safety

The construction industry in Australia continues to suffer from inadequate safety training. This problem has been a major concern for several years, with the construction industry having the most number of employee deaths. Too often, construction companies try to save money by cutting corners so that they can get as much profit as possible. But as a result, their workers' lives are at risk.

6 • Lack of Technology Adoption

Just like any other industry, technology has changed the construction business. Hence, if you fail to keep up with the latest technology, your construction business will suffer. In addition to playing a large part in daily operations, technology is also needed when you compete for new projects. However, many small construction businesses have found it difficult to come up with the needed finances for investing in the most advanced technology.

Other Considerations and Warnings

  • Inferior invoicing systems is another growing problem for small construction companies.
  • Cash flow can be affected when there are no regular progress payments, which help in outlining what's expected at various stages of a project and deciding the time that each phase is considered to be complete.
  • When too many resources and workers are involved in a single job, it can impact cash flow.
  • Building non-compliance can lead to hefty litigation costs for small construction companies.
  • Many small construction businesses make the mistake of doing estimates by hand. Even using Excel spreadsheets is not as efficient as some of the most comprehensive, streamlined options available today. 

The Bottom Line

  • The right equipment and technology can solve many problems facing small construction businesses.
  • Young people entering the construction industry need to have the right tools, such as AI and 4G / 5G / Wi-Fi connectivity for performing work on complicated projects.
  • Another perk is that the proper tools can promote more confidence in a worker's abilities as well as get the job done quicker.
  • Even more important, the right tools can make construction work safer.   

To navigate Australian terrain, you need the most robust and efficient machinery attachments available. Our Himac products are of the highest quality and are long-lasting, which allows construction businesses to reduce replacement costs. Please contact us and learn more about our wide range of products.