Specialty Contractors Combat Construction Downturn with Increased Service and Maintenance Work, Lifecycle Client Relationships
In recent years, the exposure to an unprecedented market downturn has forced specialty contractors to look for new ways to maintain better control of costs, better assign resources to operational needs and enhance client relationships.
The Engineering News Record, a McGraw-Hill Publication for Engineering and Construction Industries, recently reported an 8.7% decline in the market for specialty and subcontracting services among the largest (Top 600) specialty contractors. Already a business fraught with risk, specialty contracting is now facing the burden of the new market reality that there is less work available, and increased bid competition from uncommon competitors.
Specialty Contractors Seek More Consistent and Reliable Revenue Streams.
With profit margins being squeezed, there is an increasing emphasis by specialty contractors, particularly those performing electrical and mechanical work, on expanding the range of services they can offer to their customers, with special prominence given to servicing the facility life-cycle from concept and design/build through facilities maintenance field service work. By providing more services to a customer during and after a project, contractors deepen their client relationships and add more consistent and reliable revenue streams.
Contractors Turn to Service and Maintenance Work.
As a result, today’s sophisticated specialty contractors are increasingly turning to service, maintenance and retrofits; a business which is inherently higher-margin and lower-risk. For these firms, service is becoming more and more important to overall financial performance, driving a top-down need for tight integration between financial and project data for both the large-scale construction and work orders / quick-response service lines of business.
Unfortunately, contractors are finding enterprise system solutions to this new need in the construction marketplace inadequate. Several leading specialty contractors have recently undergone exhaustive system searches whose durations spanned up to 2 years. Traditionally, system implementations for construction and service organizations within the same firm would fall under one of the following three scenarios:
- Utilization of two software systems - One for construction-related job cost accounting and payroll activities, and an entirely different system for managing service and maintenance business activities.
This is the most common scenario. Given the specialization of available systems in either job costing for construction or work orders for service, integrated options for sophisticated contractors are rarely truly integrated – often involving a “bolt-on” third party system.
- Utilization of a single source solution whose capabilities are strong in job cost and accounting for construction, but weak in work order and field service management. The reverse may also be true – adoption of a strong field service system at the expense of critical functionality for construction accounting and job cost.
- Utilization of a home-grown system which was developed to meet the unique construction management and / or service management needs of the contractor, but is highly resource intensive to maintain and continually develop.
Shared Resources Across Construction and Field Service Operations Increase the Need for Integrated Software. 
Not one of these scenarios provide Operations, IT or Executive Management a forward-looking solution or competitive advantage. Though often managed separately, construction and service operations typically share critical company resources; the most prominent examples include Customers, Vendors, Installed Equipment and Employees. When these records reside in disparate systems, not only does information visibility and reliability suffer across the enterprise, but significant opportunities for productivity, profitability and revenue growth are missed.
Specialty contractors performing both construction and field service work should have a global view of all business operations, including:
- Vendors:
- Do our construction and service businesses share vendors? Do we have duplicate vendor management, resulting in lost discount opportunities?
- Customers:
- Have we performed Construction Jobs and Service Work Orders for the same customer? Do we have a single view of customer billings and AR status?
- What is our Overall Profitability for this Customer?
- Equipment Installed at Customer Facilities:
- Employees:
- Can we issue one paycheck for service and construction work in the same pay period?
- Can we issue one W2 for all work performed during the year?
Confidently managing and moving any specialty contracting business forward today requires reliable, immediate access to performance information that spans all contracting operations, from in-process construction jobs to maintenance contracts up for renewal.
As demand has increased for an integrated solution for specialty and service contractors, Penta Technologies' enterprise software product, PENTA, has answered the bell. One system designed to handle all of a contractor’s work in a single, powerful database, PENTA delivers the right tools to the user in the office and in the field. From integrated reporting on all business units for executives and easy management of project documents for project managers, to field work order and preventive maintenance information for service technicians, contractors are turning to PENTA to help them do what they do, even better.
* ENR Top 600 Specialty Contractors, October 2011 issue