By Bob Cain, Business Unit Leader, BuildTools and Bolt, Residential Construction Division, ECI Software Solutions. ECI Software Solutions’ ‘Bolt‘ service won the ‘Best SaaS Product for Business Management‘ category at The 2024 SaaS Awards. Bolt was also a finalist in the ‘Best SaaS for Improved Productivity‘ and ‘Best SaaS Product for Small Business / SMEs‘ categories. Both Bolt and another ECI Software Solutions service – BuildTools – were shortlisted for ‘Best SaaS Product for the Construction Industry’ in the same program.

The construction industry today faces a perfect storm of challenges.

Rising costs, interest rate fluctuations, supply chain disruptions and trade partner shortages put immense pressure on builders. These challenges affect project timelines and budgets and create a chain reaction that impacts homeowners and the broader economy.

In this landscape, the need for innovative solutions has never been more critical. Among these solutions, technology—particularly Software as a Service (SaaS) for Enterprise Resource Planning (ERP) and Project Management (PM)—stands out as a game-changer.

This article explores the current challenges in the construction industry and illustrates how adopting technology solutions can offer significant relief and drive transformative change.

The Challenges

The construction industry is currently grappling with a turbulent environment characterized by a variety of challenges, including:

Rising Costs: The construction industry has seen a rise in costs over the past few years. Materials like lumber, steel and concrete have all experienced price hikes due to several factors, including inflation and increased demand. Labor costs have also risen, driven by a shortage of skilled workers. These escalating costs are squeezing profit margins for builders, forcing them to either pass on the increased costs to consumers or absorb them, which can jeopardize the financial viability of projects.

Interest Rate Lock: Interest rates significantly impact the housing market. As rates rise, the cost of borrowing increases, making it more expensive for consumers to finance new homes. This leads to a decrease in demand, which in turn affects builders who rely on a steady stream of buyers to keep their projects afloat. A large percentage of those who may traditionally look to buy a new construction home currently have a mortgage with rates averaging less than half of the current market rates. The higher rate now makes moving into a new home substantially more expensive than staying put—otherwise referred to as “interest rate lock.”

Supply Chain Issues: Global supply chain disruptions have become a serious hurdle for the construction industry. The COVID-19 pandemic exposed vulnerabilities in the supply chain, leading to delays in delivering essential materials. Even as the world recovers, supply chains are still fragile, with ongoing geopolitical tensions, shipping bottlenecks and manufacturing slowdowns contributing to the uncertainty. Inflation and a drastic rise in commodity prices have also forced manufacturers to reduce staff and in many cases, close plants, increasing order lead time for builders. These delays have caused project timelines to slip, increase costs and lead to frustrated customers.

Trade Partner Shortages: The construction industry is also dealing with a shortage of trade partner companies as well as the scalability of existing trade companies that work for builders. An aging workforce, a lack of new entrants into the trades and increased competition for labor worsen this shortage. When trade partners are in short supply, builders face delays, increased costs and the risk of substandard work, all of which can negatively change their reputation and bottom line. Trades working for builders are also affected by this shortage. Many of these trade contractor businesses employ or contract skilled labor crews to perform the contracted work for builders. Trade businesses see these same challenges from field supervision to field labor.

The Solution: Embracing Technology

Although the construction industry faces many tough challenges, technology offers a way to make things better. Specifically, using SaaS ERP and PM software can give builders and trade contractor businesses the tools they need to manage these challenges successfully. Their benefits include:

Centralized Management of Tasks: SaaS ERP and PM software have revolutionized how construction companies run. By providing a centralized platform for managing all aspects of a project—from budgeting and scheduling to communication and reporting—these tools streamline operations and reduce the likelihood of errors. This is particularly important in an industry where even small mistakes can lead to costly delays and rework.

Real-time Data for Better Decision-Making: One key benefit of SaaS ERP and PM software is its ability to integrate business workflows and communication while providing real-time data to inform decision-making. For example, if a builder is experiencing delays in receiving materials due to supply chain issues, the software can automatically adjust project timelines and communicate these changes to all stakeholders. This approach allows for better coordination among stakeholders, reduces the risk of miscommunication and helps keep the project on track. Understanding project costs before and during projects helps key stakeholders make critical and timely decisions to ensure financial health and the highest level of quality.

Reducing Mistakes and Enhancing Efficiency: Mistakes in the construction industry can be costly, both in terms of time and money. Poor communication between teams, errors in ordering materials and misaligned schedules are just a few examples of how things can go wrong. SaaS ERP and PM software help reduce these mistakes by providing a single source of truth for all project-related information. Everyone working from the same data reduces the likelihood of errors. For example, homebuilders working with buyers making many choices must ensure they are building exactly what buyers expect. In addition, trade contractors receiving direction from builders benefit greatly when they have a system that captures everything in one place.

Case Study

After encountering difficulties with previous software systems that hindered efficiency and growth, a drywall company in Denver, Colo. adopted a SaaS platform to streamline its business operations. With its SaaS solution, the company has seen marked improvements in operational processes, including staff training and resolving technical issues.

One of the key advantages of the company’s SaaS solution is its ability to easily track and manage job data. Previously, the company relied on manual counting to track monthly jobs, but now it can generate reports detailing the number of jobs for any given period, such as monthly, quarterly or annually. Also, the platform’s app allows the company to monitor profit and loss per job, and field workers can conveniently access job-specific information, including stock sheets.

The drywall company’s SaaS solution centralized its operations, eliminating the need to manage information across multiple platforms like text messages, emails, and paper documents. The system has been instrumental in managing the company’s growth by ensuring accountability, streamlining payments, and improving overall efficiency.

Builders: Automating Communications with Suppliers and Trades

Communication is vital to the success of any construction project. SaaS ERP and PM software simplifies this process by automating communication. For builders, this means they can easily send out requests for materials, track deliveries and communicate changes to the project timeline. For suppliers and trades, it means they receive real-time updates on when materials will arrive, when they are needed on-site and any changes to the project schedule. This level of automation reduces the risk of miscommunication and ensures materials and labor are available when needed.

Benefits of a Cloud SaaS Provider

When choosing software solutions, cloud-based SaaS providers offer several advantages over traditional on-premises systems. First, cloud solutions are more scalable, allowing businesses to adjust their usage as their needs change easily. This is particularly important in the construction industry, where project volumes fluctuate significantly, and seasonality plays a role.

Cloud SaaS providers offer greater flexibility, allowing customers to access the software anywhere, anytime, using any device. This is essential for a mobile workforce that often spreads across multiple job sites. Additionally, cloud solutions are typically easier to implement and maintain, with updates and security patches automatically applied by the provider, reducing the burden on in-house IT teams.

Finally, cloud SaaS solutions are often more cost-effective, with a subscription-based pricing model that eliminates the need for large upfront investments in hardware and software. This allows construction companies to distribute resources more effectively and focus on growing their business rather than managing IT infrastructure.

The Value of Industry-Specific SaaS Platforms

While generic ERP and PM solutions can provide some benefits, industry-specific software platforms offer a level of functionality tailored to the construction industry’s unique needs. These platforms are designed with the industry’s specific workflows, regulations and challenges in mind, making them more intuitive and easier to use. In many cases, industry-specific solutions were developed by or alongside companies facing these challenges in real time.

For example, platforms developed for businesses facing your exact challenges are often used by thousands of users who continue to provide feedback to the software provider. This process creates software systems built on best practices with a high level of reliability. This is a great way for SMBs to compete with larger organizations.

Conclusion: The Future of Construction is Digital

The construction industry faces significant challenges that can be overcome with the right approach. By adopting technology, especially SaaS ERP and PM software, builders, trades, and suppliers can excel in this demanding landscape. Automation, real-time data and industry-specific solutions are essential to cut costs, boost efficiency and ensure projects are completed on time and within budget.

As the construction industry evolves, it’s critical for all players, including trades and suppliers, to embrace these technologies quickly to stay competitive. The future of construction is digital, and the time to embrace it is now.