A Construction CTO's Guide To Reducing Risk With Technology

Alex Zeines, Chief Technology Officer, JRM Construction Management

Construction has long been seen as a late adopter of technology when compared to other industries—it’s my job as a technologist, along with others like me, to change that. 

There are a number of factors that contribute to the construction industry’s caution, including the highly fragmented nature of services in the industry, which includes diverse teams on different sites with different scopes and scales of projects combined with low margins. As well, there are limited liquidity and lack of mature business operations across the supply chain.

Varied regulatory requirements at the municipal, state and federal level create additional entry barriers. To further the challenge, many contractors are also weary of the technology roller coaster, which requires them to seemingly reinvest and retrain people to achieve streamlined practices across the construction life cycle and with partners and stakeholders. 

It is my job to ensure our contractors can overcome these barriers by introducing them to tools, processes and organizations that can help scale operations, minimize inefficiency and reduce risk. Here are two best practices to take advantage of technology.

Reduce Supply Chain Risk

In my experience, it’s helpful to begin a technology transition by focusing on a specific area of concern. My current focus is on improving the subcontractor-facing component of our business, which includes subcontractor prequalification, onboarding and invoice management. 

Tools for managing these types of risk are quite mature in other industries, but have been challenging to implement in construction due to capacity, technology acumen and/or cost. While investment and adoption processes likely exist in the very larger firms, most small and medium firms struggle to find affordable solutions that can be customized to the unique industry needs. Until recently, the construction-specific partners with tools to measure, for instance, diversity, has been too costly, complicated or impractical, sometimes all of the above, to meet the needs of the larger construction continuum.

That’s changed significantly in recent years, as has the ease of deployment and integration. We are seeing technology partners in this space who have the tools to make otherwise complicated financial and audit processes more approachable to contractors, particularly general contractors.

Action-Oriented Decision Making

Every technology investment and adoption should do more than simply automate an activity. 

Case-in-point, the management of certificates of insurance (COIs), commonly managed on spreadsheets, is one critical element of a subcontractor relationship. There are tools that collect and track these documents and, more importantly, facilitate communication with appropriate parties–directly improving your relationship with subcontractors. 

All of the data is accessible and visible in an easy-to-read dashboard. This database is then coupled with more traditional approval and review processes leveraged through workflow engines to provide processes driven by business rules.

Another common area of discontent, and therefore risk, in the contractor/subcontractor relationship, is payment. How long does it take you to pay your trade partners? In today’s environment, delays could greatly influence future work with those subcontractors. Again, technology can help. 

At JRM, we’re looking at linking our invoice and payment tracking under one system. The advantage of this connection would be that our project managers can review, address concerns and approve invoices quickly and easily and, just as importantly, automatically send reminders and alerts when action is needed. 

"Technology can help us do that better, faster and with more quality—if we take advantage of the tools that are available to improve our workflows and efficiencies"

With a system that links financial and project management data, construction organizations have a full picture of their current status, allowing them to do more accurate risk and financial analysis with fewer resources. 

 These are just a few areas where technology can drive improvement. While the construction industry is a late adopter of technology, we are an industry of innovators, highly skilled at designing and building just about anything that a person can imagine. Technology can help us do that better, faster and with more quality—if we take advantage of the tools that are available to improve our workflows and efficiencies.