Lessons from the construction sector: How to innovate with purpose

The construction industry is a pillar of economic growth and development in Australia, and there are lessons businesses of all sizes and sectors can take from successful construction scale-ups, says Kim Clarke, GM of Enterprise at MYOB.

Our latest data reveals that mid-sized Australian construction businesses are faced with increased costs of materials (63per cent), shortage of skilled employees (49 per cent) and increased cost of business overheads (42 per cent). This was further supported by KPMG’s 2023 Global Construction Survey, which found that project performance, completion pressures, and risk management issues threaten business survival for many construction businesses of all sizes. But these businesses are not sitting still: a new era for doing business requires new ways of thinking and ideas, with purposeful innovation at the core.

By investing in new ways of working, industry leaders are finding ways to mitigate the impacts of escalating expenses and labour shortages. And there’s no shortage of leaders in the Australian construction sector. Our research found 82 per cent of mid-sized construction businesses have invested in innovation in the past 12 months, with the biggest investments made in business management software (51 per cent), improving project management (48 per cent), and tightening or improving supply chain processes (42 per cent).

These business owners know that staying across technology developments and making investments to support their growth will be imperative to their success. Importantly, the lessons learned can be applied to businesses of any size and in any sector.

3 tips from the construction sector you can implement in your business

1. Use data to drive decision-making

One of the most significant advantages the construction industry found by leveraging data analytics for smart, informed decision-making was the impact this had on business breakthroughs. Getting started can seem daunting, but will result in significant pay-offs for your business. Forrester research shows organisations with cloud and AI platforms found their solutions enabled them to grow 3.2x faster than their industry peers^[1].

Businesses adopting digital solutions are better equipped to analyse market trends, optimise growth strategies, and identify cost-saving opportunities. It’s important to start small to overcome the hesitation surrounding new tech solutions. Look at the areas of your business where deeper data and knowledge would help you grow or would ease manual processes, and start there.

2. Cloud solutions can streamline collaboration

Construction firms are increasingly turning to cloud-based project management solutions. These platforms allow for real-time collaboration and communication among various stakeholders, regardless of location, and can often be integrated into existing tech solutions. And direct business benefits can flow from finding solutions that integrate with your existing tech – our research shows organisations that have integrated at least two solutions together have already seen cost savings of 16 per cent, according to MYOB enterprise research. Cloud technology streamlines project workflows reduces delays, and enhances efficiency, which is crucial in managing costs effectively in any business sector.

If your business still relies on traditional communication methods – text message, email, or paper-based document management – you will likely save time and resources by adopting a cloud-based solution. Some of these, such as Google Docs, are free or low-cost depending on your subscription and usage requirements and may be a good starting point as you learn to embed cloud-based collaboration in your business.

3. Find ways to boost existing employees’ skills

While technological advancements play a crucial role in managing increasing costs and labour shortages, we know the importance of upskilling the existing workforce. Training programs and skill development initiatives have helped construction workers adapt to new technologies and maximise their potential. With a tight economy and skills market, it’s more important than ever to look at how you can boost the skills and retention opportunities for existing employees.

There are some solutions that can assist with this – the Government recently passed the Skills and Training Boost, offering an additional 20 per cent deduction on any spend supporting the training and upskilling of employees. Understanding what business support is out there can provide relief and growth opportunities in a tight market. A skilled and adaptable workforce can increase opportunities for future innovation, leading to improved project outcomes and cost control.

Additionally, as compliance obligations become increasingly reliant on digital engagement, making purposeful, targeted investments can be the difference between keeping in line with or falling behind regulation. Digital providers, such as are able to stay ahead of the regulation so your business is prepared. For example, the Queensland government is expanding its trust account framework, which will have significant impacts for businesses relying on contractors and sub-contractors. Despite not going to be fully in effect until 2025, our customers already have access to solutions that set them up for compliance.

Using digital business solutions in these ways have particularly helped the mid-tier construction sector to survive and grow, helping to navigate supply chain disruptions, a lack of skilled labour, increasing cost of materials, and the project management disruptions brought on by the pandemic. However, small businesses from all sectors can benefit from these lessons.

Leveraging innovation and technology in your own business while investing in human capital can help mitigate current business and economic challenges, paving the way for a more resilient and sustainable future for all business owners.