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3 Problems Plaguing the Australian Construction Industry (And How to Overcome Them)



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The construction industry can be a harsh place for businesses. It requires a huge investment in potential profits. Until a customer has paid for a project or contract in full, there is no guarantee that this investment will be worthwhile. It means that cash flow is very important and any delays to payments or problems with receivables can become big obstacles very quickly.

In Australia, the construction sector is very healthy and diverse, but it has its challenges, just like construction sectors all over the world. For instance, the rising cost of raw materials is a constant pressure and contractors have to find ever more innovative ways to meet them, while also keeping their rates competitive.

This guide to the construction sector in Australia will discuss some of its biggest problems and how your business can overcome them.

Slow Invoicing and Payment Cycles

Many contractors (small businesses especially) find it hard to regulate cash flow because they don’t put suitable invoicing systems in place. By using aprogress payment schedule you can easily outline what is expected of your contractors at different phases of the project. It’s important to be crystal clear on what is required for a phase of the project to be considered ‘complete’ and for a progress payment to be issued so that there is no confusion or disagreements as the project progresses. Expect contractors to request a progress payment approximately every two weeks, depending on the scope of the project.

Without regular progress payments, it can be very challenging to keep your current construction project on track. Furthermore, it will be virtually impossible to begin another project as you will have too much of your financial resources tied up in the current job. Agree on a progress payment schedule that works for all parties and the job should run smoothly from start to finish.

Rising Cost of Raw Materials

As already mentioned, the price of commodities like oil and metal continues to rise alongside interest rates and the strength of the Australian currency. In some ways, this is good news for contractors, because it means that they can justify raising their own rates. However, if rates climb too high, customers look elsewhere for their construction work and deals are lost.

It is a tricky problem and one that has no easy solution. Nevertheless, businesses can try to cut costs in other areas. For example,learning how to streamline operations with the use of technology can be an effective way to minimise waste. Digital invoicing apps and record keeping software are tools which boost profits by helping companies keep track of payments and close out on projects faster.

Lack of Safety Training

One recurring problem for the Australian construction industry is safety. As demand grows, so too does the need for qualified contractors and construction experts. This can encourage some companies to cut corners and try to maximise profits by reducing their investment in things like safety training and risk management procedures.

Unfortunately, this is nothing but a fast track to serious injury and, in many cases, subsequent litigation. So,investing in high-quality safety training is not just a way to keep employees safe, it also protects the business. Technology can be a great tool in this area as well because apps and mobile devices mean that training doesn’t have to be limited to formal meetings.

Why Technology Is the Future of the Construction Industry

It is often said that technology represents the future of all industries, no matter what their objectives. While this might sound a little far-fetched, the reality is that digital resources can transform everything from project planning to managing supplies, tracking deliveries, and processing invoices. It is particularly valuable for regulating cash flow, as automating payments eliminates errors and increases visibility right the way along invoicing channels.



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