Technology Accelerates the Migration of Contractors

More and more general contractors (GCs) are moving out of state to find work. California firms are bidding on projects in Texas; Nevadans are hightailing it east; Missouri GCs are entering neighboring states. Fewer jobs and more competition is driving this trend. But what makes it possible?

“Technology allows contractors to work on projects that are tens, hundreds, even thousands of miles away from where they historically performed work,” says Jay Haladay, CEO of Viewpoint Construction Software.

Here I explore five applications which are helping contractors pull up stakes and migrate to regions with better economies. But first, let’s take a closer look at the force behind this trend.

Construction Recovering Slowly
Despite attempts to kick-start construction through Stimulus-funded projects, the industry is having a tough time recovering from the recession. According to a survey from the Associated General Contractors of America (AGC), 48% of professionals think the industry won’t grow until next year. Another 36% think this won’t happen until 2013 or 2014.

In the meantime, contractors face fierce competition. Many are exploring alternative ways to win projects, such as lowering bids, taking on new types of construction, and moving downmarket to work on smaller projects. Just as common, contractors are moving into new regions to find work.

“I hear it constantly,” says Ken Simonson, Chief Economist for the AGC. “I travel to all parts of the country, and this is something I’ve been hearing for the past two to three years. Contractors who have never been in a certain region are moving in.”

It’s difficult to determine how many contractors have left one state for another. But we can look at state-by-state employment change as an indicator. The latest Construction and Materials Outlook report from the AGC shows the percentage change in each state.

Image provided by the AGC of America

“Texas is the state with the biggest bull’s-eye on it,” said Simonson. From December 2009 to December 2010, Texas saw a 6% increase in employment. During this time the state added 32,300 jobs. If you count contractors that work on mining and logging projects, the numbers jump to 8% and 62,300. An aside note, Oklahoma had the biggest 12-month change at 9.2%, but they only added 6,100 jobs.

A detail often overlooked in this story is the role technology plays. While the recession is responsible for the migration of contractors, technology accelerates the trend. Before the web – and web-based software – contractors mostly relied on reputation and word of mouth to win projects. Today, five applications level the playing field and help contractors to win work in other regions: online plan rooms, bid management software, takeoff and estimating software, building information modeling (BIM), and cloud-based project management software.

Online Plan Rooms
Online plan rooms help contractors find jobs in other regions. They allow them to browse construction projects by type (e.g. commercial, industrial, and transportation), by trade (e.g. HVAC, concrete, and plumbing) and by location. After identifying a viable project, they can log in to view its plans and specifications, and then download to estimate costs and bid on it. Historically, this process was expensive and time consuming. Architects, general contractors (GCs) and owners were required to print drawings, then distribute them to suppliers and subcontractors.

Bid Management Software
Bid management software helps contractors bid on jobs in other regions. They are like virtual brokers; they help buyers (i.e. general contractors) connect with sellers (i.e. subcontractors and suppliers). They are similar to online plan rooms, but offer more functionality, such as contractor pre-qualification, bid solicitation and response tracking, and document management.

Onscreen Takeoff and Cost Estimating
Takeoff and estimating systems complete the preconstruction puzzle. They allow contractors to create the cost estimates required to bid on projects in other regions. Onscreen takeoff lets contractors measure drawings on a computer screen by pointing and clicking a mouse. These drawings can be pulled in directly from an online plan room or bid management system.

Digital Takeoff Table in OnCenter Software

After calculating how much material is needed, estimating software pulls real-time pricing information from national databases, thereby allowing contractors to accurately calculate the cost for any category of construction in any region.

Building Information Modeling
Building information modeling (BIM) gives contractors and other project stakeholders a holistic view of a project throughout its life-cycle. It’s a 3-D, 4-D (time is the fourth dimension) or 5-D (cost is the fifth dimension) representation of the physical and functional characteristics of a building. It helps project teams build projects better, faster and cheaper.

Cloud-based Project Management Software
Cloud or web-based project management software allows GCs to monitor the progress of a project in real-time. They can quickly view the status of project items like daily schedules, change orders, punch list items, requests for information (RFIs) and other project tasks. They also provide a central repository to store any type of project file. For example, a contractor can take a picture or video recording from the job site, upload it to their web-based system, then send it back to the main office within minutes.

Salient Points

• The recession has prompted general contractors to try alternative ways to win projects, including bidding on projects out of state.
• Five technologies make it easy for contractors to win and manage these projects:
  • Online plan rooms
  • Bid management software
  • Takeoff and estimating software
  • Building Information Modeling (BIM)
  • Cloud-based project management software