The AEC (Architecture, Engineering, and Construction) industry is experiencing a massive boom due to the ever-growing demand for real estate and modern infrastructure. It is expected to reach $15.84 billion by 2028, with a projected CAGR of 10.7% from 2021 to 2028.
Despite impressive projections, the AEC industry faces numerous challenges affecting its market growth today. It includes supply chain bottlenecks, labor shortages, shifting regulatory constraints, and increasing resource costs.
Given AEC projects’ complexity and labor-intensive nature, resource management is one of the biggest challenges for this sector. Issues such as the widening skill gap, aging workers, soaring resourcing costs, and high turnover plague the industry, making it difficult for AEC firms to maintain a skilled workforce.
Therefore, organizations need to implement appropriate measures to mitigate these challenges.
This blog will provide insights into how Saviom’s resource management can resolve the significant resourcing challenges of the AEC sector.
Resource management in the AEC industry & its importance
AEC resource management entails the process of planning, scheduling, and utilizing every business resource, human and non-human, with utmost efficiency. It helps organizations to deliver projects successfully within the pre-defined time, scope, and budget.
Additionally, it ensures that the right AEC resources with the right competencies are available for various project tasks. With effective resource management, AEC firms can reduce their resourcing costs, meet project deadlines, and improve the quality of deliverables.
Now that we know what constitutes AEC resource management, let’s delve into the challenges within the sector.
What are the major challenges in the AEC industry?
The biggest challenges in the AEC industry are:
- Market instability:
Market instability is a reality of every industry, and the AEC sector is no different. The inability to predict demand fluctuations often leads to reactive measures such as massive downsizing and layoffs.
- Rising expenditure:
Rising costs are another source of concern for AEC firms. The cost of raw materials has significantly increased over the years, making it strenuous to make a profit.
- Labor shortage:
Skilled labor is critical to the success of any construction project. However, there is a significant labor shortage because the existing workforce is retiring, and there is a lack of new-generation workers willing to enter this market. Acute shortages can lead to last-minute firefighting, project delays, and missed business opportunities.
- Inefficient processes:
Many companies are still using legacy tools and methodologies for project completion. However, these processes are inefficient and frequently result in schedule and budget overruns.
Now that we know the various challenges of the AEC industry, the next section will highlight the solutions that can remedy these problems.
Ways to combat resourcing challenges within the AEC industry
Here are six solutions that can mitigate resourcing challenges within the AEC industry:
Create a centralized database of all AEC resources
Most AEC firms still use legacy tools that cannot provide real-time data and store the information in silos. Reconciling this siloed data becomes laborious and susceptible to human errors, leading to delayed decision-making. Furthermore, a lack of visibility into current and future resource scheduling can result in multiple bookings, wasteful hiring, etc.
A comprehensive resource management solution can provide an enterprise-level overview of the entire resource pool. In addition, it can provide a centralized database for all resource-related information that can help streamline the scheduling and allocation process. This can prevent double booking or overloading of resources.
Forecast and bridge capacity vs. demand gap for AEC projects
An acute labor shortage combined with an aging workforce is a significant challenge for AEC firms. Additionally, the demand for niche skilled resources is increasing due to rapid technological advancements and growing competition. As a result, the existing workforce is facing a growing skill gap. It can lead to last-minute firefighting, which results in cost-escalations and schedule and budget overruns.
Managers can anticipate future project demand and detect skills gaps with a forecasting and resource capacity planning solution. They can accurately analyze resource excess and scarcity and adopt remedial steps ahead of time. For example, they can implement appropriate resourcing treatment for surplus or shortage of resources, such as L&D initiatives or hiring to bridge the gap.
Maximize billable utilization of engineers and construction workers
Without proper visibility into the resource pool, it becomes difficult for managers to track and analyze the productive utilization of each employee. This, in turn, obstructs companies from identifying under/overutilization of resources which can affect overall performance and productivity. It also results in disengagement, low employee morale, and unplanned attrition.
A robust resource management tool can provide valuable insights that help managers track resource utilization levels in real time. They can identify underutilized or overutilized resources and adjust their schedules based on these insights. Additionally, resource managers can mobilize them from non-billable or less-priority to billable or high-priority work, enhancing productivity and billability.
Create a balanced mix of permanent and contingent workforce
Since AEC projects are prone to changes due to external and unpredictable variables, resource demand is volatile and can fluctuate dynamically. A lack of visibility into the resource pool prevents managers from adequately addressing demand volatilities. This leads to costly last-minute firefighting and budget and schedule overruns.
AEC businesses can use capacity planning to address resource demand volatility. They can build a balanced mix of a permanent and contingent workforce to meet demand changes. Companies can engage contractors and part-timers to manage seasonal spikes and troughs instead of hiring expensive permanent employees. Using a contingent workforce can assist the organization deal with transitory increases in demand without incurring any long-term costs.
Create a proactive plan to manage bench size in construction firms
The bulk of AEC projects experiences frequent ramp-up and ramp-down activities. For example, the management may require thousands of workers to complete the project during the execution phase. However, once the project approaches the closure phase, there is a ramp-down in activities, and resources, such as construction workers and engineers, end up on the bench. Therefore, it can negatively impact profitability since benched resources do not bring revenue to the organization.
Efficient bench management can help AEC firms proactively manage their bench size. Through forecasting, managers can foresee resources that will end up on the bench and assign suitable work using the project vacancy reports. This can facilitate continuous productivity and high performance.
Facilitate training programs to upskill resources
Due to rapid technological advancements, AEC workers must continuously update their core skills and competencies to avoid skill obsolescence. Advanced competencies such as AutoCAD, Rhino 3D, SketchUp, and Revit Architecture have become standard requirements for AEC jobs. Organizations cannot effectively deploy their workforce to projects without the proper skill set.
Managers can view the organization’s competency matrix and arrange appropriate training and development initiatives for their resources. By facilitating a multi-skill building policy, organizations can prepare their workers for future skill requirements of pipeline projects. Furthermore, they can identify competent resources to fill critical positions as part of the company’s succession planning. These resources can undergo requisite training to prepare for the new roles and responsibilities.
Now that we understand the resourcing challenges and their solutions let’s look at how resource management software can help the AEC industry.
How can robust resource management software help?
Since the AEC industry employs a large workforce, it’s critical for firms to efficiently manage the resource pool and safeguard business growth and profitability.
Saviom’s highly configurable resource management software provides AEC businesses with the following:
- Enterprise-wide visibility into key resource indicators such as demand, capacity, and availability.
- Forecasting capabilities to predict and forward plan future AEC resource requirements for pipeline projects.
- Capacity planning feature to track and analyze AEC demand vs supply gap.
- Real-time, BI-enabled reports such as forecast vs actuals, utilization reports, people on the bench, project vacancy reports, and color-coded heatmaps for better decision-making.
Like every other industry, the workforce forms the backbone of the AEC industry. Therefore, organizations must optimize their workforce to ensure successful project delivery and client satisfaction. However, this is not possible without comprehensive resource management solutions. Through effective resource forecasting and capacity planning, AEC firms can address various resourcing challenges within the industry and protect their profitability.