Technology has advanced faster in the last 20 years than at any previous point. New techniques and technologies are emerging that are threatening to turn the construction and contracting industries on their ears. So how can new technologies improve contractor profit margins, and what will it take for companies to adopt these new tools and techniques?

Current Profit Margins

What do current contractor profit margins look like? They're fairly small, according to industry experts. A report by the Construction Financial Management Association found, on average, the profit margin for contractors is between 1.4% and 2.4%. Subcontractors are only slightly better off at 2.2% to 3.5%.

With a profit margin that small, one mistake or missed deadline can put the entire project in the red. The industry has so far been slow to invest in technology that could help improve these profit margins. What new technologies could contractors benefit from?

Digital File Management

Traditional file management requires lots of printed paperwork that gets stored (and collects dust) in filing cabinets. It worked previously, but in today's fast-paced workforce, it's inefficient and can lead to errors.

Contractors can reap several benefits from digital file management. It's more cost-effective and eliminates the need for paper, printers, ink and storage space. It also makes it easier to access any necessary files immediately. Instead of searching through dusty filing cabinets, workers can find anything they need to complete their jobs with a keystroke or two.

Digital file management is also more secure than traditional paper storage. Companies don't have to worry about losing their files to a fire or other disaster, especially if everything is stored in the cloud. Even computer failures can't touch files stored in the cloud.

Switching to digital requires an initial investment, but once the contractor can move away from paper and ink, the system ends up paying for itself.

IoT Equipment Monitoring

Equipment failure and unscheduled maintenance can cost contractors hundreds or thousands of dollars in lost production.

As a solution, construction companies can embrace the power of the Internet of Things. This technology uses networked sensors that can communicate with one another and a centralized hub. IoT can be used to monitor equipment as it's being used in the field.

In the construction industry, this has a myriad of uses. Each piece of machinery is equipped with networked sensors that monitor its health, alerting workers when it detects a problem. It can even be programmed to send out alerts when it detects maintenance is needed, rather than waiting for things to start breaking down.

Rising fuel costs, unplanned delays and safety concerns are all risks that could derail a construction project. Fortunately, using IoT to monitor equipment can help businesses stay on top of all these jobsite issues. This data can improve productivity and help buffer a company's profit margin.

Artificial Intelligence and Machine Learning

Artificial intelligence might sound like something that belongs in a science fiction movie, but it's quickly becoming an invaluable tool in nearly every industry across the globe. Construction is one of the last industries to adopt this new technology, but for contractors looking to expand their profit margins, AI could be the perfect tool.

AI and machine learning systems can help with design, risk mitigation, project planning, productivity and many other aspects of the job. Machine learning means that contractors can teach the system exactly what they need it to do. That might include everything from risk assessment on new jobsites to tools that increase worker productivity.

The possibilities are endless and only limited by the programmer's abilities.

Augmented and Virtual Reality

Virtual reality (VR) creates fully immersive virtual environments that users can access with VR headsets. Augmented reality (AR) takes those virtual images and projects them onto the real world with the use of a smartphone or other compatible device.

While this started out as a tool for the gaming industry, the construction sector is quickly adopting it. VR and AR give contractors the ability to lay out and explore a design before they ever break ground. If there is a problem with the design or the blueprints, these VR and AR walkthroughs make them easy to see before they require costly fixes.

VR and AR are also valuable tools for training. These virtual environments teach workers how to stay safe on the job without ever placing them in a dangerous situation. There's also no chance that a mistake by a trainee will cause problems that could impact the company's profit margin.

Data-Driven Decisions Improve Profit Margins

The construction industry might be one of the slowest when it comes to adopting new technology, but these changes will continue to upend the sector for many years to come. For business owners who want a way to expand their profit margins, adopting new technology might be the key that they're looking for.

Many of these new technologies will require an initial investment but, as they improve employee safety, efficiency and productivity, they will quickly pay for themselves.