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Hello! We have some exciting news: Bauwise is entering the vibrant Romanian construction market, and we’ve had a heart-to-heart chat with IBC Focus about this giant leap. IBC Focus, with its fingers firmly on the pulse of the industry, sat down with us to unpack the past, present, and future of construction, mainly through the knowledge Bauwise has in the construction industry, which has come from years of developing cost management software for construction companies.
In this candid conversation, we recall the trials and triumphs of the Baltic markets over the past year, forecast the twists and turns of the residential construction scene in 2024, and share the story of Bauwise – a story of resilience, innovation, and foresight. We also shed light on the potential we see in Romania, where the construction landscape is as rich and promising as anywhere.
So, come along as we dive into this discussion that’s about more than just business — it’s about passion, it’s about vision, and most importantly, it’s about the people who make it all happen.
1. Let’s start with a retrospective of the last 12 months. How was the market viewed from the perspective of the company’s activity?
When we look at the construction market in Baltic countries where most of our clients operate, the last 12 months have been quite tricky for the Estonian construction market but not that bad for other Baltic countries like Latvia and Lithuania.
For the past 12 months, the Estonian construction industry has been difficult. In Estonia, construction companies mainly operate on the domestic market. Therefore, the country’s general economic development affects the construction sector’s performance. When the economy is doing well, construction volumes are also high. During a downturn in the economy, less construction is done because there is a lack of opportunities for clients.
According to the Estonian Statistical Office, in the second quarter of 2023, Estonian construction companies built 12 % less in Estonia and abroad than in the same period a year earlier, while the construction volume decreased by 14 % only considering the local construction market.
When we look at other Baltic countries like Latvia and Lithuania, statistics paint a more optimistic picture. In the first and second quarters of 2023, Latvia’s construction output saw impressive increases of 17% and 15%, respectively, compared to the same periods last year, signaling robust growth, according to the Central Statistical Bureau. Neighboring Lithuania is also experiencing a positive trend, with its construction output growing by 16% and 19% in these quarters. Construction prices, interest rates, consumer confidence, and inflation continue to affect the construction market. Despite these economic factors affecting the construction sector’s performance, the Baltics and Scandinavia are progressing upward due to more efficient building technologies and digital innovation.
2. How do you see the year 2024 in terms of the market of residential projects/companies?
From our industry experience and the data we see from our clients, the residential construction market in 2024 may confront a landscape of both challenges and opportunities. If interest rates fall, construction materials keep going down, and inflation is brought under control, then we should see an increase in construction markets. Currently, the 12-month Euribor rate is at 4.040 %, material prices experienced an annual fall of 1.7% in September, and the euro area annual inflation rate was 4.3% in September 2023, down from 5.2% in August. A year earlier, the rate was 9.9%, according to Eurostat. When analyzing this data, we are confident that a good year is coming ahead for the construction industry. From what we see, the Baltics and the Scandinavian countries are witnessing exciting developments, particularly in manufacturing plant construction, new building projects, enhancing energy efficiency, and generating alternative energy, like solar and wind power, through innovative building methods. A noticeable uptick in private investment in these sectors is a promising sign of the market’s vitality.
Another aspect to focus on in 2024 is innovation in building techniques and the growing importance of smart homes. These trends suggest that residential companies increasingly rely on advanced management tools to stay competitive. This is where Bauwise comes into play because construction companies must use efficient construction management software that offers advanced analytics, robust integration capabilities, and support for sustainable building practices to meet these evolving demands.
3. Please tell us a few words about the Bauwise business.
Bauwise founders started to build custom budget management and estimating software for construction companies in 2007. Our First clients were from civil engineering and pipe construction, followed by road construction. We were fully committed and learned everything from the problems and successes of heavy construction companies. We were trying to build a product but were unsuccessful because of the recession of 2008-2009. Then, we moved slowly to other segments like energy and telecommunication to build custom project financial management software until 2016, when we decided to make a product with help from innovative general contracting companies. A year later, in 2017, Bauwise was officially formed and today provides construction companies with financial planning software that allows forecasting and management of costs, revenues, and cash flows of construction projects. The software aims to systematize and simplify the management and forecasting of project budgets for project managers of construction companies.
The software enables:
- Management and forecasting of construction budgets.
- Overview of all budget changes.
- Monitor the profitability of projects.
- Make cost and revenue forecasts for projects.
- Track all expenses such as salaries, office expenses, and other overheads, which saves you time and money.
- Overview of budgets, timesheets, costs incurred, and everything important to help you make your project profitable.
- Automatic budget updates.
- Approve invoices and send them directly to the accounting software.
- Manage contract retentions and reviews of your obligations.
- Keep purchase orders, contracts, invoices, and other commitments organized in one place.
4. What made you look at the Romanian market?
The decision to target the Romanian market is based on several strategic considerations. The first indicator that made us look at the Romanian market was our first client in Romania. Based on his feedback, we concluded that in the market, there is a big need for a tool like Bauwise.
Another factor that made us look at the Romanian market was its dynamic economic landscape and ongoing development in infrastructure and residential spaces. According to global data, the Romania construction market size was $50.2 billion in 2022, and the market is projected to achieve an AAGR of more than 3% during 2024-2027. The Romanian construction industry’s growth will be aided by infrastructure development in highways, energy, and commercial projects. It is also experiencing a digital shift, creating a fertile ground for introducing sophisticated tools like Bauwise that can bring efficiency, transparency, and cost savings to Romanian construction companies.
When we compare Romanian construction market size with the Baltics, Latvia’s construction market size in 2022 was $5.4 billion, Lithuania was at $9.4 billion, and Estonia was at $6.2 billion, according to global data. This means that the Romanian construction market is more than twice the size of the entire Baltic construction sector where Bauwise mainly operates. This means a huge opportunity for Bauwise to find new clients and help Romanian construction companies improve their project’s financial planning and cost management.
5. How do you see the potential of your business here?
The prospect of Bauwise in the Romanian market is highly promising. As the country’s construction sector edges towards a pivotal shift into the digital era, the need for sophisticated software solutions that offer meticulous cost management is expected to rise sharply. Introducing such advanced tools is to revolutionize how local companies manage their projects. By adopting Bauwise, these companies could significantly enhance their operational efficiency, set themselves apart in a competitive market, and achieve a new level of excellence in project execution. This technological leap could mark a transformative period for the Romanian construction industry, with Bauwise at the forefront of this change, facilitating a modern, innovative, and cost-effective approach to construction project budget management.
6. What are 3 pieces of advice you would give to a new client regarding the correct choice of the solutions you offer?
When advising a new client on selecting and implementing solutions, especially in a specialized industry like construction, it’s important to focus on strategic alignment, team dynamics, and maximizing the solution’s utility. Here are three pieces of comprehensive advice tailored to these aspects:
1. Assemble a Competent and Dedicated Team:
The success of any new solution depends heavily on the people behind it. It’s crucial to appoint a team that not only possesses the right skills but also has the capacity and willingness to learn and adapt. These individuals should have a blend of analytical skills, an understanding of the construction industry, and the ability to train others. Emphasize the importance of choosing team members who are not just technically proficient but also capable of championing the change within the organization. This team will act as the bridge between the new solution and the existing workforce, facilitating a smoother transition.
2. Define and Align Business Objectives:
Clearly, articulated business goals are the compass that guides the successful implementation of any solution. Encourage your client to have a laser focus on what they aim to achieve with the new solution, such as process standardization, efficiency improvement, cost reduction, or compliance enhancement. These goals should be specific, measurable, achievable, relevant, and time-bound (SMART). Aligning the solution implementation with these business objectives ensures that every step taken contributes towards the overarching aim of the organization.
3. Leverage Full Product Functionality and Industry Expertise:
Often, clients underutilize the capabilities of a new solution, sticking to familiar workflows and processes. Urge them to embrace the full range of functionalities offered by the software, which are often designed based on best practices and extensive knowledge of the construction industry. Encourage an open-minded approach to adopting new methods and workflows embedded in the software. This can lead to discovering more efficient ways of working, gaining competitive advantages, and staying abreast of industry standards. It’s about shifting the mindset from “how we’ve always done it” to “how it can be done better with this solution.”
Each of these pieces of advice ensures that the solution not only fits the client’s technical needs but is also integrated effectively into their business processes, culture, and long-term strategic goals.
7. What are 3 common mistakes that you notice in your business segment?
Reversing the advice previously given, we can identify three common mistakes clients may make when selecting and implementing solutions, particularly in the construction industry:
1. Neglecting Team Composition and Expertise:
A frequent misstep is not dedicating the right personnel to oversee the adoption of new solutions. Clients sometimes allocate this responsibility to individuals who lack the necessary time, skills, or authority to manage the transition effectively. This can lead to inadequate training, resistance to change, and, ultimately, failure to integrate the new system within the company’s workflow.
2. Lack of Clear Business Objectives:
Another common error is the absence of well-defined business goals for the new solution. Without clear targets, the implementation can lack direction, making it difficult to measure success or return on investment. This can result in the new system being underutilized or misaligned with the company’s actual needs and strategic direction.
3. Underutilizing the Solution’s Potential:
Clients often stick to their old working methods, underutilizing the advanced functionalities and industry-specific know-how embedded in new software. This resistance to change means they miss the benefits of improved methodologies and industry best practices. Consequently, they fail to fully leverage the innovation and efficiency gains the solution could provide.
Avoiding these pitfalls is as important as following best practices; both are crucial for successfully implementing and utilizing new business solutions.
8. Why are companies switching from Excel to Bauwise?
Companies in the construction sector often switch from Excel to specialized construction budget management software like Bauwise for several reasons. Here are three key differences and benefits that drive such a change:
1. Real-Time Data and Collaboration:
Excel, while versatile, is not built for real-time collaboration. Bauwise is designed to enable multiple users to access, update, and manage the budget simultaneously from different locations. This real-time data access and collaboration can be crucial for construction projects where timely information is vital for decision-making.
2. Project-Specific Features:
Excel is a general-purpose tool that requires manual setup for project-specific needs. In contrast, Bauwise is tailored for construction projects, offering features like cost tracking, budgeting, forecasting, and reporting, specifically designed to handle the complexities of construction financial management.
3. Scalability:
As projects grow in size and complexity, Excel’s limitations become more apparent. Bauwise is built to scale with the project, accommodating an increasing number of line items, transactions, and users without a decrease in performance.
