Mind the gap: how to conduct gap analysis
Posted on: 12 May, 2025
In an uncertain and unpredictable business environment, gap analysis can be a great way to assess your organisation’s strengths and weaknesses.
In the construction industry, it’s more important than ever to change and adapt as the green skills gap continues to challenge growth and development.
Not only is the lack of green skills a key barrier to achieving net zero targets, but other workforce pressures, such as the ageing population, make it even harder to tackle skills shortages. The number of employees over the age of 60 are increasing more than any other age group in our sector, and essential skills will be lost as workers retire. This has been further compounded by Brexit, with around 75% of EU construction workers lost being aged between 25 and 39.
Through gap analysis, we can gain insights on the skills composition of the workforce, looking at strengths and weaknesses, and discovering the best ways to bridge the gap. But what is gap analysis exactly, and what is it used for? Here we explain how it works, why it’s beneficial, and how to do gap analysis with a step by step guide.
What is gap analysis?
A gap analysis, also known as a needs analysis, is a method of assessing the performance of an organisation or business unit, with a goal of understanding what objectives are being met.
The “gap” referred to in this process describes the space between where you are as a business (the current state) and where you want to be (the desired state). By analysing this “gap”, it will be possible to establish what needs to be done, or what needs to change, in order for transformation to happen.
What are the benefits of gap analysis?
Gap analysis can help you create a strategic plan to close the gap between your current reality with your vision and business mission. By identifying strengths, weaknesses, opportunities and threats, you can optimise resources and allocate time more effectively to achieve your goals and objectives.
Here are some examples of how gap analysis can help your business:
- Identify opportunities for cost savings
There are a number of ways that a business can save money and nurture its bottom line. Using gap analysis, it’s possible to understand what these are and what can be done to streamline processes, reduce waste or downtime, and improve operational efficiency.
- Discover areas that need the greatest improvement
This analysis method also helps you zone in on the problem areas that could be holding you back from growth and transformation.
- Better understand skill/talent shortages
Through gap analysis, businesses can determine where the discrepancies are within their workforce. By getting a view of current and future states, it’s possible to address skills gaps through upskilling, reskilling, or recruitment.
Learn more: What is the green skills gap (and why does it matter)?
- Improve customer satisfaction
Used as a strategic planning tool for pinpointing and addressing problems in the customer journey, gap analysis can inform a company’s customer service strategy.
- Foster a culture of continuous improvement
One of the most beneficial parts of analysing your business in such detail is the ability to gain a better view of what’s working and what’s not. Knowing how to do gap analysis effectively not only ensures strategic planning and development, but it allows organisations to build an internal culture where people strive to continually improve.
Different types of gap analysis
There are many types of gap analysis to consider, and this method can be applied to a number of areas within a business:
Market gap analysis
Product or market gap analysis allows businesses to gain some control over potential issues before launching a new product or service. It also helps organisations determine the readiness of the target market, while looking at the activities of competitors in that space.
Strategic gap analysis
This is often used as a business management technique when a business needs recommended actions to achieve a particular goal. Benchmarking is the main performance assessment method used to determine whether a company’s performance needs improvement.
Skills gap analysis
Looking specifically at the skills gap in a business, this type of analysis helps to address needs such as upskilling, reskilling, job redesign, company restructure or recruitment. If a skills shortage is identified, leaders can call for certain strategies, such as creating development initiatives or suitable hiring programs.
For instance, the green skills gap continues to be a problem for many organisations in the construction industry. Businesses must invest in ways not only to attract, but to retain highly-skilled workers. This goes way beyond just company training and perks, but urges employers to consider the wider company culture and employee wellbeing too.
Performance gap analysis
There are so many ways that business performance can fall short, and a performance gap analysis examines how a business is performing compared to projected results based on the current performance levels. This allows organisations to understand how close or far away they are from their desired state, and gives them an opportunity to make improvements to shift the trajectory.
In the built environment, this method can be used to identify performance gaps in construction projects, targeting root causes to eliminate issues or bottlenecks.
Profit gap analysis
By comparing a company’s financial metrics against industry averages, it’s possible to pinpoint areas for growth and improvement. Within the construction industry, businesses should deep dive into areas where efficiency could be improved, including health and safety, project management, quality control and budget management.
How to conduct gap analysis for your business
In order to perform gap analysis effectively, it’s important to consider each of the steps required. Thorough analysis is key, and ensuring stakeholder and employee engagement throughout is essential for success.
Here are six steps to follow:
1. Define scope and assess current state
The very first requirement of any successful analysis is to define the scope and objectives clearly. What are you trying to find out? What are you trying to improve or achieve? Next, you will need to assess the current situation, looking at anything from business performance and workforce to customer satisfaction levels.
2. Establish what an ideal future state looks like
Once you have determined the current state of the business, you’ll need to consider what the future state of the business should look like. This should be the desired state (e.g.: where you want the business to be and how you would like it to perform).
During this process, be sure to review a multitude of factors, including competitor and industry benchmarks and customer expectations, as well as organisational objectives.
3. Identify the gap that exists between the two states
With current state and future state established, you can now explore the gap that sits between them. Benchmarking will help you understand what’s needed in order to transform current levels of performance into desired performance.
4. Work with stakeholders to set goals
After the gap between current and desired state has been analysed, you’ll need to determine the root causes and set goals to determine where you want the business to end up. Engage with stakeholders to ensure that goals align across the business.
5. Create a timeline and plan of action
Design a plan to move forward, setting specific objectives and the steps required to achieve them. At this stage, you’ll need to determine resources, budget and key performance indicators (KPIs). In order to keep stakeholders and employees engaged throughout implementation, make sure there are achievable milestones across the timeline, as well as effective ways to track progress.
6. Continually monitor and review
Keep implementation on track by regularly reviewing and assessing progress. Use KPIs as a way to measure how well projects are moving along and how the business is being impacted by initiatives. This will help you calculate the effectiveness of your strategy, allowing you to make adjustments if needed.
Create lasting change with gap analysis
The challenges seen within the construction industry, such as the green skills gap, call for strategic planning so that companies can determine the best approach for recruitment, as well as resource allocation and prioritisation.
A gap analysis allows organisations to assess available resources, while also ensuring its energy, focus and budget is delivered to its most critical areas.
By using gap analysis as a strategic planning tool, construction companies can confront other challenges that are commonly seen in the built environment. This includes cost overruns and project delays, slow adoption of new technologies, siloed information and poor communication or problems with cash flow.
Most importantly, is the opportunity to instil lasting change. By reviewing the current and desired state of a business, and identifying discrepancies, problem areas and bottlenecks, it’s possible to create a mind-set of continuous change and improvement.
Not only is it possible to achieve process improvement, but a gap analysis can bring leaders, stakeholders and employees together, aligning goals and values, and instilling a culture where people are motivated by change, rather than fearing it.
As a result, businesses can be more resilient and agile – and in an ever-changing sector like the built environment, that can lead to huge possibilities of growth, not just survival.
