Davies has been busier than most in the transfer market this summer by bringing nine new players to the City Ground.
However, the Scot insists the club have merely been "playing catch-up" with their Championship rivals.
"If you look at the rest of the teams in the division, what we have done is add some new faces to what was a very thin squad. What we have now is a 20 to 22-man squad, which still has gaps in it in my opinion," said Davies. "We still have work to do but what we have done very well is to support this young team with new signings.
"I have said before we have done some great work in the transfer market so far but we are only playing catch-up with everyone else. It is not like we are spending money to put ourselves miles ahead of the opposition.
"We are not doing anything special, we are building our squad into one that can compete. Even with the additions, it will still be difficult. It is not going to be easy."