In the construction business, precision counts. Working with thin profit margins means contractors must constantly walk a fine line between profitability and busting their budget, so everything from material deliveries to how labor is distributed must be carefully accounted for and put to maximum utility.
It stands to reason then that degree of precision would extend to a company’s finances as well. Today’s technology enables companies to access up-to-the-minute financial data, and automatically record, report and track all potential project cost impacts in real time. This data lets companies bid, budget and cost more accurately and effectively than ever before.
“The way construction has operated for decades is that your collection and communication of financial information often lags behind the project itself. Information gets captured on a piece of paper or even a piece of plywood that ends up sitting in the office for weeks before being reported back to project executives,” says Aaron Lober, senior project marketing manager for Procore.
“This manual, haphazard process means decisions pertaining to the financial health of construction projects are often made without access to accurate and timely data. For this reason, historically, the process of managing construction project financials is time-consuming and error-prone,” adds Lober.
Stale data is worthless, particularly if key figures or instructions frequently change before the data can catch up. For a firm using a project management platform, It would be unthinkable to work from outdated drawings, financial data should be approached the same way. Having that level of real-time, actionable insights gives companies several advantages. First, having a better handle on financial data like budget forecasts and projections facilitates more competitive bidding. With change events and other financial data gathered directly from the field and continuously updated, the office can then use that data to develop more accurate forecasts and take actions to mitigate cost exposures, “future proofing” their margins in the process.
“The real benefit of utilizing an integrated project management platform like ours with Construction Financials, is you really close the distance between the project team in the field, and the project executives in the office or the project owner. In doing that, you speed up the communication process, you eliminate a lot of the manual errors that can occur, and you ultimately can improve the profitability of the overall project,” explains Lober.
Greater Access to Profitability
The old way of job costing, done piecemeal and intermittently, meant stakeholders were often stuck making big decisions based on incomplete or outdated data, unable to see potential cost-overrun surprises coming around the corner. Moving that process to a collaborative platform gives teams an environment from which to work, and enables project managers to keep a watchful eye over whether a project is on track to hit its goals, and what adjustments might be needed to get back on track.
“What technology is really allowing construction companies to do is achieve greater insight into profitability while a project is ongoing. Rather than looking at a forecast using data that’s a month old, or two months old, a project executive can now look at data that’s accurate up to the day, up to the minute, and they can say, ‘hey guys, you finished 50% of our project but we’ve used 75% of our resources, so we’re behind. We’ve got to up our productivity if we want to complete this project on budget and these project financials tools are going to help us do it.’ That’s what I really think construction financial solutions are empowering construction companies to do,” says Lober.
Wherever changes happen, they’re immediately reflected in the project’s bottom line, allowing project managers and CFOs to gain a real-time pulse of the health of ongoing projects and the company itself. Automation simplifies processes like monthly reports, eliminating the need to pull data from multiple sources and giving a real-time view of budgets, project performance and potential cost impacts.
Connecting the Field to the Office
Bringing all financial reporting under a single, cloud-based platform eliminates the need for lengthy coordination meetings between the field and office, freeing up more of everyone’s time, including time previously spent documenting everything with spreadsheets, manually entering the data and bringing it all together hoping nothing was missing.
The digitization of project financials lets field workers focus on the labor side of things and allows the office to retain control of the company’s finances. The communication happens seamlessly, and ensures critical financial data is consistently up to date across the organization. Instead of waiting for end-of-month reports to be generated, or for log files to be shared via email, everything is always up to date and accessible from anywhere.
Lacking the technology to bring together a company’s financial data can stop workflow in its tracks in the event of a discrepancy or error resulting from outdated information, where email, logs, handwritten notes and spreadsheets must be manually pored over to discover the source of the mistake and fix it. This leads to everyone essentially standing around until it can be resolved. The ability to seamlessly connect the field and office, with the same access to the same up-to-date financial data, ensures everybody is always on the same page, and that minimal resources are wasted double-checking the numbers from a two-week-old report before making a major business decision.
Part of the technological revolution in construction has seen a breakdown of the traditional silos that have divided the labor side of the business from the operation side. By giving everybody up and down the chain access to the same actionable, current information, those walls come ever closer to being eliminated altogether. The end result will be a company that is better informed about its overall financial and project health, more competitive in bidding, and which consistently delivers projects on time while maximizing profitability.