In construction, the success of any project begins and ends with proper financial management. A well-oiled financial team can assess a company’s financial resources, accurately allocate funds, cut costs where necessary, and maximize profits.
But financial management can be a mercurial landscape where problems pop up on a daily basis. For contractors in particular, a lack of job cost visibility is a multi-faceted issue that can cause unnecessary project delays and, even worse, lead to potentially expensive losses.
Here are six common blockers that prevent financial visibility in the business of building:
1. Poor Communication
The first issue concerns a disconnect between those who have access to costs and those that inform about costs. For the best results, all project stakeholders must be on the same page. When they’re not, it often creates inaccuracies during the management of a project’s budget.
The core reason for this problem is outdated manual systems that cannot keep up with the pace of the project’s progress. When one group consistently makes decisions based on old information (due to a lack of real-time data), it can lead to a chaotic relationship between the office and the field.
2. Costs are collaborative, but teams are dispersed
Building on the previous point, one might think that the solution is easy. Why not just stop, listen, and collaborate more closely?
However, the same core problem remains. Legacy systems keep information siloed to the point where collaboration between teams becomes difficult and disjointed, much like manual-system-based communication. This can also negatively affect cost and budget.
3. Things change fast and frequently
While manual systems tend to slow things down, contractors have to deal with an industry that is known for constant and rapid changes. The speedy side of construction is no small matter.
Managing change is one of the most challenging and most important part of managing any construction costs.
When teams aren’t able to view the full picture at a moment’s notice, they risk making decisions that are based on old data. Being aware of changes as they happen can keep a project on track and within budget.
4. Stakeholder needs vary
Change is not the only ingredient for chaotic collaboration. Every project is supported by various financial stakeholders, and they all need access to different types of information.
It’s not hard to imagine how a busy company without a single source of truth might struggle to constantly provide up-to-date data to dozens of stakeholders via different channels. This can cause cost visibility problems for several or everyone involved.
5. Financial overviews are incomplete
Another source that causes financial visibility problems is a fragmented view of a project’s finances. To successfully handle swift changes and data-driven decisions, every team involved in a project must have access to technologies that provide them with a holistic financial picture. Without a useful overview, some people might struggle to gauge the health of a project and find that it leads to critical mistakes down the line.
6. Cost information doesn’t tie everything together
Money is what moves a project forward. When supported by accurate project and financial information, everyone can stay on budget by managing the cost of supplies and other types of spending. It’s also easier to increase profits by better managing outstanding invoices and cutting costs.
Achieving Better Financial Management
These six issues can be resolved by the right digital platform that puts the best tools into place so that everyone can have real-time financial clarity. Outdated systems can be safely abandoned, and teams can finally collaborate without experiencing the same old problems caused by disconnected communication and siloed information.
To give a real-life example, Big-D Construction’s corporate controller Jonathan Gooch spoke at Groundbreak 2022 about how Procore has helped the company face these challenges. After realizing that the company’s communication methods were antiquated and impacted everything from forecasting to financial management, Big-D switched to Procore’s platform and quickly experienced the benefits.
“Our teams now have access to up-to-the-minute budget and cost data, and this has been a game-changer for Big-D as a general contractor,” said Gooch.
By aligning to a single source of truth, Procore has provided the company a digitized way to adhere to a culture that’s built on respect and trust. This, in turn, enables Big-D to keep its promises to clients, trade partners, and employees by finishing projects on time and within budget.
The Procore platform provides the tools you need to manage every aspect of a project, from bidding to closeout. To achieve healthier financial visibility, all stakeholders can turn to this hub to collaborate, manage data, get real-time updates about financials, and communicate changes and other important information without delay.