How GCs Can Enhance Financial Accuracy with Automation Tools

Automation is super-powering construction. Many teams now use autonomous drones or other self-driven devices to capture progress on the jobsite alongside systems that automatically remind stakeholders to review submittals and respond to requests for information (RFIs). There’s no shortage of places where automation is helping construction professionals get more done with less effort. 

Still, there’s some pushback. That’s particularly true for individual team members who value control over their processes. Specifically, finance professionals may be hesitant to turn over their work to technology lest it introduce errors. 

In reality, though, automation tools can eliminate the human errors that often come with tedious tasks like data entry. And by handling some of the more time-consuming and repetitive tasks from the finance function, it can free team members up for higher-level, more meaningful work. 

As a result, general contractors (GCs) should at the very least explore financial automation tools. They may decide their current process work just fine — but they may find opportunities for more financial accuracy, along with money and time saved. 

Why Financial Accuracy Matters So Much for GCs

GCs rely on number-crunching to turn a profit. They estimate a project and give the owner a price. Whoever does the best work at the best price wins the contract. Being able to accurately predict what the project will cost helps the GC win work while protecting their profit margin.

That prediction often hinges on historical financial data. Fortunately, GCs have a lot of it. A single job might have thousands of line items that they can look to in order to get information about past costs. 

But the volume of entries introduces the potential for problems, too. If there’s an error in even one of those individual data points, it can throw off any analysis the GC is attempting to complete. 

Say, for example, that someone missed a single zero. Instead of the cost for one item being the recorded $30,000, it actually costs $300,000. If the GC had anticipated $1 million of profit on the project, that seemingly simple error could slash the total by $270,000. 

Financial errors are particularly costly for GCs because when the company accepts a project, they agree to a price. They can’t go back and renegotiate if they discover an error later. 

As a result, financial planning in construction is a little bit like trying to predict the future. To do that, a GC’s finance function is continually tasked with tracking actual project costs against forecasted costs. If data isn’t getting recorded quickly enough, this gets increasingly difficult. 

Because finance personnel need to constantly adjust actual costs and match them to projected costs, it creates a lot of work. Getting even a little bit behind can have ripple-out effects.

In short, it’s very important for GCs to be accurate when they’re both forecasting and recording actual costs. That puts a huge burden on their finance function — but automation tools can help to lighten it. 

Getting Started With Financial Automation: Data Capture for Job Costing

If a GC firm wants to tap into automation tools to improve its financial accuracy, data capture is the best place to start. If the team can figure out a way to automate data capture, they’ll have an easier time automating everything else. 

Specifically, GCs often see notable gains when they explore ways to automate the capture of job costing data. 

To clarify what automation could look like here — and the benefits it can deliver — it helps to consider examples.

Say a GC firm wants to know all of the costs associated with flooring in the month of August. Historically, someone from the finance team would need to comb through spreadsheets, maybe even highlighting flooring-related line items, then manually tallying them up. To eliminate the risk of error, they might repeat that whole process to confirm the number at which they’ve arrived. This could take hours. 

With a financial system in place, all of this can be automated. The team can get total flooring costs for August in a matter of seconds.

Using Automation To Power Financial Success

Automation doesn’t just eliminate the manual labor aspect of data entry. It helps GCs move faster and more intelligently.

With strong, automated data capture tools, the finance function at a GC can do the following:

• Minimize Tedious Tasks

  Automation can eliminate the massive amount of manual labor that comes with tracking job costs. Efficiency breeds efficiency here. The time saved on low-level data entry can be converted to data analysis. 

• Generate Estimates Faster

  Finance teams can ask the system to give them the numbers they need. They might ask for labor cost estimates, for example, which they can then apply to projections, contracts and change orders. 

• Shrink Wait Times

  Historically, finance professionals have spent a lot of time waiting for others to provide them information, then rushing to provide information while someone else waits for it. With automation tools that capture data for them, they can pull the data they need themselves and turn around required information faster. 

• Support Accounts Payable and Receivable

  Automating finance processes can help the GC interface with external stakeholders in an informed way. It can illuminate how much work is complete versus how much has been billed. If a subcontractor submits an invoice for 80% of windows but the GC’s automation tools have recorded only 30% delivered to the jobsite, for example, they can act accordingly. 

• Make Better Decisions

  ith financial details readily available in near real-time, people can analyze the current state of a project and better decide how to move it forward. Assessing different data points against each other provides insights. The GC’s finance function might monitor cost percent complete and schedule percent complete, for example. If they see a variance that’s overly large (say only 20% of the budget has been spent but the schedule is 75% complete), that can sound alarm bells. The sooner issues are spotted and addressed, the easier they generally are to fix. 

All of this protects the GC’s bottom line. 

Looking Ahead: Balancing Advancing Technology With Sustainable Growth

As financial automation tools get more sophisticated, GCs can unlock new ways to drive profits. 

Take earned value management (EVM) as an example. EVM has often required extensive work to track where the project is in terms of scope, time and dollars. Some GCs have deemed it worth the effort because it helps them keep a finger firmly on the pulse of project health. Others have decided it’s too much work. 

But with automation in play, EVM is a no-brainer.  

That’s just one example of how GCs can use automation tools to improve financial accuracy and project outcomes. As technology advances, this should get easier, too. 

Artificial intelligence (AI) can streamline financial reporting, scanning data points to arrive at the information GCs need. It can tell them all of their flooring costs in August in seconds, for example. 

AI can also look at a contract and understand exactly what’s in it. This way, it can alert the GC when schedule clauses are triggered that allow them to pursue extra money. If it rains one day and the contract includes a weather-related clause, AI can alert them to apply for an extra day of payroll, for example. 

All of this said, GCs can move too quickly here. To successfully implement automation tools, they need to remember the human element of it all. Rolling things out gradually generally improves buy-in, particularly with finance professionals. Helping those team members maintain control points can ease minds that might otherwise be worried about automation. 

Showing the finance team how automation can make their life easier — from time savings to better insight generation — should also support adoption. And, in turn, helps GCs realize the many benefits of automation in their finance function.

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