Contractors have their hands full today managing people, processes and projects across multiple jobsites—each with their own unique sets of contractual, procedural and environmental challenges. Since contractors often operate with razor-thin profit margins and unsteady cash flows, having an accurate understanding of job costs is vital to success.
Until recently, the construction industry has been slower to embrace modern technologies that streamline job costs, meaning many contractors today are still using manual processes and outdated solutions to track them. The information they’re gleaning from their projects could be days, weeks, even months old by the time managers have time to analyze the data. And by the time issues are spotted, work could already be past stages where simple corrections can be made, which leads to costly rework.
The Challenges of Traditional Job Costing
At its core, job costing is a way to compare what has been budgeted for each project in the estimating processes with actual costs as they occur on the project. From materials to equipment to subcontracts and vendors to the largest expense on most construction projects—labor—contractors typically track these jobs costs by phase codes or cost codes. The closer to budgets that contractors can keep their project costs, the better. But that can be hard to do when the data collected is not hitting project managers’ desks in real time.
Relying on disconnected software solutions and lacking the tools to deliver accurate, real-time job cost data, contractors have largely had to make do with the limited data they receive. And many contractors have a continued reliance on things like paper forms and spreadsheets for data collection in the field. Project managers then have to organize that information, bring it to the office and either enter it in back-office systems or have the accounting staff enter the information. This process takes significant time and is often riddled with errors and missing information.
Once that data is collected, reports or dashboards need to be created (typically this has been done by accounting or IT teams). Those reports have to be sent out (usually via email or even paper formats) and managers and other project stakeholders have to find time to analyze them. By the time all of this occurs, on-site work is likely moving to different stages.
“Just a simple thing like a jobsite address was being entered into six different applications back in the day,” said Stephen Drouin, director of IT for Interstate Electrical Services, which replaced its disconnected systems and manual processes with a cloud-based, integrated software solution several years ago. “We were operating under tight time constraints and budgets—just like every other contractor out there. We needed to streamline our processes and coordinate better, both internally and externally.”
In fact, a recent report, Improving Performance with Project Data, released by Dodge Data & Analytics and Viewpoint, found that 28% of contractors still use spreadsheets to track job costs and 14% are still stuck using paper forms. Among the 26% using custom-designed software and 34% using commercial software, the data shows a vastly more favorable view of their job costing abilities. This doesn’t come as a surprise, as research shows more than half of contractors say improving their data gathering process has given them a better ability to complete projects at or under budget.
The Benefits of Modern Construction Software
Modern construction software solutions can significantly ease typical job costing challenges and open up new avenues of opportunity to elevate construction management. By taking advantage of the speed and collaborative benefits of the internet and cloud-based technology, contractors can achieve real-time data collection and analysis that can provide an accurate understanding of exactly where projects stand.
When these cloud-based solutions are delivered as truly-integrated ERP platforms they eliminate multiple sources of out-of-date information, instead giving a company—and a project—one source of data truth. This data can be easily shared in real time with automated workflows and alerts to executives, managers, accounting professionals and field teams—when they need to see them. This ensures everyone stays up to date, whether in the office or in the field.
By leveraging the cloud, modern software also makes it easier to utilize the latest technologies to make collecting data from the field even easier. From smartphone apps to online portals and tablet devices to newer tech like wearables and RFID, collecting data can be done seamlessly, providing more valuable time for field teams to focus on the actual building work and less of the administrative tasks.
And these cloud-based, integrated software platforms also allow contractors to scale for the future without breaking the bank today. Emerging technologies like advanced data analytics and business intelligence solutions, collaborative document sharing portals, virtual data capture and sharing solutions, machine learning and more require cloud-based systems to function, as these innovations were built in the cloud.
All of these tools combine to improve the processes behind effective job costing, giving contractors a better grasp of their present and future projects.
Jeremy Larsen is vice president of product management for Viewpoint, a leading global provider of integrated software solutions for the construction industry.