Many CFOs and Controllers are reluctant to accept that there is financial activity going on in their organization that’s occurring outside their ERP finance system. While this is an understandable sentiment, the reality is that, for any company whose primary source of revenue is project-driven, there will always be project-based financial activity going on outside the ERP.
The team at 4castplus recently completed a key productivity advancement with the new 4castplus “AP Automation” module. Anyone familiar with accounts payable (AP) knows that the effort that goes into matching, validating and approving vendor invoices can be incredibly time consuming and labor intensive. The new AP Automation module takes away as much as 70% of that effort by eliminating most of the manual, human involvement that goes into the matching and approval of vendor invoices. Instead, the system automatically, electronically matches and approves invoices.
A significant part of the burden on AP is rooted in the accounts payable staff not having easy access to either the original receipt, the PO commitment, or other corroborating evidence to match the invoice against. This lack of information causes unnecessary churn with AP personnel chasing down people, documents, scanned receipts, etc. to confirm the accuracy of the invoice. Then, once the substantiating information is found, matching and approving the invoice is largely a case of verifying that what’s on the invoice agrees with what is on the associated receipts. The thing is, vendor invoices are mostly bang-on accurate, so for the AP staff in those cases, it becomes a relatively tedious routine of stamping the invoice as approved. With the 4castplus AP Automation module, accounts payable can let the system handle the dull grind and heavy-lifting of matching invoices so that they can reduce their costs and focus their efforts on more high-value work.
When it comes to project controls, budgeting and cost tracking, the Cost Breakdown Structure (CBS) plays an integral role in the management of construction projects. For many organizations, designing a standardized CBS can present a number of challenges as there aren’t a lot of models and standards out there to draw ideas from. The reality is, you’re kind-of on your own to define how you want to break down your project’s costs into logical buckets for careful management of its finances.
Getting daily real-time data from the Jobsite on your construction projects is like finally driving with the lights on. Having detailed information today on costs, activities and progress that happened today, gives you tremendous power to act swiftly on that information.
Making mistakes is a normal part of life. Equally, mistakes are a normal part of business. Mistakes, however, shouldn’t be perceived as somehow a failure or a sign of incompetence – they should instead be met as an opportunity to learn and grow; to strengthen your team and tighten your processes. Clearly what I’m saying isn’t any new wisdom, as mistakes are as old as dirt and great thinkers over the millennia have been preaching about how to spin them to the positive. Dozens of old expressions like “Fail-fast-forward”, “Corrective Action”, and “Lessons Learned”, point to a common theme about the constructive management of when things go wrong.
A key corporate value that separates a well-run business from a not-so-well-run business is in how they handle mistakes, errors and failures. An important business mantra to live by is that, “They’re only mistakes if you keep making them”. Doing the same thing over and over expecting a different result is not just a sign of insanity, but a sign of a business improvement opportunity. For example, a company that is consistently under-performing on their projects, or not achieving profitability targets on their projects – and does little to correct that but hope for better results next time – is obviously not learning from their mistakes. Hope, as they say, is not a strategy. What is a strategy, is to examine and rethink processes and systems and apply corrective action towards eliminating chronic mistakes.
If you were to ask any CFO or Controller which department should be responsible for all Procurement for the company, they would naturally respond with the Finance Department. On the other hand, if you were to ask any project controls professional about procurement, they would naturally respond with the Project Team, they should own procurement.
So, who’s right?
For any organization, their corporate data is one of the most important assets they possess. The information they gather on a daily basis forms the core of who they are, where they’ve been and where they’re going. The monumental technology changes going on in the world today have made ‘Data’ the central element that determines success or failure for most any company.
On any day of any major construction project, a ton of information is being collected about that project. Including: costs, hours, activities and progress; along with a variety of documents, photos, invoices and receipts. Feeding all this data to the project managers is critical to enable them to bring the project to a successful completion on time and on budget.
The thing is, all this data that’s collected needs to be both accurate and complete, otherwise it’s not much use to anyone. Not only that, but it also has to be timely – meaning that, giving project managers data that several weeks old doesn’t really help much. It needs to be current, like from today, otherwise you’re managing the past, which is not only ineffective, but frustrating.