As businesses, families and individuals continue to adjust to their new working arrangements both at work and at home, the whole world is trying to navigate a path forward to getting things opened up, restrictions relaxed, and projects ramped-up again. Thankfully these are all positive signs for those contractors and owners looking to get back to work, as construction projects in most geographies have been deemed as “essential”; and are either still in operation, or are part of the first phase of reopening. Nevertheless, there still remains a great deal of uncertainty as to how this will play out or how successful it will be, so we are all feeling a sense of anxious hopefulness that we can all get our lives back relatively soon. Although many may wish for a rapid return to normal, accompanied with a boom of new activity, this is highly unlikely as the overarching sense of cautiousness will prevail for the foreseeable future.
We’ve been researching and gathering a variety of resources we hope will help our clients, our industry and our community to navigate the current COVID-19 situation as best they can. We’ll be updating this and other documents as events continue to unfold daily.
The 4castplus team was out in full force at the Advancing Project Controls conference in Houston this past week. This is one of numerous project controls related conferences held throughout the year in various locations around the world.
It was exciting to see how well-attended this conference was and how important the role of project controls is becoming in companies of all descriptions. The majority of delegates we came across were relatively advanced in their knowledge of project controls and clearly embraced the role of technology as a key component of its application. There were a smaller number of delegates that were relatively new to the discipline and were eager to learn. Some individuals and companies were looking for ways to advance and upgrade their software solutions, others were looking for complementary systems to what they have; and others were looking for integration solutions to bind it all together. Following are some key takeaways.
Business Intelligence and data analytics are taking center stage in project controls. For the purposes of investigating and drilling down to identify root causes of issues, schedule overruns and cost overruns. Without reliable, accurate and current data, project controls professionals are in the dark as to what is happening on their project. Good data leads to good decisions, and the right tools to present that data become indispensable.
It may come as no surprise that the construction industry is one of last to embrace technology to improve productivity. According to McKinsey’s Digitation Report, the construction industry is one of the least digitized in the world (see Figure 1 below). Many contractors, about 40% of them according to the 2018 construction technology report, are still using a paper-based solution for documents, cost tracking, reports and other field-related items. This apparent lack of willingness to adopt newer, cloud-based solutions introduces productivity bottlenecks due to information delays, errors from rekeying data, missing data, lack of collaboration and wasted effort on the jobsite and in the office.
Figure 1 - McKinsey's Imagining Construction's Digital Future
Mega construction projects withstand a level of complexity like no other. More than ever, organizations are searching for ways to increase efficiencies, reduce costs, increase productivity, collaboration and automation on their construction projects. To achieve this, the project team needs to apply a significant level of rigor in the planning and management of projects and deliver key metrics and projections to all project stakeholders throughout its execution. Calculating a reliable month-over-month forecast requires that the project team has not only done sufficient upfront project planning, but they’re also performing ongoing monitoring, measurement and management of the project in order to produce an accurate report for the project's financial stakeholders.
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.