Construction costs in the US have been escalating for months now, and it’s so far the contractors who are carrying the weight of absorbing these price increases. This, according to a recent study by the Associated General Contractors, who went on to point out that recent tariffs on non-US foreign materials have further intensified the issue.

The Pain of Higher Construction Costs 

Everyone wants to run a ‘Lean’ operation. But how do you do that when there’s so much work to do, projects to stay on top of, reports to run, etc.?  The behavioral challenge most organizations suffer from when it comes to running lean, is what I call the “More means More” syndrome.  Put simply, this means: as you grow and get more work, you just add more people to do that work. More work, therefore more people, right? Well, hang on a second. 

We often get asked about the distinction between re-baselining a project and creating a change order. I can see why there’s a bit of confusion there because in many respects they accomplish a similar outcome. However, they are fundamentally different processes that serve unique purposes.

It’s not uncommon for organizations to consider the idea of using their ERP as a one-stop-solution for all their technology needs – even when it comes to managing the many-layered complexities of cost management on major projects. It’s an appealing idea: everything in one place, under the tight control and scrutiny of the finance department. The challenge with this of course, is that the target users of an ERP are in the finance department, not those who are managing the day-to-day operations of a large construction project. 

 
Construction projects have many moving parts and a colossal amount of data to carefully manage in order to keep the project running to plan. Not only that, but there are numerous different types of users that need to work collaboratively in real-time. Such as: Project managers, project controls, engineers, field staff at the jobsite, subcontractors, project owners and others, that all need to work together, sharing data and workflows, to seamlessly bring a project to a successful conclusion.  

It’s typically not until the end of the day at the construction site that the field personnel sit down to collect and enter all the time and expenses for their crews, equipment and other charges for that day.  It’s late and they are in a rush to get it done so it’s inevitable that mistakes are made. Things get coded to the wrong place, charges are missed, incorrect rates are used, etc.  All these errors are compiled, submitted and ultimately routed to the finance team for processing. And this is where the nightmare begins.

Finance is responsible for ensuring data accuracy in cost tracking before billing clients, paying vendors or routing charges through payroll. It’s not that site foreman can’t be detailed – it’s just that they have a very different spectrum of priorities. What this translates to, is that the finance team is tasked with finding and correcting data entry errors from the jobsite.