Several decades ago, organizations used to manage all their finances using big paper-based ledgers, where they’d spend much of their day “doing the books”. These large ledger books worked for hundreds of years, however it would be a challenge to find any modern company today that runs their business on paper-based accounting methods.
The recent announcement by the Alberta government to invest $1B in grants and loan guarantees to partially upgrade its bitumen, is great news for the Alberta energy industry. As a landlocked province with no access to tidewater for access to diverse markets, and no pipeline to transport its bitumen, Alberta is not getting full value for its products. It’s the government’s hope and expectation that this will incentivize a further $5B in private investment to build and improve the local upgrader infrastructure.
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.
I’m going to start with a basic assertion: to be effective and successful in their job, Project Managers need good information and the right tools. These two things are an absolute must. A bit more specifically: project managers first need current, accurate and complete project data; then secondly, they need the right tools to analyze, and report on that data.
This is especially true when managing large construction projects, where there are so many moving parts, changes, documents, contractors, costs, schedules, etc. to stay on top of. There are other things they need of course, but without these two key things, construction project managers are left feeling around in a dark room, desperately hoping to find a light switch.
Construction contractors are increasingly adopting technology to track their daily costs and activities from the jobsite. Some will refer to this as tracking their daily LEM – which stands for Labor, Equipment and Materials – however others may call it Field Data Capture; and some may call it the Daily Field Report, or Site Superintendent Report. Although we’ve adopted an industry term, “Construction Cost Tracking” as a general name to describe the activity and process, we tend to use “LEM” as the term that describes the final document(s) that contain all the jobsite data that gets tracked.
If you’re familiar with 4castplus at all, you’ll know that the system enables contractors to track much more than labor, equipment and materials. There’s clearly much more going on than that – so a “LEM” is just a term used that encapsulates the broad variety of everything that gets tracked. Other data that gets captured in the LEM includes: labor expenses like subsistence and meals; along with 3rd party vendor expenses; material field receipts; daily log and the weather. Field personnel can also input production quantities as progressed items that are completed. It also allows field personnel to upload any number of documents into organized document repository categories. There’s additionally a very powerful Vendor LEM option to track the costs and expenses from subcontractors.
Successfully managing construction projects is highly dependent on the quality of the data that’s captured about those projects. Whether you’re using the data to manage costs, bill your clients, pay your subcontractors, determine progress – or all that and more – the quality of that data is crucial to the success of the project. Current, Accurate and Complete – these are the key cornerstones of quality information. What’s more, getting quality data right from the start – i.e. from when it’s first entered into the system – saves organizations tremendous time, money and effort in executing on projects. Not only that, it reduces the chances and effects of any potential claims, disputes, safety issues and delays. Mistakes and omissions bleed energy and money from your organization. The result is not just costly, it’s often embarrassing – and you are particularly vulnerable if you have any manual “double-entry” of data from system to system.
If you’re like most companies that run construction projects, you know that getting accurate and real-time cost data from the jobsite can present many challenges. If you’ve never considered a software system to take on the heavy lifting of that process, here are the top 9 signs you need construction cost tracking software.
Top 9 signs you need construction cost tracking software and how 4castplus can help:
#1. You have way too many spreadsheets
Your Site Foremen probably use one or more spreadsheets to capture the daily hours and activities of your crews and equipment for each of your jobsites. You may also have a few contractors working for you that submit their spreadsheet to your site personnel for approval. Then there are the expenses, documents, scanned receipts, safety and inspection reports, etc. that you need to include into the mix, and if you’re a contractor yourself, everything needs to be combined and organized for your client’s Site Superintendent to sign and stamp.
Before I get started on the details, I’ll give you a quick definition: A CPI Forecast allows project controls professionals to predict the performance of their project using a subjective CPI value rather than the calculated CPI that’s determined based on past performance.