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
Most organizations that utilize a lot of labor resources for their projects will face tremendous complexity in managing the cost and billing rates used when estimating and tracking time. Especially in construction where there are many different disciplines, shifts, contracts, collective agreements, etc. that can determine which rate to use, it can be a bewildering challenge to manage. 4castplus provides you the ability to preconfigure very complex cost and billing rates scenarios to fit every situation you may come across. The nice thing about preconfiguring rates, is that, first of all, you can standardize the rates; and second, you can simplify time tracking since the system will automatically pick the correct rate, alleviating your project personnel from the burden of knowing who gets paid what for which situation.
Regardless of your background, faith or beliefs, this time of year can give all of us the opportunity to be grateful for all the good things in our lives. Even for those who don’t feel they have much in the way of good fortune to celebrate, it’s still a time to reflect on what we do have to be thankful for. It’s easy for me to say all that of course, but it’s a much trickier thing to do. Christmas can be stressful, and for some, a cold reminder of things they’d prefer to forget.
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.
You have to expect that, from the very beginning, nothing ever plays out exactly to plan on major construction projects. Things change. Scope changes. Drawings change. People change. There are hundreds of factors that can surface at a moment’s notice – including mistakes, anomalies and unforeseen predicaments – that can cause setbacks and overages.
Being able to react quickly and nimbly to the jams and messes that project managers face on a daily basis, is the glue that keeps projects humming relatively close to expectations and plan. Major projects are big and complicated. There’s a mountain of activity going on every day that requires careful oversight to ensure things don’t go completely off the rails. With the amount of money and risk on the line, organizations clearly have to keep a tight ship or risk significant financial consequences; along with potential erosion of trust and reputation of your organization.
Approvals are deeply woven into the fabric of any financial software solution, and 4castplus is no exception. The challenge with designing complex, multi-stage approvals workflows however – for key items such as purchase orders, change orders, timesheets, invoices, etc. – is that they can quickly bog things down, and introduce delays as approvals get stuck waiting for individuals to get around to dealing with them. Approvals can drone on and on and keep critical-path items stuck on hold for days or weeks, wasting time and money, if not attended to properly. This is what we refer to as “Approvals Bottlenecks” and they can be a massive drain on the efficient management of project finances.
And bottlenecks can be very bad for business.
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.