Making Data Work for a Construction Company
Construction companies have cash sitting on the shelves collecting dust – and they might not even know it. From RFIs and change orders to reports and budget decisions, jobsites produce a dizzying amount of data each day.
Yet in this age of so-called “big data,” construction has a big problem: most companies are not doing nearly enough to leverage the analytical and trending interpretation capabilities construction software has to offer.
The challenge is that raw data isn’t inherently valuable. Contractors need to work to analyze, track, trend and forecast off of data before it finally becomes a strategic tool that can help them make better financial decisions.
From the job costing information created by field teams to accounting balance sheets and everything in between, if a company can accurately make sense of the daily data avalanche, it can leverage findings for financial gains.
But companies that are still processing data manually are putting their margins at risk.
HOW TO LOSE MONEY WITH FINANCIAL DATA
Unless a contractor is using construction financial software, it is really hard to accurately leverage data. At the same time, it’s easy to interpret data incorrectly and end up with big losses.
More information drives smarter decisions––that the more details we absorb, the better off we’ll be. Knowledge is power. When employees are forced to work with extremely large sums of complex data that bombards them daily the result can be human error and analysis paralysis. It’s honest mistakes like these that are the most costly.
In January 1995, an accountant at Fidelity’s Morgan found this out the hard way. By omitting a single minus sign on a dividend Excel spreadsheet, Fidelity’s Morgan lost a whopping $2.6 billion.
Without the proper tools, it’s easy to create inaccurate budgets, unreliable forecasts and poor financial decisions in the field. It’s even easier to make bad decisions when companies blindly trust the accuracy of their data. But construction technology’s ability to handle big data and process vast quantities of information can reduce these risks and empower companies to make better financial decisions and predictions than ever before.
It’s important for companies to address the limits of outdated systems like Excel spreadsheets and antiquated accounting software, as well as the risks associated with sticking to manual data mining.
HOW TO MAKE MONEY WITH FINANCIAL INSIGHTS
With the right technology in place, companies can leverage huge data sets to automate financial record-keeping and generate insights.
- Integrated Software Infrastructure: Software that integrates with other data and applications is capable of providing a single, central source of truth. By integrating the field team’s job costing solution with the office’s accounting software, there is no need for double entry and the risks associated with it are diminished. The result is a streamlined job costing process, automated calculations, consistency, fewer errors and happier project managers and accountants. Cost controls will be tighter throughout the project, preventing overruns and building a reliable cost history that can be used to improve future estimating.
- Standardized Data: For far too long the industry has put an emphasis on customizable reports. But this doesn’t allow for data standardization across entire portfolios that is necessary for accurate trending analysis. When all project managers across a company’s portfolio of projects track potential cost impacts the same, manage their budgets the same and produce job cost reports in the same format, data can be easily aggregated and translated into vital information . This gives CFOs the ability to monitor the company’s true financial health and trust the numbers funneling up across projects so they can produce informed, data-driven forecasting.
- Real Time Field Insights: Change happens in real time and so should financial data. With cloud-based solutions, data is mobile––giving field and office teams access to real time cost information and insights from anywhere, at any time. This gives teams the tools to manage dynamic, living budgets that provide a real time pulse of the financial health of their project and enables them to deliver their project on time and under budget.
- Executive Dashboard: To run a great company, visibility is crucial. Executives need the ability to access easily digestible insights at any point in time. A construction operating system that houses all financial data and applications allows a company to aggregate all data sources into digestible dashboards––removing any blind spots and the need for guessing games.
With a fully integrated construction operating system––where financial software like job costing and accounting share data––companies get a clearer picture of how their company functions in real time (providing live insights into how margins are behaving). Companies will be able to spot important trends like input increases, how frequently they are losing out to avoidable change orders, how they are performing in different markets and even how one subcontractor’s productivity compares to that of another.
Today’s the day to take that step forward. Review the company’s data assets and make sure software solutions do the heavy lifting and interpret data. In this data-driven world, data is currency and companies cannot afford to ignore it.