Finger on the Pulse: Breakthroughs in Cost Management TechnologyPosted on October 7, 2021 by Ceco Building Systems
Each year, the construction industry becomes more complex. Between new methods, cutting-edge materials, customers’ expanding expectations and emerging technology, it can be a real challenge to keep up. However, maintaining our position at the leading edge of advancements has always been an integral part of how Ceco operates. You trust us to be your committed partner, with superior knowledge and expertise in everything from sophisticated, flexible design styles to the latest, most innovative technology applications. So today, we want to introduce you and your business to a piece of technology you may not be aware of – and one that could not only save you money, but also boost your profits in unexpected ways.
As construction has become more complex, builders have taken on more projects – and more projects of different types. Within each of these projects, respective details split into more and more branches of complexity – each with their own suppliers, trades, budgets, variables and timelines. It’s a lot to keep an eye on. Above all, though, any project’s success is measured in terms of two things: time and budget. Was it completed on time? Was it within the budget?
All those little variables along the way can have massive repercussions on your two primary success metrics. A change in material cost, a seemingly simple shift in design, permitting problems – you name it. It can all have a “butterfly effect” on the final cost and schedule. According to KPMG estimates, a mere 31% of 2015 construction projects landed within 10% of their initial budgets, and an Independent Project Analysis Group study of more than 12,000 projects revealed that more than 35% of all construction projects incur a major change in their lifespan.
If you’re operating the old way – without comprehensive cost management technology – your window into all these variables and their consequences is startlingly opaque. Until it’s too late.
The Old Way
The way most companies attempt to manage costs has hardly evolved in decades. They essentially do it the way it’s always been done: each team or individual, from permitting to design to engineering, has its own spreadsheets, documents and software. At worst, these are all on paper in a file cabinet at the office. At best, they’re digital, but the programs likely aren’t linked, can’t talk to each other, and reside on a hard drive somewhere. If this sounds familiar, it’s time to investigate cloud-based cost management technology.
Let Your Imagination Run Wild
While the term “Cloud-Based Cost Management Technology” may sound complex and intimidating, the truth is it’s simplifies everything. Imagine a central platform, containing all the information about every project: Each supplier, tradesman and subcontractor, their rates and payment schedule; overall project dates, schedules, and costs; change orders and approval statuses – every last detail. Imagine that this central platform also interrelates all this information, so that by simply entering a change in material cost, the financial consequences of this are extrapolated across the entire project. Now, imagine you can access and interact with this not only at the office, but at the worksite, at home, on vacation – anywhere you need to see an entire project’s scope and the fallout of potential changes.
From Dream to Reality
That is the gist of cloud-based cost management technologies like Autodesk’s Construction Cloud or Procore. It gives you – and the right people inside and outside your organization – a real-time finger on the pulse of your projects’ financial health. You can visualize risk with an accurate view of profitability and control over factors that might influence it. Equipped with this level of data detail, you can make the right decisions every step of the way – regardless of what otherwise disastrous changes or unforeseen circumstances arise. We all know that those choices can spell success or failure, because every little budget overrun cuts directly into profit margins. Having this unprecedented, critical view of the big picture makes all the difference.
If you’re doing it the old way, you’re navigating waters more treacherous than you might realize. For one, you’re wasting untold man hours. But all those separate documents and processes also run the risk of errors in data entry, miscommunication and small mistakes with unpredictably large consequences. You have limited or nonexistent visibility into each project’s real financial health – and therefore a limited understanding of the organization’s overall health and future. What’s more, you’re having to make forecasts with out-of-date and possibly inaccurate information. In short, you’re working harder for less return – and you’re jeopardizing that return in the process!
More to Come
Cost management technology will allow you to do everything we’ve talked about so far with ease, plus a lot more. It will seamlessly shepherd changes through company-defined approval processes and auto-generate custom documents, with an at-a-glance view of potential change orders, type, scope, source, status and costs. It can streamline, track and manage pending and completed payments to suppliers and trades against work to be completed, centralizing cost data in one place, accessible anywhere and anytime by those you choose to have access. It will allow you to customize virtually every detail, from budget column names to reports, codes and hierarchical buildups.
Without the right technology, it’s nearly impossible to adequately manage cash flow in the construction business, resulting in minimal profits. With it, your teams can use a real-time project visualization to control costs, ensuring the project is completed as planned, and expect more predictable cash flow, profitability projections and profit margins.
We truly believe this kind of technology will be a game changer not only for you, but for the way we create the buildings of tomorrow together. To learn more get in touch with your Ceco representative.