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Construction Project Management – Why Transparency Matters

August 8, 2024 Planyard

Not having transparency or proper control over your projects leads to the inevitable outcomes: project costs exceeding the budget, work not matching the planned schedule, inability to act when risks occur, and difficulty managing change of orders.

This all leads to the unwanted outcome of project costs spiraling out of control.

A project usually starts with proper estimating and planning. Since there is a high volume of incoming quote requests and a low probability of winning the project, estimators are under constant pressure to approximate project costs as accurately but in as little time as possible.

These costs are estimated based on existing price sheets, historic cost data, and of course a little gut instinct. This means that costs are often estimated with a great deal of inaccuracy, thereby increasing the need to have better control over the process as a whole.

The structure of the budget is essential

When putting together a project budget, the first step is to agree on the table’s structure.

The question to ask before putting together this structure is, on what level do we want to be able to measure the project performance?

While measuring with too much detail leads to an overburdening of bureaucracy, failure to reach an agreement on the level of detail limits the control we have over the process.

This is where standardized categorizing comes into play.

The first thing to do is agree on the use of the same codes to categorize costs on a company-wide basis.. This allows better control over projects costs, as well as the ability to compare these costs against previous projects. In addition, it allows estimators quick and effective access in order to evaluate the costs of current projects, ultimately leading to more accurate estimates.

The next step is to measure project costs against the estimate, plan, and current costs; the structure of the estimate and the budget should therefore be the same. Costs should also be structured so that when the first phase of work ends – for example,  site preparation work – then the costs should immediately be able to be seen against the plans on the ground level.

Streamlined budget management enables control in real time

Having a well-structured project budget allows good control over budgeting and costs not only while running the project but also when the project ends. This enables people to monitor where and how errors are made, be they during the estimating or as a result of the designer putting together poor materials estimates. This all provides a good overview of what lines of budgeting saved costs and where extra costs are spent and allows immediate action to be taken when a risk of exceeding the budget occurs. In other words, it results in having full control over the project.

With a data-backed approval workflow, each expenditure is sent to be approved with details such as cost codes, estimated costs, contract costs, project goals, and current spending. Managers at ground level will have access to decide whether or not profit was generated.

Don’t underestimate the value of efficient data logistics

With the current volatility of the construction market in a world of quick and constantly evolving information, the need for speedy yet exact access to data is essential. It is common for contracts to be managed in one database, with a budget in Excel and the project costs managed in ERP systems.

The most common problems that companies now face with inefficient data logistics are:

  • The time lag. While management is keeping an eye on project costs in the accounting or ERP system, the data is often available weeks or even over a month from when costs are initially estimated.
  • The same data is manually entered in multiple databases, leading to project managers spending considerable amounts of time (up to 25% of their time)on reporting. Meanwhile, accounting is re-entering the same information the project managers have already processed.
  • The approval workflows via email, or in the worst case, on paper, add additional days or weeks to the process. Moreover, with hundreds or even thousands of cost-related documents being processed in such an ad-hoc manner, the risk of losing a document altogether or making a severe error is relatively high, leading to uncertainty surrounding the project.

The standard for data logistics is that it should allow the use of mobiles, tablets, and laptops that fit a project manager’s daily routine, minimizing manual data entry and enabling the process to be followed in real time.

How to streamline construction project management?

The first requirement is to evaluate the current processes. Do they satisfy your needs? If the answer is no, you may want to answer the question, “Where exactly are our processes broken?” Answering this question usually leads to a much higher clarity regarding project management. Looking at the root of a problem will always lead to the quickest and easiest solution.

Kick-start your process improvement by checking out Planyard – an easy to use project finances management system that project managers actually love to use.  Simply upload your spreadsheet at the beginning of the project to stay in control of its profitability.

Just upload your starting project budget, and follow the financial progress in real-time

No credit card required. No sales or IT support needed.