7 Ways Construction Companies Can Make Cost Tracking Easier
Tracking costs for your construction company can be difficult. Vendrix shares 7 Ways using which construction companies can make cost tracking easier.
Including A Cost Tracking Excel Template to Get Started!
As you may know all too well, tracking costs for your construction company can be tough.
You have multiple people spending money on various project costs with many different companies.
Last-minute changes to project scope, weather delays, and costs of materials can all have an impact on how you’re spending valuable dollars.
Clients may need to know exactly where your company stands with spending against a particular category, as well as total job costs. You don’t always have control over when they might ask and what they might ask for.
Knowing, in detail, what you’re spending is critically important to any construction project. Cost savings can free up valuable dollars that you can use to grow your business. Being able to accurately project cash flow is also critical. If you’re looking for a cost tracking template, we’ve designed this spreadsheet specifically for construction costs.
So, How Do You Minimize Cost Tracking Headaches?
Accurate planning and budgeting is the first step toward cost control.
Break the project into parts and use past experience and current pricing as your guides in creating an accurate spending forecast. The tighter your estimates, the less likely you’ll be hit with surprises and cost overruns.
Break the project down into manageable categories and timelines.
Not only will that make accounting easier, but the chance of errors will shrink because you’re dealing with smaller data sets rather than an overwhelming spreadsheet (or, worse yet, manual planning and tracking.
Stay on top of (and document) any changes to the project and the cost implications that result.
You need a reliable system for this. You need to be able to see -- at any time -- variances between your original estimates (#1) and what you’ve actually spent at any point in time.
Know your staff time costs, in detail.
This is often the thorn in the side for many construction company owners and finance managers. Taking too long to complete a task or having the wrong talent on a project can mean lost time.
And that means lost revenue. As you’re reviewing your team, factor in speed and efficiency, as well as “typical” factors like leadership, team collaboration, and skill set.
Build your sourcing and negotiating skills.
Do you really know what materials cost? Are you negotiating as hard as you can? Looking for new sources?The cost of materials, like the cost of people, is often changing.
Especially recently, certain products may be hard-to-get and you may be at the mercy of suppliers in terms of inventory and delivery time. Be sure to factor any contingencies into your project budgets and shop around for better deals.
Automate, automate, automate.
This may be the most important headache-reliever on the list. Although the thought of moving to a new cost management system may seem a bit daunting to you, having a cloud-based forecasting and tracking system will ultimately give you more control, faster.
It can save you thousands of dollars each year in cost overruns. You can get accurate information about project costs at any time, from anywhere.
Combine software with human intelligence.
Having the right system for construction cost tracking is critical, but equally important is using that data for decision-making and process-improvement. We all know that labor, materials, and overhead are the three major cost categories that can make or break a project budget.
When you can find the data you need all in one place you can make faster and more accurate decisions. Knowing at the end of a project exactly where you over-spent or saved money enables you to plan more accurately for your next job. (See #1.)
What Should You Look for in a Cost Tracking System?
First and foremost, you should choose a system that was designed specifically with the construction industry in mind. Generic expense management systems may not take into account the special needs of construction projects.
You want a system that’s cloud-based. In other words, your data can be accessed from any device, any time, anywhere. That enables you to make faster decisions and change direction as needed. Not acting quickly enough on a cost overrun or project change can ultimately drive costs up.
Simplicity is paramount. Your job and life are busy enough without your having to learn a complex system. Plus, it should integrate with your current systems.
Corporate cards and the right management software behind them are the best way to manage spending and tracking 24/7/365. Although the thought of giving 15 or more employees the ability to spend independently may give you pause, cards actually give you more control over spending.
You can set limits based on each person’s role and tenure, spot variances immediately, and even reap rewards for spending. For example, fuel rewards can provide a huge financial boost for your business, especially in light of today’s gas prices.
The money you get back can be invested in business growth, employee recognition, or simply that much-needed vacation. Here are some of the many ways corporate cards can ultimately help you control expenses, improve tracking, and result in a sense of employee empowerment (which may, in the long run, lead to job satisfaction and retention).
You can know, at any point in time, what’s being spent- by category, by person, and by day. Any issues can be spotted immediately and remedied.
How Better Cost Tracking Can Ultimately Grow Your Business
Staying on top of your expenses means that you build credibility with your clients and your team. When you spend less time on cost accounting, you can focus on ways to build your company.
Follow the 7 steps on every project and choose an automated system that makes reporting simple, fast, and accurate. The system should be reliable, easy to learn and use, and integrated with other automation tools that you’re currently using or plan to use.
Vendrix is a robust solution that is at the same time extremely simple and easy-to-use. Vendrix is the only integrated expense management solution built specifically for the construction industry, construction companies, and contractors.
Talk to an expert in construction expense management today to eliminate the headache of cost tracking.