Download eBookWill your next project strike gold? Learn how to predict profitable construction profits.
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Thankfully though, this dynamic in construction is changing. Through modern technologies and more strategic project management best practices contractors are slowly moving to managing their projects like assembly lines -- even if the end product is still vastly different. This can help create more solid financial baselines and ultimately, influence your bottom line. Here are five best practices that can help:
1. Create Change Orders Right Away
Project managers are busy people — we get that. More often than not, it becomes difficult to remember to generate a change order as soon as it happens. When a change order is forgotten about due to notes being misplaced or using other manual, disconnect processes, money is left on the table. Remember to document and enter changes as soon as requested. The best way to do this is by utilizing connected, cloud-based construction management software that can capture the request in real time from anywhere at any time — even while out in the field through a mobile device.
2. Budget for “Red Flags”
From snow to scheduling conflicts, construction project roadblocks cost time and money. Typically, the project scope needs to navigate in a different direction, but so does your budget. Make sure to account for budget versus actual spend when roadblocks occur. This impacts WIP which impacts revenue recognition that increases or decreases (you guessed it) your bottom line.
3. Utilize the Estimated Cost Theory for Every Change
Since we all know we don’t live a perfect world, we know that changes will happen. One way to calculate these costs ahead of time is by utilizing the Estimated Cost Theory. Take the projected costs for the end of the job or phase. Add or subtract changes from the original estimate based on the change. This will give you the ability to better estimate the outcome of the job or phase and make changes ahead of time that can influence your profitability.
4. Let the Experienced Teach the Newbies
An experienced project manager may be able to make more accurate estimates and forecast better compared to a new project manager. However, that doesn’t mean that the new PM can’t bring new and fresh ideas to the table, but a more experienced project manager typically has more forecasting experience. This knowledge can be shared with the new PM by walking around the jobsite and explaining how they come up with cost estimates.
5. Make Life Easier By Using Connected Construction Software
Paper gets lost, it’s hard to communicate and input change orders on the spot if needed. And while standalone software programs may be great at handling specific needs, if they’re not connected through shared data throughout the entire organization, your workflows will still suffer. A great way to make sure monitoring actual spend and getting change orders signed is by having a connected software suite that can capture these items in real time. This alleviates having to keep track of paper. Considering that a baseline is hard to create for our unique industry, modern construction software captures every project and project phase and connects the back office to the field showing ahead of time how your bottom line will be influenced.
Watch How Easy Better PM Projections Can Be:
Viewpoint’s recent Take 15 webinar, “Impacting the Bottom Line with Monthly Project Management Projections,” shows you how Viewpoint’s Spectrum construction software can predict your bottom line before it’s too late by displaying project variance in real time. Beyond simply capturing work, advanced data tools and workflows are used in order to communicate effectively with the back office and the field — reducing delays and improving profitability. Learn more about how to effectively manage projections by watching the video below:
To learn more about construction project profitability, please download our eBook "Is Your Project a Gold Mine or a Money Pit”
Want to know more about connecting your team with modern construction software? Please contact us. We’ll show you how software can be tailored to fit your unique project management needs.