Help Minimize and Manage Risk
Successful and influential leaders are risk-takers. However, they measure and calculate risk based on many factors, including perceived and projected return on investment of time and resources toward executing on that risk. So managing and mitigating risk wherever possible across an organization and its operating processes are critical to best profitability.
In the construction industry, where profit margins are tight with little to no room to accommodate errors and oversights in managing financials and projects, business owners are leveraging technology to effectively manage content, build auditable records, capture every detail of communication and approvals, track compliance, and more.
What may be especially challenging for contractors is that there are so many moving parts and different stages across the project lifecycle—from takeoff to estimate, to bid day and negotiations, to tracking win/loss, to managing won jobs, and controlling the financials associated with every project, through to final payments and close out of job.
Maintaining accurate data across each phase of every project is vital to the growth and success of a construction business. Contractors can be better informed and more proactive in decision-making by implementing software that can streamline processes for data collection and analysis. Software that allows for real-time data and deep visibility of project performance and profitability helps contractors reduce risk and uncover opportunities for profit.
MULTIPLE SYSTEMS, MULTIPLY PROBLEMS
Selecting the right-fit software requires thoughtful consideration of business needs, processes, goals, resources, constituents, and more. The software solution chosen should allow users to enter data once and have that data carried seamlessly through every phase of a project. This integrated method prevents problems associated with using numerous systems that are disconnected and fail to communicate. The systems that demand multiple points of data entry and redundant processes increase a business’ chance for error and inaccuracy, and thus increase risks involving budgets, schedules, compliance, profitability, and more.
To enhance timely collaboration and accuracy of information exchanged, it’s essential that all team members share the same data and that project documents be efficiently created, tracked, organized, routed, and managed. Advancements in mobile technology empower contractors with tools that connect the office and field teams by enabling everyone to access the same, timely information about projects, performance, financials, and more. Decision-making can be on-the-fly and within the process for best possible workflow and profit.
CONTROLLING COSTS AND COLLABORATION
To reduce risk and execute a project for best profit, contractors must know true job costs, track and measure accurately and in real-time, and maintain historical details of all exchanges and decisions. There is no efficient and effective way to properly do that without using contemporary software that brings all applications together in an easy-to-use, integrated solution.
For example, when accounts payable information is electronically linked with purchase orders and subcontractor data, then contractors can better handle retention obligations, invoice approvals, lien waivers, and disputed invoices. On the accounts receivable side, it’s extremely valuable to leverage software that can easily handle the special requirements for construction billing, obtain the information needed by managers to minimize questions and disputes, monitor Accounts Receivable, and pursue timely collections.
Payroll compliance is another area that can cause costly problems for contractors lacking efficient methods to communicate and manage content. For instance, contractors who do not track required workers’ compensation information can experience higher insurance premiums. With electronic payroll processing, true labor costs to the job (including the cost of burden) keeps contractors on track with their budgets and eases the estimating process for future jobs. Further, construction software can allow users to record work and calculate earnings, benefits, fringes, insurance liabilities, and taxes, which helps to manage the complexities of payroll and mitigate risk.
Another area where risk and profitability intersect lies in a contractor’s ability to show its capacity to be bonded and financially responsible, or they will not be awarded the jobs necessary for survival and growth. This is especially valid in an economy where banks and bonding companies are less forthcoming with bonds and lines of credit and require special reports of ongoing projects. Contemporary and complete construction management software automates reporting, including Work in Progress (WIP) and Bonding, and maintains tight audit trails and historical detail.
And of course there is nary a construction business owner operating today that doesn’t have a love-hate relationship with change orders. By using software to create and track change orders and other documents helps businesses drive timely approvals, capitalize on opportunities, and save money on potentially costly mistakes.
End-to-end software allows proper collaboration to produce audit-ready records that can be used for documented compliance and regulatory purposes. Not only does this method provide a single, centralized source of accurate information used by all team members, but it also allows correct handoffs between parties and optimal revision control. Ultimately, this bolsters accountability and confidence in the process.
PEACE OF MIND AND PROFITABILITY
There are numerous common risks for any construction company, ranging from worker safety and labor relations to price inflation of materials, project delays, and third-party liability. Savvy contractors realize it’s critical to have a view into overall business performance, and rely on contemporary software to gain strict control of financial obligations and achieve the data integrity needed for complete peace of mind.
By leveraging comprehensive construction software, contractors can streamline processes, increase visibility, ensure compliance with government and industry regulations, empower managers with reporting and audit trails for quick and informed decisions, and, ultimately, truly understand the potential risks and how to minimize and mitigate them.
■ ■ ■
[divider]
About The Author Rob Humphreys is vice president of product management for Viewpoint Construction Software. For more information, visit www.viewpoint.com.
Modern Contractor Solutions, June 2014
Did you enjoy this article?
Subscribe to the FREE Digital Edition of Modern Contractor Solutions Magazine!
