Construction is a highly competitive industry, and every stakeholder in a project is competing for their piece of the pie. That’s why contractors often are more interested in completing costly short-term tasks than in achieving the ultimate goal of the project. This is partly why the construction industry is characterized by low teamwork. And then construction software developers come on a stage capable of solving business problems.
Another challenge in the construction industry is the difficulty in estimating and controlling finances. Therefore, companies often go beyond the planned budget and complete the project much later. The Intelvision developers can develop a custom solution that will help automate financial management and improve overall team productivity.
Construction Sector in 2022: Distinctive Features
The beginning of the 21st century is characterized by the vigorous development of all types of construction in many developing countries of the world, which makes it possible to implement large-scale investment and construction projects in the areas of public, commercial, and housing construction, as well as in the development of infrastructure.
Projects of this kind are characterized by several common features, such as:
- large-scale development of new and problematic territories;
- innovative nature of projects, application of the most advanced technologies;
- the high social significance of the objects being created.
The Main Problems Construction Companies Often Face
We’ve divided them into several categories.
Among the problems that arise before the project’s implementation, one can single out the lack of BIM technology or its incomplete use. It is believed that building information modeling (BIM) saves time in the implementation of a construction project. But it is possible only if the technology is used correctly.
In general, at the beginning stage, a very typical situation is when designers work under tight deadlines. Due to the lack of a common data environment, information between project participants is not transferred quickly enough. And the calculation of the volume of work is often done manually. All this leads to errors.
Project implementation stage
This stage is characterized by an increase in construction time and budget due to errors in the documentation. Plus, financial inconsistencies and risks are common practices in the construction industry. Controlling costs throughout the project lifecycle, including order tracking and supplier contract management, is a time-consuming task. Risks are heightened by outdated or missing information, delayed response times, and convoluted processes involving multiple vendors, systems, and products. The lack of accurate data on the financial condition of the project makes it difficult to make effective decisions.
Problems with completing tasks and monitoring performers
Approval of work is delayed due to the way of control: first, the subcontractor informs about the completion of work, then the general contractor checks everything. All communications take place by mail or through paper documentation which also takes time.
Moreover, when there are many contractors, working with them becomes chaotic. It is necessary to monitor the quality and timing of the work of each performer. Managers attempt to control work through mail, or verbal communication. This is time-consuming and entails errors or disagreements.
Big data and custom software solutions can systematize incoming information, and predict cost in construction. And vice versa: large construction companies that won’t use BIM and automation tools shortly risk leaving the market during the next crisis.
Why Cost Management is One of the Key Challenges in Construction
Project cost management is a stage of project management that integrates the processes of planning, forming, controlling, and executing the approved project budget. Construction cost management helps to avoid cost overruns by providing guidelines for estimates and forecasts of labor, material, and overhead costs. The purpose of a cost control plan is to help ensure the project is delivered on time, within scope, and on budget.
The cost of the final object often tends to increase over time in the construction industry. Force majeure, missed deadlines, lack of necessary materials or an increase in the cost of resources—each of these factors requires special attention and miscalculation at the planning stage. However, not every contractor copes with such situations within the allocated funds.
How to Automate Cost Management in Construction
To simplify project planning and cost management, companies need to start specialized software implementations. Paper documentation and Excel tables have been replaced by accounting automation systems. Medium and large-sized companies are switching to ERP systems. By leveraging these solutions with CRM systems, you can:
- track the status of work, the movement of goods and money;
- keep records of finances, labor resources, tangible and intangible assets;
- store this data in a single accounting database.
Using construction management software with data management capabilities helps with updating everyone on the job site on any changes to the scope of the project. And these happen frequently. It also helps connect back-office staff with workers on the job site to ensure an active line of communication across everyone involved in the project.
How Custom Construction Cost Management Solution May Help to Manage Cost
Finance is not difficult. There are basics that you need to know, and techniques that you need to master. There is an accounting that needs to be done, and a budget that needs to be drawn up and maintained. And after that, given the financial situation, you can make important business decisions.
Financial management allows the company to realize its long-term goal. This means that the company is developing according to the chosen strategy, and realizing its limitations. An entrepreneur who understands what is going on in his finances gets more reason to make the right decision. Last but not least, using cost control procedures is vital to ensure a project is delivered on time, within scope, and on budget.