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By Doug Madey
March 29, 2017
If your project management solution doesn’t talk to accounting, there is some sweet harmony you are missing out on. The two of them were meant to be together. After all, one handles all the daily details of your projects, while the other supports those efforts and empowers everything you do. If the two aren’t in sync, you’re losing out on some extra bread and butter.
Construction projects are payment-intensive and have many parties waiting for payments at the same time. A large part of the payment process is linked to verifying quantities, labor hours, and percentage of work completed.
If you are cutting checks for work that someone didn’t finish yet, you're entering dangerous territory. The problem is that completed work doesn't always end up neatly in sync with billing. Labor tabulations can trail invoicing, and there are always situations where material quantities are in flux, or affected by returns as vendors bill you for those materials.
The only way to get good control over your accounts payable is to have your project management functions tied to your accounting in real time. The other place this makes a big difference is with change orders. When your PM system is closely tied to your accounting system, you can process changes as quickly as they happen. You don’t have to wait for the next cycle of reporting and then go back and correct change orders people did on-the-fly to prevent delays.
When you don’t link your project management solution with your accounting functions, there’s countless data that has to be keyed in multiple times. And every time someone reenters information there’s an increased probability for mistakes to occur.
There is also a possibility of information duplication. And, entering the same data multiple times wastes manpower and computing time, and exposes the data and information to greater risks of compromise.
The places where you can immediately see increased transparency, greater accuracy, and immediate reductions in cost include payroll, materials purchases, tracking on equipment rentals, and subcontractor time-and-material charges. Over the longer-term, every one of your project management functions will see improvement as data and information remain accurate and up-to-date.
It wasn't that long ago that most construction projects worked from a rear view mirror perspective. Even with weekly reporting cycles, people were often responding to events long after they affected the schedule.
The more you live in reaction mode; the more the project schedule is out of your control. But today, there are tools that can put you in the proactive driver’s seat.
Cloud-based project management software that ties into your accounting software gives you the advantage of real time insight into exactly what's going on. Resources are always in a state of flux, and as you juggle them to match the changing picture of the schedule, having real time access to your accounting allows you to make better, more informed decisions.
You will know when you are approaching the upper limits of your foundation budget well ahead of doing so. Similarly, you will know right where your contingency fund stands when deciding how to handle an unexpected change in site conditions. Having real time access to the latest updated financial information provides not only amazing advantages at the project level, but also greatly improves your competitiveness at the business level.
PM solutions with accounting integrations provide great advantages when it comes to capitalizing on history. For far too long construction companies have missed the opportunities within historical accounting information. That's mainly because, until recently, historical data was unavailable until well after the project was finished, and someone took the time to conduct analysis. But all too often, the next project or projects were underway, and nobody got around to it. The events of the day ruled, and the history wasn't available to inform them.
However, if your PM system is always informing your accounting system, the history is at your fingertips. Want to know how accurate the estimate was on a particular task within an activity? Or, maybe how many hours remain before you need to pull a piece of equipment for maintenance? In these situations and many more, the information is quickly and easily available when your project management solution is effectively talking to your accounting functions.
When your PM solution and accounting are on the same wavelength––communicating with one another in real time––the business is on track to hit higher levels of efficiency and greater profitability.
Cloud-Based Construction Software
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