5 signs you need help with cost control... and how you can fix it

If you're a specialist subcontractor, it's important to be aware of the signs that you need help with cost control. Without proper cost control, you could end up bidding on jobs you can't afford and losing money on construction projects.

A whopping 73% of construction contractors cannot ‘push one button’ to obtain fully integrated, real-time project cost data. So, it's no surprise that many subcontractors struggle with cost management, controlling costs and delivering profitable projects.

Understanding and controlling project costs is a business-wide, daily challenge for the average specialist subcontractor.

Top 5 signs cost control is an issue

Here are 5 common signs that indicate a specialist subcontractor is struggling with controlling construction costs.

  1. Project cost information is fragmented and difficult to share
  2. Cost information is inaccurate or incomplete
  3. You rely on multiple, disconnected, error-prone spreadsheets
  4. Manual procurement processes slow everything down
  5. You can’t see how price increases impact on your project commercials

Let's explore how these points are putting your projects and business at risk.

1. Project cost information is fragmented

The average subcontractor uses 6+ systems to manage project financials. And, nearly 60% of construction firms still use outdated methods (paper, email, or spreadsheets) for over half of their business processes.

  • Project data exists in spreadsheets, emails, folders and different software.
  • Data is siloed so you can’t see project information in real-time.
  • It’s hard to share the latest project data across your team.
  • Expensive employees re-enter data into multiple systems regularly.
  • You pull data from several sources to prepare cost reports, which is time consuming.
  • You can't always trust your project cost reports, as there is no one source of truth.
  • You’re paying for multiple systems, which costs a lot.
  • Everyone is responsible for cost management, which means no one is.

2. Cost information is inaccurate or incomplete

Many specialist subcontractors find it difficult to forecast total cost and total revenue accurately. This makes it hard to make informed decisions at the right time.

Challenges of cost reporting in construction

  • Generating critical monthly cost reports is time-consuming and tedious.
  • Data is held in multiple spreadsheets, resulting in lots of rekeying.
  • Reports rely on key accounting data that lags behind, so they're not up to date.
  • You’re not sure if you’re making or losing money on jobs until they're completed.
  • You make critical project and business decisions based on gut feel, rather than hard fact.
  • You experience cost overruns but aren't clear why.
  • You can't easily review actual costs versus budgeted costs.
  • Reducing costs is hugely important but you can't easily see where you can achieve this.

3. You rely on multiple, error-prone spreadsheets

A colossal 88% of spreadsheets contain significant errors. Spreadsheets might not be as great as you think.

  • Complex and hidden formulae make it difficult to spot mistakes.
  • They don’t integrate well, so it's hard to share critical data in real-time.
  • Version control is tough, as spreadsheets often sit on servers and hard drives.
  • They’re often written by individuals with no quality control.
  • Copying information from one spreadsheet to another often results in errors.

4. Manual procurement processes are slow

Very few specialist subcontractors use a single procurement system to place supplier orders and log deliveries. This hits all parts of the procurement process.

  • Orders are manual and antiquated.
  • It's difficult to see what’s been ordered.
  • Identifying cheaper suppliers to lower costs is a challenge.
  • Over ordering is common as a failsafe.
  • Reconciling invoices can be tedious.
  • Supplier invoices are often paid on trust.

5. You can't see the impact of price increases on project commercials

It's hard enough to make your real-life actual cost mirror your original cost estimate. If you're unable to factor in price increases mid-way through a project, it could jeopardize your projects’ profitability.

Your fix: A construction-specific cost control system

If you recognize any of these signs in your own business, consider a construction-specific integrated cost management solution. It:

  • Centralises project information, removing the need for data duplication.
  • Standardises documentation & processes.
  • Provides integrated, real-time cost reports.
  • Gives you total visibility and control over your commercials.
  • Empowers you to make informed decisions.