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Effective Construction Project Cost Reporting
As construction has become more complex and demanding, the importance of timely and accurate information has increased. 20 years ago, contractors had to be convinced of the benefit of job cost reports. The investment was substantial and the value was unclear. Many contractors trusted their "gut feel". It was a simpler time and the approach worked.
Now, any sizable contractor would be foolish to not utilize a cost report methodology.
Still in this century, the standard job cost reports in several software packages lack the practical approach to construction. It is surprising that we have to further customize our reports to make them effective predictors of job cost of a construction project.
Not naming software names, quite a few were created to serve more than the construction industry. We, by our nature, haven't deserved a dedicated approach by a software developer. We are too fragmented and each fragment does not have enough buying power to justify a sole approach. The two most common markets that these companies target are real estate and engineering. These businesses bear scant resemblance to a contractor's enterprise.
What 2 areas are the biggest risks for cost overrun?
1) Labor
2) Time (which translates into general conditions cost)
If you are a general contractor or a specialty contractor, either (or both) of these have been a culprit in 90% of the projects that have broken the budget.
How do we predict this earlier in the cycle? In our opinion, that is why some software packages' reports have to be rewritten.
The complete article is contained in our new book published by McGraw Hill, Managing a Construction Firm on Just 24 Hours a Day (406 pages).
This and other management information are part of our 400+ page book published by McGraw-Hill Inc. "Managing a Construction Firm on Just 24 Hours a Day". It includes 170 best Practices Used in Construction Contracting with over 100 illustrations and examples. We include a CD of 60 Excel Templates when you buy the book from our website. We also include our library of forms and 10 online courses.
See our secure Miva / EarthLink bookstore: http://stevensci.com/Merchant2/merchant.mvc?Screen=CTGY&Store_Code=SCII&Category_Code=BCF24
Go to any major bookstore for a copy or see our website above.
Take our Free Sample E-learning course for construction. Go to constructioncbt.com
Matt Stevens is a management advisor who works only with construction contractors. He has performed training and business consultation for the contracting community since 1994. Matt can be reached at mstevens@stevensci.com.">mstevens@stevensci.com.
search terms: Pre-construction, post-mortem, lessons learned, Construction Cost Codes, Cost Coding, Financial Management, Construction Costing, Cost Reports, project start-up, post mortem
Posted by Matt Stevens at July 1, 2008 11:47 AM
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Comments
Effective Project Cost Report
Posted by: Richard F. Reznicek at July 11, 2005 10:23 AM