Construction cost management is often like trying to piece together a sophisticated puzzle. For procurement managers and cost controllers, it is a challenge to make each piece fit perfectly while not going over budget, especially when they have to rely on outdated solutions like spreadsheets. But what if it were possible to achieve total cost control, minimize mistakes, and eliminate data silos? Welcome Archdesk, an all-in-one construction management software designed to make cost control effortless from tender to handover.
In this blog, we'll consider the crucial role cost control plays in the construction world, looking at real-life examples of some of the biggest issues you'll encounter. We'll also talk about how Archdesk can make the process from start to finish easier. By the time we reach our conclusion, you'll understand the importance of optimizing your toolkit to make project management efficient, transparent, and profitable.
The importance of Cost Control in Construction
Cost management remains the quintessence of any successful construction project. With material costs skyrocketing and project timelines changing on a daily basis, the ability to forecast, track and manage all costs becomes the basis for protecting profit margins.
The need for cost controlling is explained as follows:
1. Avoiding Cost Overruns
Unforeseen expenses such as project delays, material shortages, or subcontractor problems all too frequently arise in construction. Left uncontrolled, such surprises can quickly turn into major cost overruns. Good cost controls ensure such deviations are tracked and picked up on in order to be resolved prior to affecting profitability.
2. Guaranteeing Data Transparency
Procurement managers usually have to deal with scattered information from multiple departments. These information silos make it difficult to have an integrated and open view of projects. Clear and transparent cost tracking can nevertheless prevent miscommunications and improve cooperation between teams.
3. Making Decision-Making Easier
Fact-based cost analysis and an organized budget enable the procurement managers to make accurate and timely decisions free from speculative restraints and undue delays.
Ultimately, cost management involves more than just reduction. It entails the careful distribution of resources, timescales and budgeting in order to produce quality work and return the highest profit margins possible.
General Issues Faced in Managing Construction Costs
Although the importance of cost controlling is widely acknowledged, cost controllers themselves frequently struggle with the processes and tools they have available. Typically, they face a set of common challenges:
- Spreadsheets have been a standard in the construction cost tracking world for years; however, Excel is error-prone, cumbersome to scale up, and non-integratable across teams.
- Manual errors: Manual entry involves the possibility of duplicate and incorrect information, and this could result in poor financial management and poor quality of decision-making.
- Lack of Visibility: Procurement managers have no single source of truth because of siloed systems and departments.
- Managing costs with subcontractors involves its own particular challenges but remains a key element of successful cost management. It can lead to disputes and payment delays if done inappropriately.
- Scalability in the midst of complexity: Big construction involves many dependent elements. Non-scalable software usually stumbles when confronted with the rising complexity of modern construction.
Is this something you can relate to? This is where Archdesk comes in to turn the situation around. Replacing clunky disjointed process with an integrated solution helps you realize true cost management results.
Mastering the Art of Managing and Controlling Expenses
To optimize and manage construction project costs properly, you need visibility, precision, and automation. With Archdesk, you have the tools in place to achieve each of those things.
1. Accurate estimation with flexible cost codes.
Archdesk starts by helping you create realistic project budgeting by utilizing adjustable cost codes. This feature helps you create itemized budgeting with rich detail information, improving the accuracy of your planning stage.
Use Archdesk's cost coding system to segment all kinds of expenses, whether for material or equipment, and enable thorough tracking.
2. The Procure-to-Pay Process for Streamlined Procurement
Good procurement management is the foundation for cost efficiency. Using Archdesk's Procurement Module, you can manage orders, develop supplier relationships, and keep procurement costs under control from start to finish.
Advantages
- Visibility into supplier quotes to avoid overpaying.
- Real-time tracking of orders for timely delivery.
- Automated workflows for invoice approvals.
- This end-to-end procure-to-pay process ensures fewer errors so that your procurement aligns with your budget.
3. Track the earned value and costs in real-time.
Understanding project progress can become very difficult in the absence of the earned value measurement. Archdesk provides you with total visibility into the financial health of your project throughout its life cycle. You can quickly spot any deviations by comparing planned expenses with the expenses incurred and make adjustments accordingly.
Example:
Project A is budgeted at $1,000,000. Halfway through your project, your spending is $600,000, but the earned value is only $500,000. With Archdesk, you will be warned in advance, and you can take remedial actions.
4. Minimizing Subcontractor Expenses in Management
Subcontractors are involved in all building projects, but their expenses can be a source of frustration in turn. Archdesk removes the weight of dealing with the subcontractor costs by automating the invoicing and accurate expense matching. This eliminates delays and enables you to have a sharp eye on payment timelines, building strong business relations with your suppliers.
5. Valuations for Client Billing
Accurate valuations are essential for invoicing clients and locking in cash flow. With Archdesk, you can generate valuations instantly, invoicing your clients correctly for work done. This reduces disputes and gets you paid sooner.
6. Comprehensive Reporting for Total Transparency
Archdesk's powerful reporting functionality provides accurate and clear data-driven insights that stakeholders can trust. With in-depth reporting on invoicing, expenses, purchase orders, and more, it gives you real-time insight into every penny spent.
Why choose Archdesk over other solutions?
1. Overall Project Oversight Compared to its competitors, including Procore and Autodesk Construction Cloud, all of them focusing on site-office communication and collaboration, Archdesk encompasses the entire project lifecycle from tender to handover. This all-round coverage ensures your data points stay connected throughout estimations, procurements, cost controls and billings.
2. Reduced Errors and Data Silos All the data in Archdesk are stored in a centralized repository, providing real-time access to all departments. This level of integration helps to avoid data siloing and also minimizes the chances of human errors.
3. Especially geared towards construction firms. Archdesk's specialized features—ranging from costing codes to valuations and subcontractor management—make it uniquely suitable to fulfill the industry-specific requirements.
4. User-Friendly Experience It is intuitive in nature and simple to use on a daily basis yet powerful enough to solve demanding costing challenges. This balance means faster onboarding and sooner payback. Seize control of your building costs today. Managing costs doesn't have to be a daunting task. With Archdesk, you have software giving you total transparency and management over the financial side of your construction project—beginning from the first estimate right up to the end of the project. Are you interested in seeing how Archdesk may be able to transform your approach to controlling costs? Request a free demo and see for yourself.
