How Improved Project Management Leads to Real Cost Savings

Article written by Alan Littman for Construction Executive

While the construction industry is slowly adopting technology in its daily operations, many firms are still supported by disparate, non-integrated systems that often require the use of manual forms or spreadsheets to capture and document work performed.

This leads to, among other things, serious deficiencies in the ability to communicate necessary information in a timely manner, users having to access multiple systems to perform and document their work and no opportunity to manage work efficiently “in the moment,” which can have significant consequences—especially in the area of safety.

If that isn’t bad enough, it also dramatically impacts profitability in the form of inaccurate costs estimates that lead to major cost overruns and can introduce significant risk into operations.

However, most organization are unaware of the considerable cost of this condition. Often, the inertia of doing things the same way they’ve been done in the past wins out over doing things the better, more efficient way. As the saying goes: if it's not broken, why fix it?

The lack of concrete data around process improvement may be part of the reason the construction industry lags behind other industry sectors when it comes to technology adoption. That’s why it’s vital to quantify and qualify the cost of doing business today and the opportunity to do business better tomorrow.

A team set out to observe and interview firms in the engineering and construction sectors across the country. Those discussions identified the following top six sources of inefficiency and revenue loss.

  • Duplicate data entry;
  • Missing project and contact information;
  • Manual sample and test tracking;
  • Ad hoc scheduling requests;
  • Untimely or missing notifications to technicians in the field; and
  • Unplanned project and scope changes.

Most construction organizations have in place the requisite business systems to drive core functions. These consist of finance (governing work breakdown structure, units and hours), human resources and payroll (governing employee information and labor and time), project management (governing project information) and CRM (governing budgets, account and contact details). Information from all of these systems is used and synthesized in construction operations, which is then used to produce various forms of reporting, including safety.

But, along the way, there are critical activities where friction arises that are caused by inefficiencies of disparate systems. This manifests itself in struggles between information access/usage and personnel needing to leverage data to add value to and advance work operations. This results in a loss of time and money and adds risk to the construction equation.

These activities are commonplace in every construction job: project set up, scheduling, field and lab activities, quality assurance and quality control, and client delivery. Just how much time and money is wasted in these activities? The cost of these inefficiencies was computed by the team using a more than 1,000-employee firm as a case subject.

  • A common practice in scheduling is managing forecasting in Microsoft Excel spreadsheets. This tabulated to pilfer 4,000 to 8,000 hours annually, at the cost of $140,000 to $280,000.
  • Often field staff grapple with duplicate data entry and missing project information. The cost of these sins is 134,000 to 291,000 hours annually at the price tag of $3.36 million to $7.28 million.
  • Lab operations can become extra laborious when notifications of test results are waylaid or go missing. Estimates peg the labor drain of 30,000 to 55,000 hours annually, with a price tag of $1.19 million to 2.19 million.
  • Project management activities in the field are often derailed due to a lack of detailed exception information and an over-reliance on email communications. The tally for that 44,000 to 67,000 hours per year, amounting to $2.19 million to $3.34 million in extra costs.
  • Project administrators routinely run into issues with manual document and report compilation and missing contact info. As a result, 13,000 to 17,000 extra hours are poured into these efforts each year, costing $390,000 to $560,000.
  • The biggest billing inefficiencies were triggered by an inability to understand percentage of project completion and impact of change orders. These issues slow invoice turnaround time and expend an extra 20,000 to 32,000 man hours at the cost of $710,000 to $1.13 million.

When the staggering costs of all these inefficiencies are added up, they are hard to ignore, and help make the case for integrated project workflow that streamlines information access, reduces risk and the cost of doing business.


Highly Collaborative and Intuitive Cloud-Based Construction Solutions

Increase accountability, efficiency and profitability with a suite of construction management tools designed to build a better bottom line – and a better project. Learn more about our solutions, including Spectrum, Vista, Kahua, Phoenix Project Manager, and P6.

 
 
 

Scott Builders

With projects scattered across western Canada, Scott couldn’t afford the errors and delays that came with inconsistent data from a hodgepodge of disconnected systems. They needed one source of truth for all of their projects to get their office staff and field personnel on the same page. Spectrum fit the bill perfectly.

Download the case study

 
shadow