Accounting Systems by their nature concentrate on providing information about events that have already happened. They provide a numerical picture of the status of an organization at a point in time: the month end balance sheet. They provide a high level numerical picture of what has changed over the last month: the Profit and Loss Statement. They provide costs against budget on a periodic basis, sometimes 30 to 45 days after the fact. This information is important, but it doesn’t really help management know how they are doing on a day to day, project by project basis, when important decisions need to be made. Accounting Systems simply aren’t the proper tool to accomplish these needs. But when combined with Construction Scheduling Software, management has the information they need to make good business decisions.
To manage for profits, management needs information from the field on all projects daily. The field information needs to be available in a timely manner—preferably at the end of the construction day for which the information is for. This information needs to include who was at the site, what was accomplished, what slowed planned progress, what problems occurred, if there were any safety issues, code or inspection issue, and were the problems resolved or not. This information needs to be compared with the Construction Scheduling Software schedule and present variances to management in order of their impact on profitability.
Technology exists for this information to be collected daily from the field using wired or wireless laptop or tablet PCs, or PDA phones. Usually the necessary information can be entered into these devices in less than 15 minutes a day by an assistant project manager or site supervisor. When completed, this information should be electronically transmitted to a central computer where it can be compared with the plan or schedule. Variances can then be developed and sent to alert management each morning:
1. Any critical path activity that did not start before its late start date. These activities will cause the project end date to be missed unless additional labor is employed to bring the project back on track.
2. Any document that hasn’t received approval and is required for a critical path activity to start. The issues with this document need to be resolved quickly or they may lead to the creation of condition 1.
3. Any activity that is running significantly behind schedule and may lead to additional costs to complete.
These are a few of many types of information that can be developed to help management see into the future and make improved decisions with more current information.
Cost accounting is a useful tool to look at the past and learn from history.
A far more useful profit management tool, however, is to collect actual construction site activity daily and present it to management in an easy to understand and decision impelling manner. Getting done ahead of schedule and under budget is possible if management receives the right information from the Construction Scheduling Software early enough to take the correct actions in time.
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