If you cringe at the thought of how many of your capital projects have gone over budget, you’re certainly not alone.
Conventional cost control methods, long a staple in construction, are inherently limited in their ability to enhance project performance that directly impacts outcomes. They can’t adequately account for rising material and labor costs, determine real-time financial effects of internal and external risk factors, track ongoing expenses or identify developing cost trends and patterns.
No wonder keeping project costs reined in and on track has been elusive.
These challenges are being amplified as construction projects become more complicated, data-dependent and expensive. And those traditional cost control methods aren’t up to the task.
That’s made the business case for adopting more effective and focused cost management even more compelling.
This helps explain a rise in the adoption of sophisticated capital construction management software. And it’s been nothing short of a game-changer. The industry is starting to see a positive shift toward improved outcomes, with more projects meeting their completion deadlines and budget caps.
Advantages of Adopting Sophisticated Capital Construction Management Software
While there are a host of factors that contribute to cost overruns and delays, some are unique to traditional project controls software. Some of these may sound all too familiar:
- Lack of visibility into scope, cost and schedule
- No view into historical cost data that can realistically inform estimates
- Human error and inaccuracies stemming from inefficient, manual-based data entry and workflows
- Inability to effectively track and manage labor, materials and equipment costs and changes
- Reports based on inaccurate, inconsistent data from spreadsheets or multiple disconnected sources
- An absence of trusted, real-time data and insights for informed decisions that are critical for project outcomes
Modern capital construction management software is emerging as an effective antidote to these pain points. From a practical standpoint, what is it about this advanced technology that makes such a positive difference in project performance and outcomes?
Enhances Accuracy in Cost Estimation and Budgeting
Never underestimate an estimate. Because it informs the budget for the entire construction life cycle, its accuracy is critical to avoid risking otherwise preventable cost overruns and delays — and likely legal disputes. And that runs the further risk of affecting business reputation and viability.
Advanced project controls software dramatically minimizes this common risk by incorporating benchmarks and data from prior projects that act as building blocks on which to assemble more precise cost forecasts. Project-specific variables can then be factored in to create a budget that supports the project’s requirements.
As inevitable changes are made during the planning and construction phases, the software can make necessary adjustments using real-time data as it is input. So stakeholders are in a more solid position to make cost-impacting decisions, confident that those decisions are based on the latest data.
Increases Real-time Visibility into Project Performance
With project performance in constant flux, having real-time visibility into project cost data can help you stay on top of the things that are going right and the things that are starting to beg for attention.
Thanks to the cloud technology that supports today’s project controls software, access to that evolving data is opened up to project teams and stakeholders anywhere, as long as they have Wi-Fi connectivity.
And, together with the online dashboard functionality that such software often features, making sense of all that data becomes easier and more focused. Dashboards consolidate the mountains of data into graphical representations (think charts, graphs) that tell the ongoing performance narrative.
This combination of connectivity and dashboard access does a couple of things that support project visibility:
- Labor, materials, equipment and overhead costs can be monitored in real time by those who need to know, which typically are the ones tracking productivity and progress, making resource allocation decisions or managing project risks as they develop.
- It supports collaboration. Having real-time visibility into the same data promotes common understanding of what’s happening with the project and forms the basis for more productive discussions and decisions. There’s no risk of bias, misunderstanding or lack of information getting in the way of collaboratively maintaining or course-correcting project performance.
Delivers Greater Control Over Capital Projects While Mitigating Risk
Risks can be perceived as being hard to control. But that’s likely because you can’t see what’s coming; that makes it impossible to adequately prepare for it.
What would it mean for your projects to have the right information at the right time to prevent those risks from happening or at least alleviate their impact?
It’s impossible to constantly keep one eye on project management and the other on risk management. Your capital construction management software should enable you to select the key performance indicators (KPIs) that track risks for you — for example, cost performance index (CPI) and cost variance (CV).
So, let’s go back to those dashboards mentioned above. By defining the specific metrics that are important for each different project team or group of stakeholders, the right people can view — and receive alerts for — any performance risks based on metric deviations as they’re developing. This early identification (or early warning system, if you prefer) turns what was once a reactive response or damage control into proactive risk mitigation. And with that control comes better adherence to tight project budgets.
Accuracy, access, speed and control are among the hallmarks of a comprehensive, effective project controls software that delivers value faster for your mega projects. If you’d like to learn how we do this for companies like yours, visit Contruent.com.