In today’s hyper-competitive construction market, it’s a great accomplishment to win a bid or get awarded a contract. But it’s also a double-edged sword.
Being the contractor that comes out on top means also being the one to take responsibility for the work. It must be completed on schedule, within budget, and according to strict standards for quality and consistency. Falling short on any front could put a contractor in hot water with a client. Even worse, potentially, developing a reputation for projects that go sideways can haunt a contractor for years to come. Successful companies don’t just win work – they execute it exactly as contracted to.
Which involves many moving parts, each moving in sync. However, one thing keeps those parts moving: the project budget. It’s the most important part of any construction project to get right. Unfortunately, it’s also one of the hardest.
Two Main Obstacles to Effective Project Budgeting
Typically, an estimating team will hand over the detailed final estimate to the project team performing the work. That team will then turn the estimate into an actual budget with as much detail as possible. Accurate project budgets have many benefits:
- Establishing a baseline for a frame of reference
- Forecasting the estimated project cost at completion
- Managing risk and real-time decision-making
- Reviewing uncommitted costs for potential overruns or savings
- Tracking allowances and contingencies
- Creating a cost-loaded schedule
- Building historical data for use when bidding or proposing on similar work in the future
Things can go awry at either end of the equation. Discrepancies between the estimating and project teams can result in budgets being built on inaccurate or incomplete information. Once those budgets are put in action, discrepancies between the systems used for budgeting and project accounting can waste resources on extra administration and result in risky financial decisions based on erroneous information.
Building and following a budget is one of the most essential steps construction companies can take – but the discrepancies between the systems and stakeholders involved make every budget a burden. This used to be a burden that construction companies had to bear. But not any more.
Sage Intacct for Seamless Construction Accounting
As the obstacles outlined above make clear, the biggest hurdles to effective budgeting result from having siloed data that needs to move from one system to another – first from estimating to projects, and then from projects to accounting. That makes the solution fairly obvious: integrate the data silos.
Sage Intacct is a full-service accounting suite that lives in the cloud and provides a platform for the most important data and responsibilities that construction companies handle. That includes creating projects, writing commitments, and tracking actual costs. By integrating all these activities (plus many more) onto the same platform, Sage Intacct clears away the obstacles that make project budgeting difficult.
More than just another accounting solution, Sage Intacct has a Construction module with a toolkit purpose-built for this industry. That’s apparent from how Sage Intacct handles project budgeting. The system tracks a real-time comparison of buy-out and actual costs compared to the budget throughout the project life-cycle. When projects change, budgets change. And when construction managers need to explore risks and manage costs, they can store as many versions of the budget as required. Versions can be built manually in Sage Intacct or imported by an API from some of the most widely-used estimating solutions on the market (e.g. ProEst).
With budgeting as with all aspects of construction accounting, Sage Intacct unleashes visibility, coordination, control, and accuracy that has been difficult to achieve before. It’s time to expect a higher standard. And in today’s hyper-competitive construction market, it’s imperative to achieve it as well.
Explore all that Sage Intacct Construction can do, from budgeting projects to boosting profits. Schedule a time to speak with a Construction Technology professional at RSM.