Rising material costs, a surge in construction projects across the country and potential supply chain issues make successfully managing construction project costs while maintaining regulatory compliance challenging without a robust enterprise resource planning (ERP) system. Firms that utilized construction project management software or a construction ERP system were able to increase on-time deliveries by up to 24%, an Aberdeen Group study found.
When construction costs and compliance are not appropriately managed, several negative consequences can occur, such as:
- Budget Exceedance
- Profit Erosion
- Extended Timelines
- Reduced Quality
- Payment Delays
- Client Dissatisfaction
- Penalties
Using an ERP accounting software platform like Sage Intacct Construction, offers several features that help manage projects effectively, including real-time cost tracking, job coding, forecasting, improved payroll management, financial integration and more.
Using an ERP System for Real-Time Cost Tracking
Few people like surprises, especially surprises that might lead to negative consequences, such as going over budget on a project. Sage Intacct Construction can provide regular cost monitoring, helping to avoid unexpected costs and delays.
Real-time cost tracking is crucial for construction projects because it helps avoid surprises. By continuously monitoring expenses, project managers can quickly identify and address potential issues related to overruns, providing immediate budget awareness.
Additionally, real-time cost tracking enables better decisions and helps ensure spending aligns with project goals. Better visibility into costs helps identify cost-saving opportunities. For instance, early detection of overspending on a project allows management to take corrective actions to reduce overall costs.
Using Sage Intacct Construction To Combat Job Coding Challenges
Job coding during construction projects is often complex but can be manageable with the right ERP system and practices. Several challenges can occur when job coding, including inconsistent code application, lack of user-friendly systems, inadequate cost code detail and data entry errors.
Sage Intacct Construction offers robust job coding features that significantly enhance project cost management, including:
- Granular Expense Monitoring: Sage Intacct Construction allows for precise tracking of costs by breaking down expenses into specific categories. This helps with understanding where every dollar is spent.
- Budget Adherence: By continuously comparing actual expenses against budgeted amounts, Sage Intacct Construction helps keep projects financially on track. This reduces the risks of cost overruns and helps to maintain profitability.
- Data-Driven Estimates: Historical data from job codes can be used to improve the accuracy of future project estimates.
- Automated Workflows: Automation reduces manual data entry and helps avoid invoice approvals, purchase orders and expense report errors.
- Real-Time Financial Insights: Proper job coding gives project managers immediate access to critical data, including real-time financial reporting and analytics.
ERP Accounting Forecasting
ERP accounting forecasting is the process of predicting future financial outcomes using ERP systems. These systems integrate various processes and data, enabling organizations to make informed decisions based on comprehensive and accurate forecasts.
Forecasting is essential when managing labor costs as the process provides accurate predictions of staffing needs based on historical data, market trends and projected demand. Effective labor forecasting helps businesses avoid overstaffing — which can lead to unnecessary expenses — and understaffing.
By optimizing scheduling and resource allocation, forecasting helps keep labor costs in check while maintaining operational efficiency. Additionally, it allows for better planning and budgeting, reducing the likelihood of unexpected labor-related expenses.
Better Payroll Management With ERP Tools
Spending less time on payroll processing allows businesses to allocate more resources and attention to strategic activities that directly impact project profitability. ERP tools significantly enhance payroll management by streamlining processes and improving accuracy. Key benefits of using Sage Intacct Construction for payroll management include:
- Automation: The software can automate payroll calculations, tax deductions and benefits management, reducing manual errors and saving time.
- Compliance: Sage Intacct Construction helps comply with prevailing wage laws, union agreements and certified payroll requirements through automated tracking.
- Customizable Reports: The platform offers customizable reports that provide real-time insights into workforce expenses.
These features help construction firms manage complex payroll needs more effectively, enhancing accuracy and compliance while reducing administrative burdens.
Using Sage Intacct Construction To Manage Rate Tables
With Sage Intacct Construction, organizations can streamline the setup and maintenance of rate tables for unions and localities using import templates, eliminating the tedious process of manually updating rate tables.
Rate tables in the construction industry are tools used to standardize and manage the costs associated with various tasks, labor and materials. These tables provide detailed pricing information for different types of work, helping contractors estimate project costs accurately.
Rate tables typically include hourly labor rates, material costs, equipment rental fees and subcontractor charges. By using rate tables, construction companies can ensure consistency in their bids, improve budgeting accuracy and enhance overall project management. Streamlined rate table maintenance also facilitates transparent communication with clients and stakeholders regarding cost expectations.
Example of Successfully Using Sage Intacct Construction
Scenario: You are the chief financial officer (CFO) of a company that has just been awarded a contract to build a new retail store for a major client. You decide to leverage Sage Intacct Construction for this project. Here are the typical steps to take:
Step 1
Your project manager begins setting up the project in Sage Intacct Construction. All relevant details are entered into the system, including the project scope, budget, timeline and key milestones. The system’s multi-entity management feature allows the project manager to consolidate financial data across different departments, ensuring everyone is on the same page.
Step 2
Using Sage Intacct Construction’s advanced budgeting tools, the project manager creates a detailed budget that includes labor, materials, equipment and overhead costs.
Step 3
The project manager uses Sage Intacct Construction to allocate resources efficiently. The manager assigns tasks to the team, schedules equipment rentals and orders materials. The system’s automated workflow reduces manual data entry.
Step 4
As the construction begins, the team logs their hours and materials used directly into Sage Intacct Construction via mobile devices. The job coding feature allows them to categorize expenses accurately, providing the project management with real-time visibility into project costs.
Step 5
During construction, the client requests several changes to the original plan. The project manager uses Sage Intacct Construction’s change order management feature to track these modifications.
Step 6
Throughout the project, the manager generates detailed financial reports using the software. These reports provide insights into labor costs, material expenses and overall project performance.
Step 7
The company uses the software to remain compliant with industry regulations and standards. The system’s automated compliance tracking helps the project manager stay on top of permits, licenses and safety requirements.
Step 8
As the project near completion, the project manager uses Sage Intacct to streamline the month-end close process. The system’s efficiency gains reduce the time required for financial reconciliation, allowing the manager to focus on final inspections and client handover.
By leveraging Sage Intacct Construction, the company successfully managed the construction of the new retail store. The system’s real-time data access, automated workflows and detailed financial reporting provided the tools needed to deliver the project on time and within budget, securing client satisfaction and project success.
Contact Us
Using an ERP accounting software platform like Sage Intacct Construction provides numerous features to enhance project management. With extensive experience in Sage Intacct Construction implementations, Cherry Bekaert can help you get started on the right path toward your ERP journey.
