We were recently speaking with a CFO at a large contracting firm who told us his team had just finished a long, tedious internal assessment that uncovered they had been routinely underpricing a particular division by 40%. Because of the limitations of their data and difficulty of analysis, they did not know how long this had been going on for. He was relieved to have caught this systematic error now, but it begs the question, what risks could be averted with built-in, continuous monitoring?
Currently, the entire planning workflow is siloed: estimating software here, accounting and project management there, and many, many spreadsheets in between. The fragmented nature of project data makes monitoring and analysis nearly impossible. If all project data were housed in a single data environment, then continuous monitoring and improvement becomes very feasible. Project audits would no longer be time-consuming or small slices.
We were talking with another CFO about margin fade. He referenced a recent project where the projected margin was 8% but actual was 3%. He was frustrated that this was shrugged off internally as the cost of doing business. He is searching for tools to allow him to put systematic improvements in place so that future projects could meet their projections more reliably. We believe that the first step to achieving his goal is to implement a single data environment for his company.
How getting out of spreadsheets into a single data environment improves a CFO’s life:
- A structured platform with contextual documentation produces a consistent, defensible work product, yielding more predictable outcomes and less gaps from the beginning. Spreadsheets can easily be broken or changed and are difficult to access and update.
- A single data environment negates the need for data reentry. Reducing the amount of time teams spend on menial tasks like data reentry and verifying calculations gives employees their time back to focus on higher value tasks, tasks like value engineering, pricing strategies and identifying assumptions and risks that can be proactively mitigated later on. As we know, risks compound over the life of the project, especially when they’re unknown. If you had more awareness of risks from the beginning, you could make more accurate project decisions.
- With continuous monitoring, you have access to clean, structured current and past data so that you can engage in proactively reviewing, learning and improving. As a company, rather than always being on your backfoot, cleaning up problems, you can be engaging in identify, learn and improve.
- Additionally, with a single data environment, you are able to tie estimates to budget and budget to actuals. Preconstruction teams would be able to learn from past budgets and actuals to improve future ones.
- Estimating teams collect a lot of data during the preconstruction process, which does not carry over at handoff to Project Management and Field Operations. Project and field teams are then making unnecessary assumptions or operating in the blind. A single data environment prevents this information loss and maintains project momentum through hand-off.
Currently, leadership struggles to hold teams accountable because of a lack of clarity into profit drivers and opportunities to affect meaningful improvement. A single data environment gives executives access to the real-time data they don’t currently have that would allow to make improvements and drive sustainable change. Unanticipated risks erode margin. A single data environment changes the paradigm for contractors.