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Skyrocket the financial position of your construction business, with monthly housekeeping

Electronic Data Interchange
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Skyrocket the financial position of your construction business, with monthly housekeeping

What is construction project housekeeping? No, it is not bringing in the cleaners every week to get the office and amenities cleaned.

It is about housekeeping your projects.

 This seems to be the untidiest area of project management that I come across as a consultant. I know you are thinking, what are you talking about, Sindee? 

Project Manager’s manage projects and ensure that the project is commencing and tracking on time and hopefully to the budget; that is their job. But some Project Manager’s fail to ensure the budget and costing of their job is accurate.

It is usually at the end of the job during closeout when the actual financial status of a project is discovered. Money is buried and found or, even scarier, you find inaccurate forecasting to reflect false economies. Both of these outcomes are disappointing, as it demonstrates that housekeeping has not been done throughout the projects.

Let me share some basic housekeeping that should be performed each month before forecasting:

  1. Create a financial and project calendar that the company can adhere to like the following:

2. After the accounts team have completed their previous months’ entries and reconciliations, it is always good practice to run reports and review the open commitments. Analyse if the open Purchase Orders are exhausted and/or no longer required or are there any double-ups in the system. These Purchase Orders need to be closed out.

3. Are Subcontractors Commitments going to be used to their capacity, or is their contract on a schedule of rates but with a committed amount that won’t be used, and a negative variation needs to be entered to reduce the commitment?

4. Review previous month’s forecasting line items. Has your previous month’s forecast items become actuals and now need to be removed as a forecast cost to complete line item from the forecast?

By doing items 2-4 each month, I guarantee that the Project Manager and Upper Management would have a very transparent view of how the project is running month-to-month and can report a project’s margin accurately at any moment in time, not retrospectively. 

Again. What is Housekeeping – My answer: The most critical activity in any project EVERY MONTH.

If your construction business could benefit from some help implementing construction project housekeeping processes, contact the construction industry experts at Thrice TODAY on 1300 868 474, or email the team today, info@thrivetech.com.

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