Effective financial management is critical to every kind of business’s success. But in the field of engineering and building, it becomes even more crucial. To grasp its relevance, simply observe how the market functions.
Sudden price increases in the cost of materials, for example, can make the entire project more expensive. As a result, construction companies, developers and contractors run the risk of having reduced profit margins and even operating at a loss.
To prevent this from happening to your clients, you need to have highly effective financial control over construction expenses. In this sense, there are strategies that can be adopted by those seeking to obtain the best results in the business.
Is this your case? Then continue reading and learn how to control the costs of your engineering and construction clients’ projects efficiently!
What are the main demands of engineering and construction clients?
You must first comprehend the demands of the building industry. Knowing this enables you to meet them in the right way. In this manner, you may guarantee client happiness and provide solutions that support financial organization.
Check out the main demands of the sector!
Production control
The construction industry is known for having low production control and high waste. However, this can result in a reduction in companies’ profit margins. In this scenario, it is important to promote integration between the financial and operational sectors.
Project cost
Construction also involves increases in the cost of materials used in the work — especially in unfavorable economic situations. As a result, the entire project becomes more expensive.
Therefore, it is necessary to find ways to keep expenses at acceptable levels, without compromising the quality of the service offered, but maintaining adequate profits for the business.
Financial flow
Typically, construction projects are carried out using real estate financing. If consumers are late in paying, the company may face a cash deficit. Given this, it is necessary to know how to balance the accounts to maintain a good cash flow.
How important is construction cost control?
As you have seen, cost control in construction projects is directly linked to the operational efficiency of companies in the construction industry. Efficiency can affect profit margins. Therefore, achieving quality financial management can mean keeping businesses profitable.
Being able to control costs without compromising the quality of the services provided by an organization results in greater satisfaction for the end customer. Therefore, providing a good financial management service helps to increase the competitiveness of your client in the market — and also of your own business.
In civil engineering and construction, a significant portion of revenue comes from installment sales. With efficient control of receivables and costs, the construction company or contractor can avoid the risk of operating at a loss with your help.
How to control construction and engineering costs?
Knowing the importance of controlling companies’ construction costs, it’s time to learn how to do it with quality.
Below, see some tips that can help with this task so that your clients’ businesses grow towards success!
Create a physical-financial schedule
The first step to controlling the costs of your engineering and construction clients’ projects is to create a physical-financial schedule. This is a spreadsheet that contains a description of the activities of all stages of construction and the budget available for each of them.
This schedule template is essential because it helps you estimate the total cost of the project and predict the periods of greatest expense. This way, you can prepare your client to organize their finances before making large investments.
Establish efficient communication
Another key point for controlling construction costs is establishing efficient communication between your company and the construction site. The idea is to integrate the financial and operational aspects to avoid information mismatches during the execution of the project.
This action is important to prevent resources from being wasted on excessive purchases, which could lead to an imbalance in the physical and financial budget. There are several tools that help with communication with construction companies, such as Trello and Asana.
Follow the progress of the work
In addition to keeping data up to date, it is necessary to monitor the progress of the work systematically. Periodic visits to the construction site are useful to check whether the materials are being used rationally and stored properly, for example.
The visits also serve to monitor the productivity of the team carrying out the work. This way, it is possible to identify waste and correct it before it harms the cash flow of companies in the engineering and construction sector.
Monitor cash inflows and outflows
Another essential practice for controlling construction or contracting company costs is to monitor the cash flow in and out . With this practice, you can understand the current and future financial reality of these companies.
Based on this knowledge, it is possible to identify risk situations that could halt projects carried out by your clients. Based on this analysis, it is easier to devise strategies to overcome the problem and ensure the continuity of the works.
Use financial management software
To control the costs of your engineering and construction clients’ projects, it is worth using financial management software . It allows for more effective organization of data, which allows for faster analysis of information.
In addition, the system automatically generates graphs and reports, which are essential for decision-making. Therefore, a technological solution specialized in financial management can help your company provide a quality service to customers in the construction industry.
