Wouldn’t you like to have everything about your projects — such as accounting, purchasing, estimating, and actual job progress information — readily available to you anytime and everywhere? Of course, you would.
Accounting data is driven by business and legal requirements and provides a look into the past. While it can show you what has happened, it provides no insight into the future. When is the last time accounting closed your books before the end of the period? There are many things that you need to know about your business while there is still time to act and impact the results. For example:
- Are the billings up to date and accurate?
- Are all the change orders captured, approved, completed, and invoiced within the terms of your contract?
- Is your composite rate rising or falling? Is it managed and controlled?
- Do you have a handle on your receivables? Are they rising or falling next week or next month?
Field data is priceless information. This otherwise invisible information can predict the productivity of the job, and, more importantly, what’s adversely impacting productivity. When combined with accounting and estimation data, field information can provide the only complete picture of current project performance and reliably project future outcomes.
Field data is often omitted from business management decisions because it is difficult to gather and often requires observation and intuition to correctly interpret. Field data is often confused with subjective statements or simple opinions. But there is a difference, and correct data is essential. Reliable field data must be collected with respect to an established and objective baseline. Understanding and effectively using field data is only possible when organized with a consistent and objective method for categorization.
Effective project management requires deliberate usage of all data (separate and combined) at the time it is current and accurate. Consider the value of asking these questions:
- Was the team able to get done what it planned for today? If not, why?
- Did the team have the materials they needed? If not, why?
- Is the team prepared with the tools and materials they need tomorrow? The next day?
- Did the team have the manpower they needed? If not, why?
- Is there a manpower plan for tomorrow? The next day?
- Is all the completed work fully reflected in the billing?
- Do you have sufficient supporting documentation to collect what’s billed?
Much like field data, estimating data is also very often underused and misunderstood. Estimation data is more than what you are estimating currently. Your estimating data cannot be limited to only material counts and “average” labor units. Ask yourself these questions:
- Are we productive on this type of work, and do we have the correct knowledge and experience to profitably deliver the scope contracted?
- Do we have the correct manpower plan and resources to take on this work?
- Is our existing backlog and pipeline capable of supporting the future of the company?
- Have our value engineering efforts considered all reasonable prefabrication and vendor services that could, should, and will be used?
Having data from all three sources (field, accounting, and estimation data) gets you to the starting line. But data alone is not useful for project management and effective project delivery. The tools for converting data into information are essential for the proper connectivity of all three sources, providing project managers with the information they need to use their skills and experience effectively.
Project management is dependent on properly connected data and creating a common form of accurate and reliable information. Raw data is not actionable by project managers; it needs to be categorized and prioritized from discrete events to become manageable information. Accurate information is actionable. Skilled project managers can use digitized project information to make very quick and knowledgeable decisions with inherently reduced risk. This is all working within the project delivery system — and what makes the project delivery system both repeatable and scalable with a growing business.
For a full picture of what is happening on a project, it’s key to triangulate between what we call “The Three Databases: Field Data, Accounting Data, and Estimating Data.” The Figure shows the linkage between the three databases and the information that can be shared between each for fully understanding impacts on your jobs. Note that this is not a technology concern; it is a process concern.
It’s important to recognize that the process of gathering and using the information should enhance your business results. Are the right items in place in your organization to capture and interconnect this information for your use in a timely and useful way? Unless you have included a process with defined categorization and analysis methods and techniques, standardized digitization, and thorough connectivity, then you do not have the right items in place for effective project management. What you do have are results based on a few good people on a few good projects, looking for a few lucky breaks — and betting your money on finding them.
When the business has accurate information fed to an effective project delivery system, then, over time, knowledge about the outcome and results can be captured and analyzed, forming a common and powerful feedback mechanism. At the overall company level, this common feedback allows the leadership and estimating teams to make very effective and knowledgeable strategic decisions about the projects available in their market. Analyzing each future project available with historical project information can help you understand which projects your company can make money on, which projects are worth investing limited business resources in, and which projects can secure (not jeopardize) the future of the business.
Everyone knows knowledge is power. Being able to quickly refer to and manage the connectivity of your job data, your accounting data, and your estimating data (including your pipeline and backlog) lets you see the full picture of what is happening around you today and what is going to happen in the future.
Phil Nimmo is vice president of business development at MCA, Inc., Grand Blanc, Mich. He can be reached at [email protected]. Jennifer Daneshgari is vice president of financial services and operations at MCA, Inc., Grand Blanc, Mich. She can be reached at [email protected].
