Skip to Content

Construction companies: Invest in analytics for a competitive edge

April 21, 2022 Article 5 min read
Bob Tinglestad Shane Brown
You’re managing a complex construction business, and likely exhausted from creating too many Excel-based scenario models. Analytics can help you make better decisions faster.
Two construction workers looking at pallets

A great client said to us recently, “Many things are out of our control right now, but we can control how we communicate, how we plan for change daily, and how we show up as leaders.” It’s more important than ever to streamline your processes and technology right now. Traditional tools and processes aren’t going to support the level of speed of decision-making that’s needed to give you an edge. If you act quickly, however, analytics can help you optimize future success and keep the promise you made to yourself to invest through the next downturn. It will allow you to better control how you communicate (which often includes data) and plan for change daily.

How can analytics help your construction company?

Ask yourself:

  • Do your financial teams invest time into manually preparing data and running models to help advise the business on how to run more efficiently and cost effectively?
  • How often do analysis efforts raise more questions and provide fewer timely answers?
  • Are you strategically and proactively managing cash flow?
  • Are all of your processes efficient and optimized across functional areas?
  • Are you capturing and monitoring costs?
  • How can you assess the impact and options you have for hiring and staffing decisions?
  • Are there opportunities in your business to automate decision points to drive attention to the highest and best use of your staff’s time?
  • How much time is wasted on high-risk jobs that cause other, more profitable, jobs are sacrificed?
  • Have you performed similar jobs in the past that turned out well, made a profit, and informed your decisions to bid on new work?
  • Can you quickly provide updated forecasts to your banks and bonding companies?

If you’d like an easier way to model, decide, communicate, monitor, and refine your business planning functions in an comprehensible and sustainable way across your organization, there is a subset of analytics tools that you need to learn about. These tools will give you and your team the speed and ability to make wise, data-driven decisions more effectively, resulting in a strong return on investment.

In old processes, creating a scenario model either means overwriting existing models, building out brand-new ones in Excel, or performing “save as” functions and investing finance staff’s time into tying out new spreadsheets. Corporate performance management technology can create and help you adopt new operating scenarios within your business in just a few clicks, without changing your plans. While it might take some extra time to learn the new tool, we find that they often save clients 2–4 weeks in quarter in accounting and finance work — that’s time your team can spend on projects that move the needle and get you ahead of the competition. Not to mention the benefits to your project or equipment managers, if for instance you deploy Job WIP or Fleet Management functionality in the same solution.

Focus on quick wins: Cash flow, headcount planning, and schedule slide

Integrated models between financial, operational, and strategic activities in your business mean a more streamlined flow of shared data, leading to faster decision-making and better adjustment to change among departments and teams. Here are a few things to keep in mind for quick wins.

  1. Cash is king. With a cash flow and financial model, you can balance short-term liquidity with intermediate and long-term decisions. You can quickly produce driver-based budgets, with streamlined input from all necessary decision-makers. You’ll be able to produce rolling forecasts and enable faster data-driven organizational changes while maintaining your operating and strategic plan. Operational financial planning can be complex, but with a proven and consistent model using our best practices, you’ll be able to make solid long-term decisions on strategic investments.
  2. People matter. Having a plan for individual jobs or entire divisions, and being able to execute it, can have an impact on your business and human capital strategy. Are you effectively managing cash flow during work-timing concerns, while taking care of your people and attracting top talent? Many factors must be addressed, including force majeure clauses allowing employees to go on unemployment and limiting personal risk.
  3. Managing the program and project management triangle (scope, cost, time) is a juggling act. On your sales, job, and schedule management, you need to be 20% oversold to anticipate schedule slide. Are you performing strategic sales planning to recover lost accounts? Are sales and construction collaborating on when to start projects? Are you risk-rating and managing your project portfolio to slow high-risk projects and/or spread out intentionally using shifts to minimize risk? How are you communicating with and managing subcontractors? Proactive management through an analytics-capable platform can simplify managing the program and project triangle. For example, consider these questions:
    • How do you manage your sales slide to reach our benchmark of 20% oversold?
    • Are you recovering or reactivating lost jobs based on strategic sales goals and are you incentivizing sales staff correctly to achieve that goal?
    • Is there collaboration between sales and construction on project scheduling?
    • Are you using business intelligence on past performance to risk-rate jobs and focus your management team to effectively mitigate it?
    • Is your headcount plan and job scheduling considering your needs versus any contractor requirements?
  4. Organizational alignment is critical. Can your organization keep your job revenues/fees in line with G&A? Don’t get caught cutting so much that you can’t manage the jobs you win — finance and pre-construction need to be aligned. Are you able to produce reporting that allows organizational managers and executive leadership to understand allocated overhead costs versus operational costs? Have you developed KPIs and scorecards to manage organizational alignment and develop incentive programs?

Build your data program and literacy now

With traditional tools and methods (often Excel), you may not be where you need to be with planning for constant change. Speed with accuracy is critical for effective rolling forecasts and timeliness of information needed to make decisions. Making strategic, intelligent investments into increasing analytics capabilities will provide data-informed forecasts to help you take advantage of the opportunities being presented in the future. How is your company going to win? Prepare now!

Now is the time to make sure you can. Developing or enhancing your data strategy now can help you ensure your data is valid and programmatically fed to your models, freeing up your talented team to be more strategic and proactive in identifying opportunities to make your company stronger. And keep in mind that it’s easier with a partner, so give us a call, and we’ll help you hit the ground running.

Contact our authors

Related Thinking

Construction leader wearing a hard hat and holding blueprint plans.
February 22, 2024

Plante Moran’s Construction Leaders’ Roadmap

White Paper 12 min read
A close-up photo/view of a staff member holding a tablet device.
March 15, 2022

Blueprint for success: How to design and implement an Analytics Center of Excellence

Webinar 1 hour watch
Construction worker in a hard hat viewing blueprints and planning documents.
Nov. 5 - 16, 2020

Webinar series: Hot topics for construction leaders

Webinar 3 hour watch