In our final part of this three part series “Cashflow & managing projects”, we delve into managing scope creep, and technology challenges while making sure you have the right people in place.

Managing scope creep 

Developing strong project reporting practices allows companies to identify scope creep and manage this challenging aspect of every project. Scope creep is when a project’s scope changes and the project work starts to extend, or “creep”, beyond what was agreed initially. With just about any project, change is inevitable, but it’s the uncontrolled changes that delay projects and cause scope creep.

For example, if a sub-contractor arrives at a job site and is asked to do extra work outside the scope, this cost is usually borne by the lead contractor, and often without the customer signing off on the variation. Many construction businesses are reluctant to ask customers to approve a variation. 

This is a risky practice, especially if the variations have blown the budget, a situation often aggravated by inadequate WIP reporting.

Good luck going back to the customer to seek a variation payment after the work is done and the subcontractor paid. It can usually be too late if you realise this several months after the project has been handed over to the client.

The technology challenges

The construction industry has been notoriously slow in digital adoption—with Excel sheets, A3 drawings, and clipboards still commonly used to manage large projects. Not surprisingly, the sluggish technology adoption has heightened the complexities of managing project profitability. Paper documents are unwieldy and lead to inaccuracies, duplications, and mistakes.

Likewise, accounting departments and Project Managers relying on spreadsheets are operating with 20th Century technology that will most likely leave them overwhelmed by inventory resources and vendor updates, which can change quickly.

Despite the techno tardiness there are software solutions available that address the unique needs of the construction industry. Digitisation, combined with cloud-based technology, provides real-time access to data, helping to improve the industry's WIP scheduling success.

"Successful project reporting involves having the right people in the right seats."

Disclaimer

The information provided in this article does not constitute advice. The information is of a general nature only and does not take into account your individual financial situation. It should not be used, relied upon, or treated as a substitute for specific professional advice. We recommend that you contact Brentnalls SA before making any decision to discuss your particular requirements or circumstances.