How business intelligence tools can help your construction firm thrive: Part I
What projects have you taken on in the past that turned out to be the most profitable for you? Why were they the most profitable? Can you reliably repeat that success going forward?
Chances are, without strong data and the tools to collect and interpret that data, you’re chasing past success with gut instinct. And while experience is incredibly valuable, it can be supplemented with business intelligence (BI) tools that manage the many variables that go into profitability and then deliver significant insights. With insights comes solid, proactive decision-making.
In this three-part series on BI tools and the construction industry, we’re going to take a look at how technology helps you better understand your past, better manage your present and better predict your future.
Better understand your past
Job profitability is the number one area construction firms seek to understand. And measuring true job profitability relies on your past — collecting that data, interpreting it and then using it. How quickly you can answer questions and make timely decisions relies on having the right data in the right place, which means having the right tool.
If you’re a sub-contractor, a BI tool can tell you whether it’s worth it to accept a quote you received, based on how much profit you made in the past on similar projects.
If you’re a construction firm, a BI tool can tell you, based on your past jobs, whether a job you’re looking to take on will be profitable for you and potentially by how much.
And we can’t discount private equity (PE). Many PE firms have been acquiring construction companies, and they are driven by the need for data. They want to know seemingly everything. A BI tool can feed that data need.
Business intelligence dashboard and reporting
With all the emphasis placed on data these days, you probably have a lot of it collected. But it’s way too easy to drown in that data. Which of it is relevant to your business? How does it all work together? How can it answer your biggest questions?
Perhaps the best thing about business intelligence software is that it provides one central place for you to view your data. The magic of BI is in how it integrates data from all of your systems and visualizes it in ways that make it easier for you to make decisions.
And it all comes down to the dashboard.
Dashboards allow you to customize what data you want to see and how you want to see it. One of the biggest benefits for construction firms is a type of early warning system the dashboards enable. Often, a couple jobs during the year get out of hand and require your firm to make up the costs by taking on other jobs.
But what if you were warned when job costs and actuals started to outpace estimates? Then you could make adjustments to get back on course and/or determine what jobs you need to take on to make up for the predicted profit loss.
Dashboards track this data and visualize it in charts that make it easy for you to see when a job looks like it may get out of hand, giving you enough time to make the most effective decisions.
The reporting that a BI tool delivers is also incredibly valuable. Oftentimes, we see construction firms trying to pinpoint these mistakes they’ve made in jobs that forced them to east costs later on. Reports can help you understand in your past jobs whether you’ve underestimated job costs like man hours required or subcontractor costs. This can then help you more accurately predict job costs for future, similar projects.
Business intelligence tools in action
In our Wipfli Construction CFO Peer Exchange — where 30 construction CFOs discuss best practices, trends and concerns on a quarterly basis — the topic of business intelligence is regularly discussed.
One of the CFOs has, at their firm, built a comprehensive data visualization tool to manage and streamline data and reporting. This BI tool lets them view profitability by client, market sector and state. As a result, they’ve been able to identify bids that have been problematic in the past and avoid them in the future, while shifting assets over to more profitable projects.
It’s also enabled them to review the performance of PMs and track revenue and profitability against their targeted billing amounts per year.
It’s a clear success story of how understanding your past helps you become more profitable in the future.
In part II of this series, we take a look at how BI tools help construction firms better manage their present. But if the idea of using a BI tool at your firm has piqued your interest, you can learn more about top business intelligence tools here and contact us to answer any questions or get started.
Or keep reading on:
Article: The top 3 myths about business intelligence
E-book: How you can benefit from the top 3 technology trends in construction and real estate
Success story: USI uses QlikView to empower employees with reporting