Construction is a unique industry in many ways, one of which being the flow of cash and accounting process for projects. Whereas many industries have straightforward transactions and payments, construction costs tend to be more complex and nuanced—which makes it more difficult to stay on top of a budget with money constantly going out and coming in.
From estimation and bidding to delays and change orders, there are many stages and factors that go into determining the cost (and profits) of a project.
How can companies know if they’re on schedule and under budget before the project closes? Work in progress is the answer.
A work in progress (or, WIP) schedule is a detailed report that shows the percentage of progress completed on a project—and takes into account any work that’s in progress in relation to budget and profitability.
When it comes to a project’s progress, communication is critical. Without clear, real-time communication, project teams waste valuable time meeting to discuss and determine where a project stands. Progress can also be misrepresented or miscalculated, which directly impacts the budget and schedule of a project. With so many moving parts to balance, construction companies can’t afford to make mistakes due to miscommunication.
WIP reports provide accurate progress data that project teams can trust across the entire site. This reduces any subjectivity throughout the building process and gives everyone one source of truth to work from.
Many contractors choose to implement progress payments, which means the project is billed based on certain percentages of completion as they’re reached instead of waiting until the end of a job. Combine progress payments with inaccurate progress reporting, and the project can very quickly become overbilled (revenue billed exceeds the work completed) or underbilled (work completed exceeds what’s been billed).
WIP tracking provides the exact progress percentage of work completed to create a shared understanding and accountability for project costs accrued so far—and can help shed light on any discrepancies in the budget to prevent future cash-flow problems. This is especially helpful for those project managers who like to ‘guesstimate’ based on a gut feeling, then try to do the math later to even it out.
Hindsight may be 20/20, but it won’t keep your project profitable. A problem is much harder to fix after it’s already happened. While discussing what went wrong at the end may help your next project, the power to be able to notice and act in real time is invaluable. Project teams need to be able to spot potential problems as early as humanly possible to minimize the impact and keep everything on track.
That’s where work in progress tracking comes in—it’s in the name. Using technology that quantifies progress all the way down to the subcomponent level allows stakeholders to catch an issue and course correct as soon as (if not before) it happens. This prevents mistakes from becoming costly and provides insight for better business decisions in the future.
While catching issues early on is one thing, being able to predict a project’s future is another. With the right AI-powered progress tracking, companies can track project performance for deviations from plan and forecast a more accurate estimate at completion.
Knowing where your project is heading before you get there means you can plan accordingly and get ahead of costly trends. WIP tracking data gives project teams the ability to confidently manage the schedule and predict delays.
At the end of the day, work in progress reports give a true and accurate view of the financial health of a project. However, they require accurate project progress data to be effective.
Companies that leverage technology with AI-powered progress tracking can truly reap the benefits of WIP reports—and ultimately keep their projects on track and profitable.
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