January 26, 2022
Procore Technologies, Inc., a leading provider of construction management software, released Canadian-focused findings from a report developed in partnership with Dodge Data & Analytics, a leading provider of commercial construction project data. The report found both owners and contractors in Canada face a variety of challenges when it comes to project cost management, but they believe using one streamlined tool will help facilitate construction projects and cost management more efficiently.
Conducted in July 2021, the report explores the industry’s perception of project cost management and how construction professionals across multiple regions leverage technology to effectively manage costs. Participants included construction owners, general contractors, and subcontractors in the public and private sectors across Canada, Australia, New Zealand, the United Kingdom and the United States.
“Cost management is one area that has often taken a back seat as construction has become more digitized,” said Jas Saraw, Vice President, Canada, Procore. “Understanding the financial health of your project in real-time can have a significant impact on operations and on the bottom line. This report offers great insight into both the challenges and opportunities for the construction industry, and how technology can play a significant role with project financials.”
Technology’s Role In Cost Management
When it comes to leveraging technology to track projects and costs, Canadian organizations are split — with many using multiple applications and spreadsheets to manage the information. While many are confident in their ability to track information to the benefit of their business, there are still many areas where there are needs for improvement.
Key Findings of Procore’s New Construction Cost Management Report:
- Canadian Confidence: Canadian respondents were confident in how they are managing information.
- Of all the regions surveyed, Canada led the way in knowing the real-time profit/loss status of projects/portfolio, with 68 per cent of Canadian respondents agreeing or strongly agreeing that they know where they are making or losing money on a project or across their portfolio, at any given moment.
- Fifty-eight per cent of Canadians indicated they can easily uncover cost details and create comprehensive financial reports from a single source of truth.
- Sixty-three per cent said they can dynamically track every dollar in their budgets and forecast critical costs with real-time data from the field, while staying in sync with the accounting system.
- The report shows that owners expressed more confidence in their overall cost management capabilities than contractors surveyed, and each type of owner studied (public and private) is more confident than either type of contractor (general and trade). General contractors are more confident than specialty trades.
Staying on Top of Costs: When asked which cost-management activities their company has the greatest difficulty with, the top five selected by Canadian organizations are as follows:
- Determining appropriate contingency amounts (32 per cent)*
- Accurately estimating total cost to complete for activities in the work breakdown structure (31 per cent)*
- Tracking costs for every aspect of the job to determine how they impact overall project cost (31 per cent)
- Control of project cash flows (29 per cent)*
- Understanding in real-time where they are making or losing money (26 per cent)
* Canada also leads in these three challenges when compared to its global counterparts.
Varying Workflows: Canadian respondents are collaborating with external partners in various ways — including older, traditional processes — when it comes to workflows related to cost management:
- Email and attachments (17 per cent)
- Generic, third-party collaboration software (17 per cent)
- Telephone and personal communication (16 per cent)
- Manual processes relying on printed paper (14 per cent)
- FTP server managed by a project team member (13 per cent)
When it comes to internal collaboration, third-party collaboration software (18 per cent) and email and attachments are the top tools.
The Cost of Technology: Globally, general contractors and specialty contractors reported notably different levels of satisfaction with their use of software for cost management. The disparity sends an important message that the right technology — and the right amount of it — is needed to effectively support the workflows of every team member in order to advance the entire industry.
And, while a high level of Canadian respondents indicated they know where they are making or losing money on a project or across their portfolio at any given moment, the results show there is room to spend more on the technology they need to be successful with 20 per cent of Canadian organizations said they are spending “the right amount” on technology required for cost management practices and 30 per cent said they are spending somewhat or much less than they should.
Improvements Needed in the Next 3-5 Years: When asked about the most important future needs to solve with project cost management, tracking dollars and data were high priorities. Globally, forecasting critical costs with real-time data from the field topped the list (30 per cent). In Canada, respondents cited these top three as the most important:
- Dynamically tracking every dollar in my budget (30 per cent)
- Leveraging data from previous projects to benchmark cost performance (29 per cent)
- Accurately assessing risk related to any changes or performance issues (29 per cent)
The findings show significant diversity between the needs identified by owners and contractors.
“Contractors and owners are all in it together. The shared understanding of each other’s needs is important to move things forward. The key takeaway is to approach cost management as an integrated project team-wide practice,” added Saraw.
“The report shows that construction owners and contractors alike are ready and able to participate in a more holistic and integrated cost management approach,” said Stephen Jones, senior director of industry insights, Dodge Data. “Focusing on using fewer, more comprehensive technology tools and increasing all stakeholders’ engagement with cost management will ultimately generate better cost-related outcomes for all parties.”
“While at one point in time spreadsheets were the gold standard in the industry, we are seeing a change and evolution over the last five to 10 years as more construction professionals — from those in the field, to those in offices — understand the power of connected data and how it can empower them,” said Saraw.
Listen to the conversation between Jas Saraw and Stephen Jones during the Cost Management: The State of the Industry webinar HERE.
Download The Construction Cost Management Report HERE.