Controlling Construction Spend

construction spending

Having construction expenses to manage at all is a relief after two years of wild on-again, off-again projects. It is the nature of our industry to have financial cycles, even when we’re working steadily.

However, 42% of us pay our subcontractors before our customers pay us. Later, cost overruns nibble away at profits. If you think in terms of win-lose, the customer wins, the subcontractors win, and hopefully you don’t lose. You just win less.

Controlling construction spend through software automation is a way to better manage projects’ financial outcomes.

How Automation Can Manage Construction Spend

Financial automation software tracks every dollar spent:

  • Accounts payable
  • Corporate cards
  • Employee expenses

…and more.

Automation increases control over construction spend through:

  • Real-time reporting – All projects stray off-budget, but automation software gets you back on track sooner. Knowing real-time status means decision-making is faster and more efficient. Cost overruns are caught earlier and finance teams save time looking for exceeding expenses; the software raises a red flag in real-time.
  • Time-saving money-management – Your finance team can save time reconciling expenses. The back-and-forth financial transactions between vendors, corporate cards, and general accounts payable are minimized plus the human-error factor is greatly reduced.
  • Workflow approval processes – An automated approval process gives you a handle on construction spend like nothing else. You can quickly go to the expenditure source with questions. It also creates an audit trail that – again – saves time for finance team members hunting and reconciling so they can provide insights and actual finance management rather than spending time on damage-control accounting.

When you’re able to see the big picture, construction spend and budgeting become knowledge-driven. You can make necessary adjustments quickly.

Construction Monitor Provides Money-Making Business Leads

We believe construction spend and money management software are necessary to grow your business. That’s why we offer information about software platforms. But you’ve got to make money in order to manage it.

Construction Monitor won’t endorse any brand of software except our own. Building permit software allows us to refine data you can use for business-building. Whether you’re seeking a mentor, considering new-start partnerships, or simply tracking competitors, we can give you data analytics pertinent to your area of the U.S.

Need to know more? We’re eager to share. Call 800.925.6085 (international/435.586.1205) or contact Construction Monitor.

9 Things You Can Learn from Construction Spending

construction spending

Data – information – is available to everyone. Even if you feel confident you know your business, its goals, and your industry, it’s difficult to know which information sources can deliver usable facts and figures. Construction data, including building permits information, is pertinent to our companies as well as our industry. But there’s another source of information you should investigate: construction spending.

Construction Data; Construction Spending Statistics

“Construction spending” measures the amount of investment in new construction. U.S. public and private sector new-construction spending information is used for economic forecasts and financial decision-making. The Census Bureau studies the construction value-in-place (VIP) every month.

Construction spending estimates include costs of:

  • Architectural and engineering work
  • Contractors’ profits
  • Interest and taxes
  • Labor and materials
  • Overhead/miscellaneous

FYI: Construction Spending 2020-2026

Construction spending data has led to good construction forecasts for this year and beyond. However, doubts surrounding steel and other building material costs continue to be driven by tariff and supply uncertainties.

How You Can Use Construction Spending Information

If you think you’re a “small-time” company, then don’t bother evaluating U.S. construction data, including spending. And forget about following the global construction industry. That’s one way to guarantee your growth and profits remain small.

The only limitations you have are the business decisions you make. Here are two things you need to know:

  1. Timely, relevant construction industry information pertinent to where you work (your geography) is critical to your business.
  2. Global and national trends impact your local business.

Construction spending data can give you the information you need to:

  1. Assess monthly fixed costs (rent, salaries, utilities, etc.) vs. comparable businesses
  2. Improve your budget and money management, which:
    • Keeps costs in-line with projections
    • Leads to better decision-making for profit
    • Captures a more realistic idea of revenue potential
  3. Compare industry trends with local economic projections and building permit data
  4. Determine if your rates are competitive and reasonable
  5. Develop a concise business plan
  6. Evaluate direct cost expenses (project-related labor, materials, subcontractors)
  7. Evaluate industry trends
  8. Identify cash flow variances based on time of year and competition
  9. Reinforce planning/financial goals (and adjust when necessary)

Our Success Depends on Yours

Construction Monitor believes data-driven decisions are shaping the global market for every industry, including construction. Our mission is to provide construction analytics and information you need for success. Call 800-925-6085 (International callers 435-586-1205) or contact Construction Monitor to learn more.

New Report: Construction Spending on the Rise for 2016

Spending on U.S. construction is expected to continue to increase in 2016, though at a slower rate than seen in 2015, according to a new report.

Fitch Ratings predicts continued stable growth for construction spending throughout the United States in 2016. The company presented its findings in its 2016 outlook report, cited in an article on the website Business Wire.

U.S. construction spendingHowever, growth rates for 2016 are expected to be lower than those experienced in 2015. Fitch notes that construction spending increases in 2015 were particularly strong.

Even if the 2016 growth rates don’t equal those from the previous year, Fitch still sees a healthy expansion for building services and home products over the next twelve months.

The Business Wire article notes that Fitch expects new home and commercial construction to expand 8 percent in 2016. Home improvement and public construction spending is anticipated to experience moderate growth, fueled in part by the recent $305 billion highway bill.

Building materials companies could see an increase in revenues of 5 to 7 percent in 2016, according to the Fitch report. Improvement in profit margins, better cash flow among customers, and reduced debt is also expected to help boost the income of building materials suppliers.

Despite the good news on U.S. construction spending, Fitch warns that there could be some factors that have the potential to keep the expected growth to a slower rate. The Business Wire article quoted director Robert Rulla as saying that construction industry labor shortages, higher labor costs in general, and delays in beginning and continuing projects could slow 2016’s expected spending growth.

Fitch Ratings is a division of Fitch Group, an international leader in financial information services. Fitch Ratings focuses on credit ratings and business information and research.

Construction Monitor provides up-to-date information that helps builders and contractors plan for their future, including important industry news and data on construction starts. Contact us today for more information on developments in U.S. construction spending and how they can affect your company now and in the future.