The Construction Project Cycle (around here we call it the Construction Triangle) focuses on the 3 steps of every project that have to work together to build consistent profits: estimate, execute, and evaluate.
Previously, we looked at the process of generating estimates designed to protect profitability, and how to execute projects to maximize those profits. Now, we move to the final phase in the Construction Triangle and examine how to evaluate projects in order to make more accurate profit predictions in future bids and proposals. This is done by identifying strengths and weaknesses in our business, which helps us to know which jobs we’re likely to profit more from.
Smart Jobsite Data drives better decision making
The aim of evaluation is to make better decisions and predictions in project estimating and staging. Those decisions will be heavily influenced by the quality of information available from both current and historical construction data of jobs we’ve done in the past. This information provides the raw material for identifying ways to improve risk management and profit predictability.
Strategic planning and estimating based on this information can lead to better quality results, tighter building schedules, fewer wasted resources, and higher profit margins.
Evaluation is built from the details
The essential elements of the evaluation process can be analyzed by breaking down the available data according to the following categories:
- Project overviews
- Cost code divisions
- Individual employee activity
- Equipment utilization
Each one of these analytical approaches provides insight into the performance of the construction process on any given project. By looking at each one in turn, a complete picture of the factors behind profit performance can be determined.
Combining detailed jobsite information in a macro project view can show where total labor hours and equipment utilization costs have been allocated on a project by project basis, over any set period of time.
This provides owners and managers with a snapshot of which projects have met profit objectives, according to the original estimates, and which ones have fallen short of the mark. With this information as guide, further analysis can be done to drill down into the reasons behind the different levels of performance within each project.
Cost code activity
The ability to sort labor and equipment costs according to specific phases of the construction process brings a deeper understanding of which activities produce the most consistent profits. Cost codes will capture all the data related to each phase. This will indicate a consistent level of performance in the actual labor and equipment required to complete each phase.
These cost codes provide a solid basis for targeting and estimating future jobs, based on established strengths and weaknesses. Also, this data will show areas where further team training or equipment upgrades might be needed to achieve the necessary profit performance on cost code activities that have consistently underperformed.
Individual employee labor costs
An essential aspect of profit predictability is evaluating the performance and contributions of individual team members. The ability to analyze and compare employee activities creates opportunities to improve the knowledge, skills, and efficiency of the workforce to achieve the necessary speed and quality of project execution.
It also provides data to support compensation and advancement decisions, and to evaluate the impact of individual performance, including overtime costs, on overall project results.
Equipment utilization costs
The performance of machines and operators on the jobsite is a major variable in project profitability. An accurate assessment of these profit contributions requires the ability to monitor heavy equipment usage and individual operators according to the detailed breakdown of specific activities. This allows for comparison by project, by cost code, or by employee.
Integrate project evaluation with project management
Providing supervisors and managers with analytical tools of evaluation in day-to-day project operations and in project planning and estimating enables construction contractors to boost the accuracy of their profit predictions. And it will provide immediate improvements in their ability to control the execution of every project to meet those predictions.