This content has been provided by our AU 2020 sponsor community.
Construction cost management has, for the longest time, existed within the domain of legacy ERP and finance and accounting systems. Many of these solutions have not evolved with time, and do not adequately equip the user with the many benefits of modern software. The development of Construction Cost Management is a powerful opportunity to bring cost management workflows up to speed and deliver a solution for managing costs, commitments, and changes within the connected architecture of BIM 360. This article will review crucial construction insights around cost management and productivity that can be created when BIM 360 is connected with real-time field data.
While AEC technology has augmented and improved many construction management workflows, key areas in construction—including finance and accounting, change management, and labor productivity—remain largely underserved. The lack of solutions addressing these critical areas is due to several interlinked trends:
1) Contractors have invested so much time and effort into customizing and configuring their ERPs that they have, in effect, created custom software that cannot be easily replaced.
2) With very high switching costs and significant resources already invested in a current solution, construction companies will continue utilizing the existing ERP despite its shortcomings.
3) In many cases, ERP vendors have been slow to modernize their technology, leaving customers with tools that, while functionally sound, may be challenging to use, integrate, feed with data, or derive insights from.
The development of Construction Cost within this framework provides contractors with a powerful alternative to managing the key elements of cost, commitments, and changes. By integrating and connecting the BIM 360 platform, empowered by Forge, with additional data sources, construction teams can more easily leverage faster, more efficient workflows. One example is the combination of the Rhumbix field data solution with the BIM 360 Cost Management to support the use of labor, production, and field change data as part of contract and project cost management.
The Rhumbix platform is a field solution that is leveraged by individual contractors, general contractors, and entire project teams to generate accurate insights on the metrics that drive labor productivity. This data includes:
- Reliable, foremen-entered timekeeping data that informs subcontractor payroll, labor attendance, project manpower, and labor utilization.
- Installed quantities and production units to progress the work, inform labor productivity calculations, and support payment applications.
- Field time and material workflows that document the expenditure of resources on field-directed changes or the consumption of resources on cost reimbursable or pure time and material projects.
While several technology solutions exist that perform one or several of these workflows, the Rhumbix solution automates all of them within one platform. Because cost metrics are driven by a combination of factors and related data, the importance of a centralizing platform for cost management is clear. By reducing the number of disparate data streams that feed their “source of truth,” organizations can reduce latency in reporting, unnecessary data manipulation, additional system integrations, and the time and effort required to train users. Consistent, real-time data reporting is essential for effective cost management, which means the fewer systems required, the better.
Some examples of these complementary data attributes between BIM 360 Cost Management and Rhumbix are outlined below.
Flexible Budget Structures
Cost Management supports the use of complex budget Work Breakdown Structures (WBS) deployed across multiple project stakeholders. This flexibility is key to allowing the cost data of different subcontractors to be reconciled into a single cost management platform. A challenge exists, however, for feeding subcontractor field data into this model if their internal WBS elements, estimates, cost code structures, etc., differ. This makes a seamless data flow from the subcontractor’s field personnel and tools a challenge—data must meet the needs of internal stakeholders and workflows before being shared with outside tools managed by a general contractor. Internal estimates, control budgets, schedules, baseline plans, and other control tools may not be coded in a way that maps between a subcontractor’s processes and the construction management tools leveraged by general contractors.
A solution that is functionally independent of subcontractors but can structure data and connect with cost management can bypass the time-intensive manual efforts associated with data capture and transmission to existing construction management workflows. While flexible budget structures are a simple concept, the practical execution can be complex—capture data flexibly between multiple different subcontractors on the same project and then feed this data into one source of truth.
Tracking Actual Costs
‘Cost data’ can mean many things in the construction industry. While it obviously includes purely financial metrics and indicators such as margin, profit, fees, etc., it also includes the factors that drive cost outcomes on projects. Cost data can include many variables not related to cost such as manpower staffing, attendance, turnover and staff attrition, accuracy of data, production progress reporting, and labor productivity management. Cost Management allows users to add additional custom attributes to cost elements to further enrich the cost tracking data and forecasting workflows enabled by Cost Management. This additional cost “metadata” is often unsupported by a cost technology solution and unavailable for downstream analysis. It is excluded from the transactions, systems, and analysis. This robust cost data is often lost to the construction management system even though it is a critical component of effective cost control and forecasting workflows.
Custom attributes support greater granularity and context to the data hosted in Cost Management. This detailed data can empower and enable enhanced reporting that not only supports different types of project and contract vehicles but can include other data sources that feed into this metadata.
One obvious area where complementary data solutions such as Rhumbix can be leveraged is importing timekeeping data into the cost data for tracking and forecasting purposes. As mentioned previously, timekeeping data is often proprietary to the subcontractor and is rarely shared with the general contractor or a wider project team. However, it provides a rich source of context and insight on project execution that can provide more reliable information on production capacity and plan completion. Insights contained in timekeeping data are even more critical during COVID-19 as general contractors are required to capture and maintain accurate and detailed information on personnel attendance and work performed. In most cases, this data is captured in daily construction reports, but not in a structured way that would support a high degree of historical analysis.
The ability of Cost Management to host structured data within the cost module creates a powerful database of historical timekeeping data that not only informs cost analyses as part of financial transaction management but opens up a world of other downstream project analyses that historically have been impractical as part of the financial analyses of projects because of the inability of financial solutions to host the data in an efficient and structured way.
Change Management
One final area of cost management that has been empowered by Cost Management is the real-time collection of cost data associated with field changes.
Changes happen on projects. Some have the benefit of foresight and can be negotiated. These workflows are well accommodated in Cost Management, which supports the initiation of potential cost events within the system and tracks them through to disposition. Unplanned change events are equally common, however. Field-directed changes are often requested or required by contractors where work must proceed to protect the schedule without a negotiated change order in place prior to work being performed. These field-directed change orders place both parties at risk—the work is not budgeted or committed prior to its execution and is typically tracked on paper time and material tickets.
Rhumbix contains a digital time and material solution that allows all subcontractors to submit tickets to a GC for immediate visibility. These tickets are completed by foremen in the field, then submitted for review and approval by management. The tickets are then automatically priced, providing insights into the cost impact of directed changes as they occur in the field. These cost impacts can be transferred across Cost Management to provide reliable and timely indicators of cost and contingency impacts that must be addressed in future change management workflows.
Time and materials are a necessary burden in our industry, but the complementary nature of Rhumbix and BIM 360 Cost Management creates seamless flows for data that reduce the administrative effort required to process changes and provide protection to all parties on a project.
In summary, BIM 360 Cost Management is a powerful and flexible tool that enables enhanced management of cost and financial workflows on projects. Coupled with complementary data-driven solutions, it offers a wealth of opportunities for enhanced data aggregation and reporting, and workflow augmentation.
Guy Skillett spent 10 years on Bechtel job sites building airports, bridges, smelters, and mines on five different continents. After leaving Bechtel, Guy completed a master's degree in Construction Management and spent time as a visiting research scholar at UC Berkeley's Project Production Systems Laboratory (P2SL). He now heads up the construction team at Rhumbix, a Bay Area tech start-up developing mobile tools for front-line construction personnel. Rhumbix has recently released a solution that is focused on digitizing the T&M workflows for general contractors and subcontractors on the biggest projects, to solve a persistent challenge impacting the industry associated with the documentation, processing, and management of change orders.