Financial monitoring of a construction site

On a construction site, every cent counts. Managing work costs effectively is a vital necessity for the company. Below you will find strategies and tools to avoid pitfalls, improve your financial monitoring and increase the profitability of your projects.

Definition of the financial follow-up of a construction site

Financial site monitoring consists of the management and analysis of the costs involved in a construction project. It includes several steps:

• Budget planning: the price study phase details the future costs of materials, labor, equipment, construction costs, as well as overheads.
• Monitoring of actual expenses: the construction supervisor continuously monitors the expenses incurred during the course of the construction site.
• Comparison with forecasts: actual costs are compared to initial budgets to ensure compliance.

The objective of this approach involves ensuring that that the site does not exceed the allocated budget, while optimizing its profitability.

The challenges of successful financial monitoring of construction sites

Financial site management is therefore necessary for the success of any construction project. It plays several roles:

• Budget and profitability: financial monitoring prevents additional costs to avoid budget overruns. By optimizing expenses, it directly improves the profitability of the construction site.
• Allocation of resources: it helps to identify areas where resources can be allocated more wisely. It improves efficiency and reduces losses.
• Risk controls: thorough financial monitoring helps identify and mitigate financial risks associated with construction.
• Decision-making: the more accurate the follow-up, the easier it is to make decisions at each stage of the project.

In addition, transparent financial management facilitates exchanges with stakeholders. It provides reliable data that can be used for multiple analyses.

Method for carrying out a good financial follow-up of a construction site

Financial monitoring therefore makes it possible to control costs and ensure the profitability of the site. But how do you go about it?

Pre-project financial planning

Financial planning can be done in several steps.

1. Define financial goals: Start by calculating the total disbursement. This includes material, equipment, and labor costs (dry outflow), plus construction costs.

Formula to remember: Total disbursement = Dry disbursement + Construction costs.

2. Establishing the budget: Create an initial budget based on these costs, and add room for contingencies and structural costs. In this way, you determine the cost price of the construction site.

Formula to remember: Cost price = Total disbursement + Overhead expenses (or Structure costs).

3. Plan financial management: Set up a precise schedule for payments, choose suitable methods to manage expenses effectively. Also, identify potential financial risks and prepare strategies to mitigate them.

Monitoring of costs during construction

To ensure transparent management, ensure a thorough record of all expenses on the construction site. Here are some practices to put in place:

• Document each expense: keep invoices, order forms and other supporting documents. It is necessary for monitoring and to meet accounting requirements.
• Respect the procedures: each cash outflow must be approved in accordance with internal rules and contractual agreements.
• Update the data: Update financial information regularly, ideally in real time. Use appropriate software for better visibility.
• Analyze the costs: Examine spending for anomalies or savings opportunities. Adjust plans based on the results of this analysis.

Analysis and adjustment during construction

During the construction site, adaptation is essential to ensure compliance with the budget. Here's how to do it:

• Produce regular financial reports (weekly or monthly) to compare actual expenses to planned budgets,
• Examine the discrepancies between planned costs and actual expenses,
• Determine the causes differences. Adjust budget and plans based on results.

If you see significant differences between forecasts and reality, intervene quickly. For example, consider renegotiating contracts, reviewing material choices, or adjusting workforce management. This can help limit negative financial impacts and even lead to savings.

Existing tools to carry out financial monitoring of construction sites

Choosing the right tools is important for effective financial monitoring of work. They generally allow better manage budgets and avoid costly mistakes.

Excel

The use of Excel for financial monitoring is common, but Can be time consuming. For each project, you must:

• Customize the file: each project requires an adapted model.
• Complex formulas: sum calculations, advances, security deductions, and VAT must be meticulously configured.
• Data export: reports should be prepared in PDF format or printed for meetings with stakeholders.

Even with great rigor, avoiding calculation errors in Excel is perilous. Especially for large projects.

Specialized software

The use of specialized software brings significant improvements in the financial management of construction sites. These tools generally have the following benefits:

• A collaborative interface which simplifies interactions between all the financial actors in the project, from planning to monitoring.
• All-terrain accessibility that facilitates ongoing management and communication.
• The ability to connect to other tools to ensure consistency and reliability of data.

The benefits are numerous for businesses:

• Time saving: the use of specialized software reduces the risk of errors by reducing the need for multiple entries and low value-added transactions.
• A look back at the main missions: it allows teams to focus on their core tasks without being distracted by administrative details.
• Centralization of information: they improve data visibility, making it easier to make more informed strategic decisions.
• Financial reactivity: they help to react quickly in the event of cost overruns, guaranteeing accurate and effective financial monitoring.

By adopting appropriate tools for financial monitoring, construction companies can not only monitor costs in real time but also react quickly to any financial anomaly. This follow-up improves the predictability of projects and considerably increases their profitability.