5 ROI Benefits of Consistently Capturing Structured Commercial Data from Site.

Working under a fixed price or cost reimbursable contract?  

Here are five clear return on investment benefits of consistently capturing structured commercial data from site.

The construction industry is dominated by two predominant forms of contract.  The fixed price, lump sum and any number of variations on a cost reimbursable model including target cost contracts. 

For both these fundamental types of payment terms there are basic risks and benefits associated with how and what data is best captured consistently on site to support substantiation of payment and contract administration.

In this article we explore 5 of the highest value benefits of consistently capturing structured data for commercial reporting.  To start, the most obvious is getting paid for the work you’ve done! 

1 – Getting paid

Fundamental to the commercial management of any project is getting paid and paying others.  This is almost always underpinned by an application for payment process requiring further substantiation of either works complete of project expenditure. 

Often site records or data from site are required to provide evidence and this is where capturing the data consistently and in a structured format is essential.  Using digital automation, applications for payment may be streamlined avoiding a huge data dump from a payroll system or complex spreadsheets. 

For cost reimbursable forms of contracting demonstrating actual cost is critical and supporting that with site data is essential for avoiding disallowed costs, often applied where site records are lacking quality or missing completely!

2 – Mitigating risk

Risk and contingency budgets for major capital projects run into tens of millions of pounds.  There are unknowns that must be insured against and many potential likely scenarios that must be allowed for and managed during a complex programme of work. 

There is often a disconnect when these events occur as reliable, structured, consistent data is not being captured in order to understand, mitigate and ultimately avoid high risk, high impact events.  By investing in the right tools to capture this data not only is there a great chance to make proactive and positive interventions in a timely manner there is also all the data relating to the impact of events when they have occurred. 

Where target cost contracts are being used there is a shared incentive to understand and take action to mitigate risk as both client and contractors benefit from beating the target price. 

For fixed price contracts it’s essential to capture high quality site records to substantiate compensation events and demonstrate the impact on cost.

3 – Managing suppliers

The benefits described above for getting paid by a client are transferred all the way through the supply chain, often through “back to back” contracts.  Many processes still rely on varying degrees of trust and are open to manipulation and miscommunication. 

Significant resources are used to verify and substantiate what are often simple progress metrics and cost information.  Where contractors and suppliers embrace a shared platform for capturing and reporting on progress alongside labour, plant and material resources the allocation of costs may be automated with contemporary records and transparency driving trust and efficiency into the process. 

Under cost reimbursable contracts, where clients may audit cost applications in the supply chain it’s essential to have adequate records to adequately demonstrate payments to subcontractors.

4 – Pricing scope change

How can change be priced if there’s no benchmark or data relating to productivity norms and efficiency? 

With consistent, structured data capture comes confidence in outputs and the ability to extrapolate costs and forecasts for additional or changed work. 

Where clients have visibility of that data, reviewing and negotiating the price for change is simplified as the reality of actual progress is known and not a subjective debate. 

5 – Understanding productivity and profitability

In any contracting relationship, for all parties, the fundamental understanding of productivity and profitably are mission critical.  Knowing when you’re going to finish and at what cost is the basic building blocks of project controls. 

For clients, having instant and ongoing access to structured data captured on site will improve confidence on programme updates and cost forecasts.  For suppliers in fixed price contracts knowing their cost and value reconciliations are based on robust reporting could be the difference between making and losing money on a contract. 

For all suppliers, being able to track and make interventions to maximise productivity, whilst tracking delays and risk events should be a priority and available in real time.

In summary the consistent capture of site data touches on and improves every part of the commercial function on a construction project. 

Clients and suppliers rightly focus on the people required to manage projects however it’s equally important to provide those people with the right tools for the job. 

Paper, spreadsheets, Whatsapp reporting, digital forms, low code solutions will only deliver so much and often bring an administrative overhead on the most expensive human resource deployed to make projects succeed. 

If you’re ready to invest in the right tool for the job and give your people what they need to deliver the outcomes you expect, whilst increasing confidence in delivery and higher profitably then come and speak to us today.

‍