Project Invoicing | 4castplus Project Cost Management Software

Managing Vendor Accruals and Vendor Invoice Matching on Large Construction Projects

Click to download whitepaper The Situation The “Owner” on major construction projects, has a very different set of challenges and priorities than contractors or EPCs. While contractors are busily figuring out ways to get the work done as cheaply as possible – and invoicing the client for as much as possible – the Owner is busily controlling project finances, monitoring vendor performance, and making sure the project is commissioned on time and on budget. In the big picture, Owners of course have a much more holistic view of the project in its entirety; and ultimately are managing the cost & timing expectations of their stakeholders & investors. What that translates to on a day-to-day basis for the Owner, is close management of their vendors. Put into simplistic terms, it’s the vendors who are doing the work, and the Owner who is paying for it. The challenge to the owner however; is that close management of vendors is not a trivial thing to do. There can be dozens if not hundreds of vendors on the job throughout a project’s lifecycle, and keeping on top of their costs, activities, productivity – and validating the invoices they send – all requires the owner to collect, organize and analyze a lot of information on a daily basis. Which is not a trivial thing to do. 1 The Problem The Construction Industry is one of the last industries to adopt and embrace technology as end-to-end solutions for management of major projects. It’s shocking how many paper timecards, home-grown spreadsheets, phone calls, emails and handshake agreements that are still used on multi-million dollar – or multi-billion dollar – projects. I know there are a lot of people that hold on to

By Charlie Rose|September 18th, 2015|Categories: Cash Flow, Project Accounting, Project Invoicing|0 Comments

Are we nearing the end of Cost Reimbursable?

Get Ready for Convertible Price Projects When we see quotes like this from the Globe and Mail, “Investors are increasingly applying pressure on oil companies to trim their investments in oil sands projects,” it becomes clear that a change in how we do business in Alberta is on the horizon. If the investment community is losing faith in our ability to extract oil at a reasonable and predictable cost, our industry is in serious jeopardy. There is a shift underway. Cost overruns on construction projects aren’t uncommon of course, and the oil and gas industry in Alberta has not been an exception. It has in fact shown to have one of the worst records for budget overruns of any energy geography in the world. There are a number of underlying challenges that have contributed to this unfortunate track record; but one of the primary culprits has to do with the predominantly cost-reimbursable contract culture that exists in Alberta. This culture creates a challenging environment for projects to stay on budget. The nature of these contracts suggests that there is compensation for all costs incurred plus a rate uplift, with little to no risk absorbed by the contractor for when projects are extended or when they aren’t executed at maximum efficiency. When the cost-risk is so lopsided like that, the owners face having to bear all the added cost of any inefficiencies, productivity issues and errors that occur with any contractor or engineering firm on the project. There can be dozens of contractors and engineering firms (EPCM) on a project, and with the way contracts are currently structured, everyone just passes their problems up the food chain (even the best, most efficient contractors). Nobody’s

By Chris Ronak|February 4th, 2013|Categories: News and Events, Project Change Management, Project Cost Controls, Project Estimation, Project Invoicing, Project Management, Project Negotiation, Project Planning, Project Risk Management|0 Comments

The WIP Report – It’s CFO Candy

Why the WIP Report is so Important In addition to effectively managing the costs and schedule of your project, it’s critical to stay on top of your Work in Progress or WIP. WIP is critical to monitor. You, your CFO and your investors need to know just how profitable your project is, how much of the project has been funded by your customer, and how much has been financed by you. Combining WIP information with project profitability and performance metrics, will give you a complete picture of the financial health of your project or your program. Work in Progress looks at the following key metrics on either a single project or a portfolio of projects currently underway: Total estimated cost Total estimated revenue Total estimated profitability The revenue earned to date Estimated cost to complete Estimated remaining revenue The costs spent on the project(s) to date All billings that have been completed for the project(s) and billable remaining Regularly reviewing your Work In Progress allows you to quickly identify any under or over billings that may be taking place in your project. If your project has been financed by the bank or an underwriter – or when your CFO needs information on your project for his financial forecast – your WIP Report is going to be a critical report in your arsenal of effective project management tools. If you can produce a detailed WIP report and send that to your CFO on a regular basis, you'll make their life way easier - it's like filling their candy jar. The WIP report in 4castplus combines the above mentioned metrics along with much more to give you a complete picture of your organization’s work

By Michael S. Wilson|January 29th, 2013|Categories: Business Process Innovation, Cash Flow, News and Events, Project Accounting, Project Invoicing, Project Profitability|0 Comments

Tips and Tricks on Unit Price Contracts

Unit Price or Re-measurement contracts are a common way for owners to define the structure of how a project is to be quoted by contractors. This is especially true when there is uncertainty on the part of the owner as to the total quantity of each item that will be required to complete the project. A big part of the owner’s motivation for structuring it this way, is that they’re looking for a means to compare rates from the different quotes tendered. Using this technique, they can have an undetermined project size yet still compare vendor bids. With unit-price or re-measurement projects, the owner will provide a Bill of quantities (BOQ) to which the contractor is to quote against on a price-per-unit basis. A BOQ item is an item of work that is stated and measured based on some unit amount; where a “Unit” could be, for example, “feet of pipeline” or “cubic yards of dirt” moved. An example of a BOQ item could be, “Install 8,750 feet of pipeline”. The entire project is made up of many of these BOQ items, each with its own units and quantities. The owner is primarily interested in seeing the price-per-unit for each BOQ item, along with the total project tallied up for a complete quote. As mentioned above, the quantities of the work at tender stage are deemed to be approximate and the actual volumes will be measured and paid as the work proceeds. This way of quoting, measuring and operating a project, is considered to be fair to both owner and contractor, as both are absorbing an equal amount of risk. As long as the contractor is good at figuring out his

By Michael S. Wilson|October 29th, 2012|Categories: Project Estimation, Project Invoicing, Project Tracking|0 Comments

Top 4 Construction Invoicing Tips to Accelerate Cash Flow

Accelerate Your Cash Flow You’ve spent considerable time and effort in running your projects well. You make sure that your customer is kept very happy during project execution, and you’re expertly handling the multitude of challenges that come along with a complex project. Your project is going well, your customer is happy. But you still can’t seem to get paid on time. What’s with that? There’s no doubt about it, keeping your project healthy and well managed has a huge impact on achieving healthy cash flow, but that's really only part of the overall strategy of getting cash flowing happily into your organization. The other half of it – the half that can really bite you – is making sure that you invoice efficiently, and your customers pay you efficiently. Many construction organizations spend a great deal of cost and effort towards invoicing their customers in an attempt to improve their cash flow performance. The challenge, however, is that they’re using the same old process, the same old tools, subject to the same old risks. And they’re getting the same old results: accounts receivable aging stretching to 120 days, accountants and auditors insisting on an allowance for uncollectable accounts, board members and bank managers tapping their fingers waiting for the latest receivables schedule. It’s no wonder when you consider the inherent challenges that practically all construction companies have to deal with in getting their invoices out the door. Those challenges, however, can be minimized, and cash-flow significantly accelerated by implementing the following four cash flow management strategies. Consolidate information. When your key project data resides in multiple systems, there is great risk in access, ownership and status of that data. When you consolidate

By Kim Tremblay|October 8th, 2012|Categories: Business Process Innovation, Cash Flow, News and Events, Project Accounting, Project Invoicing|0 Comments

To Get Paid on Time – Organize Your Job Billing

End-of-month or end-of-week scrambles to get invoices together to bill your customers can be a soul-wrenching hassle. Especially when the systems you have to do your job billing are spread out between spreadsheets, paper, a stack of invoices & purchase orders and some reports from financial. Sitting in a dark office on a Friday night, trying to reconcile it all into invoices while your buddies are at the hockey game – isn’t the best use of your time. On top of that, you’re faintly hoping that, fingers crossed, your customers don’t dispute or find discrepancies with them this time – and you can for once get paid within 30 days. Chances are, though, if everything doesn’t line-up perfectly, there will be phone calls, corrections and the payment will end up being over 120 days. Invoicing in construction projects has its share of complications that aren’t found in other businesses. Progress draws, holdbacks, time & material transaction billing, retainage, flowing through 3rd party direct costs, split-billing, all the complexities around markup on materials & equipment, and much more. Add to that, the knocks to a company’s reputation that go along with invoicing mistakes, double billing or missed billing. To get it right and keep it simple requires a highly organized, flexible and thorough solution. Ultimately, everyone’s in business to get paid, and to get paid on time. Companies and projects can come to an abrupt and grinding halt if they struggle with cash flow issues. A number of years ago, a very smart man – a man who was seasoned in building many businesses – pointed his fat, hard-working finger at me and said, “You can get a lot of things wrong, but you

By Chris Ronak|April 3rd, 2012|Categories: Business Process Innovation, Cash Flow, Project Invoicing|0 Comments