{"id":20466,"date":"2023-07-18T09:34:24","date_gmt":"2023-07-18T13:34:24","guid":{"rendered":"https:\/\/www.foundationsoft.com\/?p=20466"},"modified":"2025-04-14T16:27:34","modified_gmt":"2025-04-14T20:27:34","slug":"forecasting-costs-cash-and-revenue-with-real-time-construction-data","status":"publish","type":"post","link":"https:\/\/www.foundationsoft.com\/learn\/forecasting-costs-cash-and-revenue-with-real-time-construction-data\/","title":{"rendered":"Forecasting Costs, Cash and Revenue with Real-Time Construction Data"},"content":{"rendered":"

Forecasting is critical for any well-run business, but it is even more so in construction, given the need to balance everything from crews and equipment, to bids, billings and job costs.<\/p>\n

There is a growing trend among companies to base their decision-making on solid financial and project data, moving away from subjective factors such as gut feelings, personal opinions, and nonscientific assumptions. This shift highlights the importance of leveraging data-driven insights for making informed and accurate calls in business operations<\/a>.<\/p>\n

The shortcomings of what could be thought of as \u201crearview-mirror\u201d perspectives are also becoming better understood. All too often, contractors get a sense of their performance by waiting until the end of the month, processing paperwork, building spreadsheets and then looking backward at a 10-day-old snapshot. Forecasts are often based, at least in part, on these backward glances. It\u2019s a slow, manual process that tends to miss what\u2019s happening now<\/em> with projects and the company.<\/p>\n\"UG<\/a>\n

Streamlining revenue forecasting<\/strong><\/p>\n

Designed in concert with CPAs, CEOs, PMs and data scientists, newly emerging, automated financial workflows allow contractors to make better forecasts in areas such as revenue, final costs and cash flow. Access to live data in real time helps contractors put in place the right bonding capacity, personnel and other resources.<\/p>\n

Let\u2019s take a look at how this can work with revenue-forecasting:<\/p>\n

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With a specially designed financial workflow, the contractor can enter data for jobs that it is bidding on while pulling out of the ERP all data for jobs under contract. The platform can then generate high-level summaries of progress toward previously inputted revenue targets.<\/p>\n

The revenue forecast can be configured for the rest of the current year, or contractors can pull data to view projections into next year or later.<\/p>\n

Start and end dates, total contract amounts, margin, and either a linear or S-curve distribution are among the fields\/data visualizations in the forecast. Whenever the user adds a new prospective project, the tool automatically calculates the effects on the forecast and related KPIs.<\/p>\n

A well-designed tool will update revenue projections based on changes to either the cost or the percent-complete side. Let\u2019s say the PM had been counting on being 100 percent complete in October but needs to revise that down by 10 percent. With an automated tool, she can make that modification and see the effects in real time.<\/p>\n

Benefits of automation <\/strong><\/p>\n

Because these tools pull right from the ERP, they provide insights into things like the prior revenue earned on a monthly basis, allowing the contractor to compare its actual-versus-projected performance and gauge whether its teams are on track.<\/p>\n

These workflows also make it possible to drill into individual project details and see things like revised contract amount, percent complete, earned revenue, backlog revenue, job cost to date and projected final cost\u2014all flowing directly from the ERP.<\/p>\n

Generally, PMs who use such tools come to the table with a clearer understanding of how their actions directly affect project and company goals.<\/p>\n

Costs and cash flow<\/strong><\/p>\n

In addition to revenue forecasting, specific automated financial workflows can be used for cash-flow projections and projected final costs as well.<\/p>\n

A tool focused on the latter will allow PMs to run cost-to-complete<\/em> analyses based on where their projects stand today<\/em>.<\/p>\n

Potential benefits include:<\/p>\n