How to Improve Cost Coding Data in Construction

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Tracking work to proper cost codes is an important part of any construction project, especially for contractors. Project managers, accountants and estimators use cost code data to accurately assess work progress and plan future budgets. Having a standardized cost code tracking system in place is key to receiving high-quality data and gaining better insights that help contractors stay on time and on budget.

When workers fill out timecards, they typically track their work time against a specific task-related cost code. These codes are determined in advance according to the needs of the company. Cost codes tell contractors exactly where and how most of the time and budget allocated to a job is spent. They help management teams keep current projects on track and establish appropriate budgets for future work.

This type of information is essential in the construction industry. Not only does cost code data inform project finances from an internal perspective, but it can also be shared with stakeholders and used as a way to measure project success or improve processes. Showing customers a detailed breakdown of time (and cost) spent improves customer engagement and provides documented, organized proof of the complex work being performed.

The main advantages of cost codes

It is almost impossible to establish realistic budgets for construction work without the type of granular information provided by an effective cost coding system. Here are the main advantages of cost codes at a glance:

  • Get better productivity insights
  • Measure KPIs more accurately
  • More accurate planning of future project estimates

Entrepreneurs rely on cost code data to stay profitable. Without consistent and accurate data, financial planning is like a shot in the dark.

How to Optimize Cost Code Data

Construction contractors should establish an organized and standardized cost coding system to ensure that data collected in the field is as accurate and impactful as possible. How a company structures its cost codes depends entirely on the type of information needed to monitor success.

Determining the structure of the cost code

Balance is essential in determining an appropriate cost code structure. Businesses need to collect enough information without becoming too granular or complex.

For example, project managers may initially want to designate each possible task with its own cost code for maximum visibility, but ease of reporting should be considered. A complicated and difficult-to-use cost coding system for field workers will result in inconsistent and less accurate overall data.

Project managers and other internal stakeholders can ask these questions:

  • What information do I need to make better estimates?
  • What data does the accounting team need?
  • Can any part of the cost code process be streamlined?
  • How can field contractors easily track code costing time on site?

Gather feedback from different members of the organization who use cost code data and design a system that meets the needs of everyone involved.

Organize by sub-project

The ideal cost code structure is separated by sub-projects. Within each sub-project, costs can be organized by labor, materials, equipment, and crews. The purpose for each cost code is to identify what part of the project the tracked work relates to and what type of resources were used to complete it.

Generally, getting more granular than this will lead to unnecessary complexity or confusion. However, it can be important for some concrete contractors to be very specific when it comes to tracking materials or the location of completed jobs. Whether cost codes should be itemized is up to the business, and your system should be flexible enough to keep evolving.

The most important thing to remember when designing a cost code system is consistency. Setting expectations and providing the field team with a defined structure for tracking cost codes will lead to better insights into all projects over time.

Using Mobile Data Capture

Modern technology makes it easy to collect accurate cost code data, even when that data is very detailed. Gone are the days of trying to remember how many linear feet of rebar you used or cubic yards you poured. Digital reporting software that allows contractors to collect information using a mobile phone or tablet right in the field gets the most out of your cost code process in the following ways:

  • Improved accuracy and ease of use: Paper and pen reports take time and leave room for error. A mobile data capture app with an intuitive interface saves crews time and enables them to capture more accurate data, faster. Applications that enable digital reporting eliminate the need for manual data entry and allow field teams to focus on work-related tasks, while providing professional and standardized daily documentation.
  • Real-time previews: The use of mobile data capture and information sharing between teams via cloud storage means that information from the field can be accessed by the office in real time. When tracking project finances, this instant information is incredibly handy. Analyze cost code performance and adjust schedule and budget as needed to catch potential issues early before they turn into significant roadblocks.
  • Detailed and accessible documentation: Digital reporting also facilitates feedback on a completed project. When project managers need to refer to a previous project to determine budgets or schedules for new work, they can easily access and search previous productivity data and reports. Also, the information is usually better organized and published in a clear and consistent format, making it easier to review.
  • Easier and faster payroll: In addition to project managers, the accounting team will also appreciate the move to digital data rather than paper reports. With less manual review and manual data entry, payroll and other accounting processes can be done faster and painlessly, resulting in less litigation and less downtime.

Cost codes: an essential part of any construction project

Collecting accurate cost code data is necessary for construction contractors to meet project goals and stay within budget. Each business should determine its specific cost tracking needs and establish a cost code structure that is detailed enough to provide high quality information without being too difficult or complex to use.

Using modern technology that streamlines mobile data capture can enable construction crews to collect better data and gain real-time productivity insights. Improved documentation will make it easier for project managers to plan budgets and schedule future opportunities.

There are two things that keep a concrete contractor up at night: productivity and profitability. With the right cost code technology, the right tools, and the right planning, you can set your team up for success.

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