Improve the accuracy of your WIP

There’s no getting a construction project done without a WIP. No matter what construction company you go to, it’s inevitable that you’ll encounter this critical document at some point in the lifespan of a project. It’s a report that aligns your project managers with your accounting department to create a full project overview. That makes it the perfect stage for construction companies to analyze their processes, address fee erosion and enhance profitability. 

Despite this, most companies aren’t using the WIP to its fullest potential. The report is treated as a financial compliance document, rather than a business development tool. The WIPs aren’t overlooked because they lack utility, but instead because they often lack accuracy. Unless there’s a glaring red flag in billing, many companies don’t even bother to measure how accurate their WIP reports are. Not only does this deprive your business of a key strategic resource, but it’s also entirely avoidable. If construction companies want to maximize profitability, they’ll need to build better WIPs to get there. Let’s go over how to turn your WIP from a set of rough estimates into a powerful strategic tool. 

Hold your teams accountable

The WIP has a history of optimism. These reports can occasionally skew towards representing the best-case scenario over the worst-case scenario. While this feels great in the short term, it can hurt your profit in the long term. One of the leading causes of failure for construction businesses is revenue mismanagement. If you think you’ve got more money coming in than you actually do, all it takes is a series of underbilled projects to put your business in a challenging position. Accuracy needs to be favored over appeal, and the only way to get there is by holding your teams accountable for the WIPs they’re producing.

It’s time to start having direct conversations with your accounting team and project managers. When they provide their cost estimates, ask them how they arrived at that number. How much of what’s on the paper is based on hard data versus gut instinct? This isn’t about doubting trusted personnel. It’s about tapping into the insight and analysis they bring to the table. By having these conversations, you’ll understand exactly what’s happening and what can be done to improve an inaccurate report. Conversely, if another project’s WIP proves more accurate, you can draw on the expertise and analytical processes that created that report and extend that knowledge to other projects. Understanding how your teams generate their reports gives you the tools you need to improve the WIPs they produce.

Create automated workflows

The accuracy of your WIP may not be flawed due to any human errors. It could also be inaccurate due to a lack of available information. In construction, the flow of financial information between departments is scattered and slow. Change orders don’t always move from project managers to accounting on time. Invoices fall through the cracks, and workplace silos can make it hard to get information in a timely manner. All of this leads to the creation of a slower, less accurate WIP for your business. 

Automated workflows can help resolve this issue without having to restructure your entire business. These workflows create clear audit trails for tasks and assign every step of the process to the right employee. It alerts team members when it’s time to submit a report, invoice, or create a financial document for review. Best of all, it allows your teams to understand what may be holding a task back and who they need to speak with to resolve a delay. This creates a robust pipeline of information for your WIP to ensure that no cost code, billing, or change order is left on the table when creating the report. With automated workflows, every member of your team can rapidly get the information they need to create the best WIPs for total project visibility. 

Invest in a better process

When it comes to financial reporting, garbage in means garbage out. Your financial reports are only as robust and useful as the processes that create them. That’s why it’s essential to invest in a platform that optimizes construction finance for better outcomes. There’s no greater platform for that job than Briq.

Briq is a financial automation platform that can automate data entry, create intelligent workflows, and help construction companies build a better business. Using Briq, your construction company can do more than just improve its WIP. You’ll be able to automate it entirely. Set up a demo with one of our experts to learn how Briq can help you improve your financial reporting.

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