Use Mobile Apps to Manage Project Costs

Introduction: Two Of The Scariest Words In Construction: Cost Overrun

Estimating a job is a tricky business and things can change at any moment. But companies whose project costs consistently exceed their estimates are doomed to fail. There is a reason why barely 50 percent of construction companies survive after their third year in business. 

Why do companies sometimes have trouble meeting their margins? It’s partly because of the current economic climate: Construction costs are at an all-time high, according to Turner Construction’s cost index. Labor costs are through the roof, and while materials costs aren’t increasing as quickly as labor, they are also on the rise (and some can be quite volatile — which we’ll get to later).

Another issue is human error in bidding: One consultant shared a story of a contractor who forgot to add sales tax to his estimate. Another contractor, bidding on a big project for the Army Corps of Engineers, made a mistake in a single cell of an Excel file that changed the final bid amount by $3.7 million.

But another major cause of cost overruns is a lack of ongoing communication. According to Construction Global magazine, update reports from the worksite are often only produced every four to six weeks, which means that any developing cost overruns won’t be spotted until much later when they are often too late to correct. 

Mobile apps can solve this problem by allowing managers to track daily costs in near real-time.

Why mobile?

If you haven’t made the switch from paper forms to mobile apps, you might not know that cost tracking is just one advantage. Mobile apps give every member of your team access to the information they need in real time, from anywhere. Mobile apps also address the key issues with paper forms, including eliminating lost forms and illegible handwriting while expediting traditionally slow routine tasks — like completing time cards and estimates.

Electrical Contractor Magazine puts it plainly: “Contractors that are still putting estimates together using pencil and paper are not only wasting time and money, but they also are losing business. Just as the advent of the internet changed how sales teams interact with customers, smart devices and the cloud are helping contractors become more competitive and able to demonstrate their ability to immediately and effectively respond to customers’ needs.”

Mobile also helps companies respond quickly to changes. In “the old days,” it could take days or weeks to adjust to new specs from the architect, with multiple versions of the same documents being faxed or messengered around. Now those plans can instantly be sent to everyone’s mobile devices so that your entire team is on the same page at the same time.

How mobile helps control costs

As previously mentioned, construction costs are higher than ever before. The good news, according to JLL, is that there’s also a lot more work to go around — the construction industry will continue to grow by double digits in a majority of industry segments — outpacing the rest of the economy. 

And costs are also expected to rise further. So it’s more important than ever to know exactly how much you’re spending. 

Tracking your daily costs via a mobile app takes only a few minutes and can be updated from any mobile device in the field. That data can then be instantly exported into a file back at the office so you can see where you are trending in relation to estimates. You can slice and dice those costs to compare by project type or by cost category, to drill down into exactly where your estimates are spot on — and where they need to be improved.

Plans can instantly be sent to everyone’s mobile devices so that your entire team is on the same page at the same time.

Here are three of the most important areas where shifting to mobile can help you get and stay: Labor, Materials, and Equipment.

Chapter 1: Labor

The shortage of skilled labor in the construction industry has led to increased costs. CBRE reported that after the housing crisis of the last decade, many construction workers left the industry and have not returned.

“When the number of new construction jobs began to grow without a proportional increase in qualified construction workers, tighter labor markets conditions pushed wages upward,” said Andrea Cross, head of research for the Americas at CBRE and co-author of the report. The labor shortage is expected to continue for the foreseeable future, according to Tradesmen International, and labor wages will rise steadily at least through 2020, JLL said.

What does that mean for you? First and foremost, it means you need to have a tight rein on labor costs since they’re already likely higher than expected. Unapproved overtime could throw an entire project budget into disarray.

Mobile timekeeping apps are one way to effectively monitor your labor costs. Crews can submit daily or weekly timesheets, by project, and their hours worked are instantly uploaded into accounting software systems, where supervisors can see the cumulative totals. Instead of waiting a few days for workers to drive to the office to hand in paper timecards — or send a fax — and then for your back office staff to process those paper forms, you can know immediately how many hours were worked by each member of the crew that week. Mobile apps can also track the GPS location of where those timecards are completed, ensuring workers were “at the job site.”

Some mobile apps, like those at GoCanvas, are able to automatically notify a supervisor if there’s an anomaly or approval needed. That supervisor can then immediately sign off on overtime or, if there’s an error, send the card back to the worker for corrections – right from their mobile device.

Unapproved Overtime Could Throw An Entire Project Budget Into Disarray.

Chapter 2: Materials

Materials costs aren’t rising as quickly as labor costs, on average, but there are some standouts. CBRE points out that the price of asphalt, diesel, iron, and steel may be down, but the decline in those prices has been offset by increased prices for glass, cement, construction sand, gravel, and stone. In general, cement, steel, and lumber price growth may flatten off this year or next, according to JLL. 

That said, according to Ken Simonson, chief economist for Associated General Contractors of America, other materials have experienced wide cost swings. The price of gypsum products, for example, increased by 3.9 percent from January 2017 to August 2017 — and more than doubled in 2018. Further, many materials are purchased locally and local markets can have huge variability in their costs; that makes predicting price changes even more difficult since you can’t always rely on national data. 

With prices changing dramatically like this, you need to have a handle on your materials use and costs in real-time. You need to know how much you paid for a product, how much you used on a given project, and whether your markup was correct. Mobile apps can track all data relevant to a job — location, materials used, and costs — and even present an itemized bill to a customer for a signature, with no pen or paper required. Then, in the back office, you can pull all that information into an Excel spreadsheet to compare how you’re actually tracking with your estimates.

You can also use mobile apps to track orders, keeping an eye on shipments and inventory so you don’t run out of any crucial materials — or buy too much. Overbuying can waste money and also creates potential safety issues if materials are stacked too high or if they create crowded conditions. (To say nothing of the potential OSHA fines!) By tracking where materials are and when they’re likely to arrive, you can better plan ahead.

Be Ready for OSHA 

Want to learn more about staying on top of OSHA construction regulations and preparing for safety inspections? 

Download these resources: 

Your Guide to OSHA’s Construction Safety Regulations 

Chapter 3: Equipment

Is owning that dozer a savvy business decision? If you don’t know, you need to start tracking usage. 

Most major equipment comes with motor meters, or you could have the operator note start and end times in an app. This will give you an idea in real time of how often a piece of equipment actually gets used (as opposed to sitting idle on a lot). 

You’ll also want to calculate your “internal rental rate,” or what it costs you per hour to run. This calculation includes not just the cost of fuel and an operator, but mechanic hours, financing, insurance, and taxes, notes consulting firm K-Coe Isom.

Divide one-time costs (like the purchase price) by the expected number of hours you plan to get out of it over the equipment’s lifetime. Add up yearly costs (like insurance, taxes, and licensing) and divide by the number of hours you expect to use in a year. Then add up maintenance costs and divide by the number of hours you can go between servicing, and add in hourly costs like fuel and the operator’s rate. There are more detailed examples of how to do this at For Construction Pros, or a mobile app could do the math for you to ensure accuracy.

Once you know your “internal rental rate” you can determine whether renting makes sense. Your “rate” calculation for the equipment you bought might look like this:

Cost Item	$ / motor-hour
Cost of Purchase	$12.80
Cost of Annual Ownership	$3.00
Cost of Running ($24+$1+$0.50)	$25.50
Cost of Maintaining ($1.00+$4.00)	$5.00
Internal Rental Rate	$46.30

Many construction companies are moving this way: The demand for rented heavy equipment is soaring, with recent data predicting that the market for heavy equipment rentals will grow by 4 percent between 2018 and 2024. 

Usage data can help you determine whether it’s more cost-effective to rent or own. Are you using the equipment enough — and is maintenance costing you little enough — that ownership makes more sense than renting? If you do decide to go the renting route, remember that even then, a usage log can help you reconcile rental charges with actual use. With the ability to add a GPS tag and photos, you can also keep track of the last location equipment was used.

Finally, detailed usage and maintenance logs help you in the event of an audit: According to K-Coe Isom, the IRS has been looking more closely at deductions for repair costs on equipment since new regulations went into effect in 2014.

Putting It All Together

Mobile’s true savings really become apparent when you think about all the projects your business is juggling at once: It’s not just one job or one piece of equipment, but many dozens or hundreds of moving parts all at the same time. Using digital and mobile tools lets you pull everything together into one area so you can assess whether you’re on target at any time. 

With GoCanvas, it’s easy to upload cost data into a backend system — you can do it with just a few clicks. This saves time in the back office and gives your employees out-in-the-field actionable information just when they need it. Rather than spending their time filling out or reviewing paperwork, they can quickly and easily note the most crucial information on their mobile device and get back to work. 

With costs either through the roof or swinging wildly, you need the best information available to you to make accurate estimates and meet your margins. Using mobile tools is a smart decision that will help you minimize cost overruns on labor, materials, equipment, and more — and help your business meet its margins on every project.

Ready to Rethink How You Work?

GoCanvas has helped a variety of businesses across multiple industries transform their safety processes and rethink their efficiency, ultimately saving them money. Why not do the same? Reach out to one of our experts today to kickstart your process revolution.