How to improve the integration of project management and accounting with ease

Budget and scheduling are the most important indicators of project success for project managers in the construction industry. McKinsey and Company recently published a report that revealed that large-scale building projects have an average scheduleoverrun of 20% and that budget overruns occur in 80% of these projects.
Although budget and delivery are two different ways of evaluating project performance but they are closely linked, many of the most common problems that construction project managers face can have a negative impact on both budget and scheduling. The schedule can be compromised if the wrong materials are delivered to the jobsite. On-site contractors and employees also need to be paid. Rework can be caused by a lack of communication or planning.
Project managers are increasingly choosing to integrate accounting systems with their selected project management software tools to address these issues. Integrated accounting can be beneficial at every stage of construction project management and ultimately gives managers better oversight of budgetary performance and project scheduling.
What is Integrated Accounting?
Integrated accounting is revolutionizing the way project delivery teams in construction communicate, share data, and make real-time decisions that lead to project success.
A construction project team consists of many roles: a constructionproject manager, a project accountant, the general contractor, architects,engineers, designers, the project owner and often additional stakeholders. Communication between all parties was limited in the past due to limited technology. This could lead to costly delays and lost information.
Consider the case of a single order for a change. A project owner might visit the job site and request a change. The site manager may help the project owner to fill out the change request. Once approved, the manager will bring it to the office of the project manager for approval. Once the schedule has been approved, the order will be sent to the back office accounting department. The projectbudget can then be updated.
This manual process involves multiple hand-offs and many opportunities for data entry errors or lost paperwork. This process can lead to a significant delay in the time between the initial request for a change order and the time when the project budget documents have been updated to reflect the new changes. This may not be a problem for a small project, but it can cause project managers to wait days for the most current version of the project budget.
Integrated accounting addresses this issue by synchronizingfoundational, budgetary and transactional data between the back office and thefield. Information such as change orders and new purchase orders will be automatically exported to the chosen accounting software. This information will then be reflected in the project budget documents. This eliminates the need to manually enter data into the accounting system. Integrated accounting allows project budgets to be updated in real time. Construction project managers can make business decisions using the most accurate and current data that reflects the project’s status.
Image courtesy eSUBHow does project management and accounting integration support project outcomes?
Integrated accounting solutions for the construction industry have one key function: “Connecting the back officetothe field”. This streamlines communications and helps to maintain an ear-real-time fl