Integrated Construction ERP: Track the Top 4 Construction KPIs

Is Your Construction Business Tracking These Important Construction KPIs with Construction Accounting Software?

Thousands of key performance indicators (KPIs) have been created to track performance and modify accordingly. Construction KPIs make it easier to monitor virtually every aspect of the business. However, it’s easy to get into the trap of trying to track too many KPIs. It's crucial to prioritize KPIs so you don't get buried and miss insights that can really impact your success. Here are four Construction KPIs that are important to monitor in order to surface valuable gems of actionable intelligence.

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The Importance of KPIs

KPIs are the output of aggregated data and calculations to derive measurements typically organized into an executive dashboard. Dashboards visually display trends and outcomes at-a-glance, and KPIs in a dashboard view help executives focus on rising challenges or emerging opportunities.

The decision-makers in your company can use these metrics to make better decisions. Data-driven decision-making helps reduce reliance on hunches. Successful companies have improved performance in new construction and residential improvements, custom and spec home building, commercial real estate development, and multi-family and mixed-use projects.

Avoid Analysis Paralysis

It’s important to avoid trying to track too many KPIs. Taking the time to understand your business inflection points is the simplest way to determine which of the many KPIs will work for monitoring your particular type of business.

Limiting KPIs to a few critical points also helps avoid two problems. We frequently see companies that adopted the use of KPIs with the following issues: 

• KPI clutter can make it impossible to see early warning indicators that allow you to respond rather than react to emerging changes. When your leaders have so much to monitor, it’s important to monitor what matters most.
• Overly complex KPI sets create a mountain of data to wade through, which costs time. KPIs are meant to make your teams more responsive and productive, not bogged down with studying charts and reports for meaningful and actionable insights on where to act.

1. Improve Cash Management

KPIs can unify bank balances, billings, and invoices into a holistic view of your cash flow. You’ll know exactly your cash situation when it’s time to sign contracts, make payroll, or plan capital investments like new equipment or a fleet of new trucks.

For example, in the Acumatica Construction Edition, the system constantly analyzes your operational and financial data to update your cash position. Acumatica’s full drill-down capability provides instant access to the transactions behind it.

2. Better Project Management

Project cost budget status compares actual and committed costs by task/sub-job.KPIs relating to projects should include a view of expense versus budget tracking to monitor profitability. Ideally, your system will enable faceted views of your business, such as:

• Active and completed tasks
• Time by employees
• Subcontractor commitments
• Payroll details

3. Painless Change Orders

The Acumatica Construction Edition enables all that and the ability to measure billing and revenue recognition by cost code, contract line item, and more.

4. Accurate Profit Analysis

In this category, the critical KPIs will show you revised margin/markup, estimates, change orders, and revisions. Analyze variances' root causes by analyzing by line item, cost code, subcontractor, or material.

Acumatica has built-in functionality to make it easier for your teams to catch deviations sooner and take preventive action faster to keep projects profitable. Acumatica’s automated dashboards with real-time data aggregation and tracking display:

• Gross profit by project
• Estimated gross profit
• Profit margin percentage
• Original estimate
• Revised contract

See KPIs in Action

Implementing a cloud-based software platform with built-in and ready-to-use KPI functionality is the most straightforward path to a KPI-driven construction business. In this way, you avoid hardware costs, installation at your facility and maintenance over time. A cloud-based system lets you pay a subscription fee and use the software through a browser.

Getting Started with Cloud Construction Management Software

Don’t get left behind on yesterday’s technology. Take the first step towards a better bottom line today. The Acumatica Construction Edition is a complete, native, and cloud-based construction and accounting software solution. It's designed to meet today’s general contractors, subcontractors, home builders, land developers, and construction businesses' unique needs. This easy-to-use software includes powerful financials, job cost accounting, project management, payroll, inventory, order management, service management, CRM, mobile, and more.

An Acumatica Partner Can Guide You

At Aqurus, we know how valuable Acumatica ERP software is for businesses – especially those needing construction, Distribution, eCommerce, and retail functionality. If you’re interested in how Acumatica’s cloud ERP software can boost your business, the Aqurus team is passionate about smooth implementation and ongoing support. Contact us today.