Construction Accounting Software that does not include the capability of capturing payroll figures and data in real time might be comparable to using a cordless drill without a battery. Basically, it just does not work very well!
Indeed, since payroll is an inherent piece of any construction project accounting, reflecting construction manpower labor costs, it is paramount that it be as up to date as possible, to ensure charges to projects are properly directed, and to help project managers and company financial folks keep abreast of day to day project cost impact from payroll figures.
Additionally, depending on specific company structures, some construction companies might have graduated payroll impacts based on employee skill levels and actual pay. Thus, up to date, accurate payroll data keeps the construction project actual costs in view at all times, without the need to extrapolate, interpolate, or otherwise estimate up to date figures.
Real time data is always best, if available, since it leaves little question or confusion about the overall project accounting from day to day or week to week. If the data is days, or even hours old, it can lead to ineffective monitoring and poor accounting controls of the overall project package; which then can lead to unacceptable outcomes with regard to profit and loss.
Many of today’s Construction Accounting Software packages typically offer as much real time data as is practically available, for good reasons. Today’s market economy demands no less, since everything is moving at such high speed and projects are always under great potential for risks, if the data is anything less than spot-on.
While it is necessary to maintain accurate construction project costs, real time data can also become an administrative nightmare, as it relates to manpower allocations and the like.
For example, we know that very few construction projects are actually executed exactly as they are initially planned and estimated, due to last minute on-the-job changes in equipment or manpower availability or other similar unforeseen glitches common to such projects.
If a field supervisor needs to get a particular piece of a construction project completed at a particular time, and the only personnel available are not the ones initially planned (and monetarily accounted for in the project budget), actual costs for that piece of the project might reflect over or under charges, depending which personnel were utilized, with real time payroll data collection.
It goes without saying that some measure of flexibility must be built into any effective Construction Accounting Software package for reasons like those mentioned above. Field supervisors need to be able to deviate somewhat from the initial plans, so they can continue to move forward toward project completion on time and, hopefully, within budget!