On a lump sum earthworks contract, margin is fixed at bid time and every cost overrun comes directly out of your profit. The most common reason lump sum jobs lose money is not poor estimating. Profits are lost because of the delay between when costs are incurred on site and when they appear in the project’s financial record.
By the time paper tickets and invoices make their way to the office and are reconciled, the window to make operational changes on site has already closed. Having visibility into accrued costs in real-time eliminates that delay, giving project managers the insight needed to make improvements before it’s too late.
KAPP Infrastructure used SoilFLO on a project to track over 100,000m³ of soil to 13 different facilities, tracking the excavation of each segment against their initial estimates. Once the project had exceeded its hauling estimates, the team was notified on their site dashboard. Having the data in real-time meant the team could proactively discuss a change order with the project owners before hauling any more material.
What "accrued costs" means in excavation and haulage
In the context of earthmoving in heavy civil contracting, accrued costs are the material disposal, supply, and hauling costs for every load of material leaving or arriving on site. These costs represent a huge line item in every project and these costs can add up quickly. Each truck movement is a cost event, and that cost is real the moment the load is dispatched (not when the hauler gets around to sending you an invoice.)
How lump sum excavation jobs lose profit before anyone notices
In the competitive construction landscape, the estimator priced the job with little margin for error and it’s your job as the project manager to make sure the expenses don’t go over the budget. On a lump sum contract, every dollar that runs over eats into your profit margin.
By the time the pit and haulers invoice you, and you reconcile them against your tickets, and update your spreadsheets or software, days or even weeks have passed. Without knowing where your costs are in real time, you’re left at risk for going over budget with no ability to change anything.
How real-time cost tracking lets PMs protect margins
When you have a real-time view of your accrued costs while the project is ongoing, you can see if your expenses are running higher than expected. Being able to view metrics like loads per truck hour, costs per cube moved, and a running total of accrued costs, you can accurately see your production rates and timelines before the invoices even come in.
Having this data sooner gives you the time to make changes like look for a closer or cheaper disposal facility, order more haul trucks to speed up production or fewer trucks to reduce idle time, or issue a change order because you see that you’ve already exported more contaminated soil than your tender specified, before you’ve hauled it all off site.
Having this data in real time is the difference between having the power to control costs versus hoping that the project doesn’t go over budget after everything gets added up at the end.
SoilFLO delivers the data needed to control costs
Tracking material and haulage data in SoilFLO, you’re given a live view of your progress, production and accrued costs. SoilFLO provides a number of dashboards to monitor these as your projects progress including hauling summaries with totalled disposal and haulage costs, truck productivity and turn times, as well as any custom built report that you want to match your company-specific metrics.
PMs using SoilFLO are able to better manage their projects and keep them from going over budget.
