6 Types of Construction Reports and the Questions They Help You Answer
As the owner of a construction business, one of the primary ways you gain visibility into your operations is through the reporting capabilities of your accounting and management software. To be successful in today's environment, you need reporting that can turn large amounts of data into summaries and reports that help you make smart day-to-day decisions while keeping your eye on the big picture. Construction accounting and management software come with a variety of reports. Some construction businesses can get all the information they need from the standard, built in reports that come with their software. Others buy custom third party reporting tools. Others export data from their accounting system into tools like Excel to get the information they need. Whether you are evaluating new construction software or trying to get more out of your existing investment, this post will help you identify the broad categories of reports typically found in construction software and the types of questions those reports help you answer.
These are the typical financial statements that your C.P.A., banker and bonding agents demand. They help you and outsiders answer questions about the health of your company.
If you are using construction specific accounting software (vs. generic accounting software), then you should have a set of reports that provide the information that you need about each of your projects or jobs. The need for project specific reports is one of the major reasons construction companies move from generic software (i.e. QuickBooks) to a construction specific solution (i.e. Sage 100 Contractor)
Project reports show project activity at a glance and help you answer questions related to change orders, safety, labor, equipment, schedules, and more.
Drill Down Reports
Drill down reports let you see the "numbers behind the number". High level summary reports help you digest and analyze large amounts of data quickly, but sometimes you need more detail. Whether you are checking information accuracy, or want to know the make up of your accounts receivable total, drill down reports help you quickly get to the the source data.
Drill down reports are typically, interactive, on screen reports, but you can often print the results of "drilling down" if needed.
Drill down reports help you answer questions like:
- What are the project costs vs. budget variances?
- How many safety issues have there been?
- What is my debt-to-equity ratio?
- How long does it take to collect receivables?
Key Performance Indicators (KPIs)
KPIs provide "at a glance" insight into your projects and company. While KPIs may take the form of a standard report, it is more common to see them on a dashboard - a single page displaying several KPIs. They are often depicted using a visual or graphic element, such as a speedometer, thermometer, or "red, yellow, green" indicators. Dashboards that also incorporate a drill down feature as mentioned above provide quick access to the data driving the KPI, allowing you to make adjustments as necessary.
KPIs should be set up to answer the questions that are most important to you in running your business. Here are a few examples of the types of questions KPIs can help you answer:
- How long are my projects taking to complete?
- What is labor costing me per hour?
- Are the number of accidents going up or down?
- What's my daily cash balance?
Chances are you will have questions that can't be answered by the standard reports that come with your accounting software. This is where ad-hoc reports come in.
Ad-hoc reports, or queries, allow you to create your own customized reports. Ideally, you want a software solution that simplifies the process of creating a custom report. You don't want to have to burden your IT folks every time you need a new report.
Creating an ad-hoc report typically entails two steps. First, you define the data (including time periods) you want to include in your report. Second, you define the format of your report. Formatting typically includes organizing the data into a specific layout as well as defining subtotals and other calculations. Depending upon your software, you may be able to export the data from step 1 into a tool like Microsoft Excel where you can perform further analysis.
Again, ad-hoc reports will be specific to your business and will be used to answer questions that standard reports cannot. Here are a few examples of questions other construction companies have answer via ad-hoc reports:
- What type of work is most profitable for my business?
- What impact are change orders having on my projects?
- What subcontractors are performing at the highest level?
- How closely do my estimated costs resemble my actual costs?
Data Mining & What If Analysis
This last category of reports helps you answer questions related to past performance. These reports can be helpful in evaluating future projects. They can also help you plan for contingencies and other variables such as material costs, labor costs, or interest rates.
Data mining reports help you answer questions like:
- Which types of jobs are most profitable for us?
- What might happen if labor costs continue to run over by 10%?
- How long does it usually take us to complete that type of project?
- Should I buy or rent my equipment?
This post provides an overview of the different types of construction management reports and the questions they can help you answer. If you are evaluating a new software solution, or just looking to get the most out of your current software investment, check out our free Construction Software Selection Guide.