3 reasons why you shouldn’t track construction project costs in your accounting software



I’m going to give you three reasons why you shouldn’t track construction project costs in your accounting software. Number one is simple. It hasn’t been designed to do that.

We have a lot of customers and clients that will come to us using Xero, Sage, QuickBooks, and will show us how they tend to do things today, tracking projects in those systems. And the answer is yes, you can, but the reality is that you will find the limitations very, very quickly and you will run into reporting issues.

So, the first reason to not track construction project costs in the accounting software is it was never designed to do that. Your accounting software has been built and designed to serve as butcher, baker, candlestick maker, and not been specifically designed to manage the details required to track construction project costs.

The second reason is it creates a disconnect because it gives us limited permission sets. We might have people on the project that have financial responsibility to the project who are not necessarily the same people that you might want to have in and around your accounting software. So therefore, we create a disconnect from where the cost is happening on the project.

For example, we might have QS, we might have project managers, we might have guys on site that can order materials, for example, and we don’t allow those people into our accounts package, which is another reason why we shouldn’t track the project costs in the accounting software.

Three, it’s extremely limited in terms of its reporting. For example, when we want to drill into a project and we want to break projects down into different cost codes, design codes, and we want to run reports on that, even at a product code level, we’re not going to get that detail out of our accounting software.

So for example, if I want to run a report on a single line item and I want to see how much I spent on a length of timber, I want to run that at a project level or I want to run it across numerous projects, we’re not getting that detail, which is just one example of the detail that we’re never going to get from your accounting software.

So, it’s not designed to do it. It’s not going to allow the key people in the company to get access to it. And it’s going to be so limited in reporting that it’s going to stop us having the insight and the ability to grow our company in a way that we know we should be by producing an efficient, purposely built construction cost control system.

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