Q: How do you go about maintaining a budget?
A: Maintaining the budget requires a focused effort over the life of the project by many parties. It is a different kind of focus. A DISCILPINED TEAM focus. The TEAM consists of our employees, subcontractors, vendors and clients.
We have found that having real time financial information is paramount in maintaining a budget. This means that when work is performed on a jobsite an invoice is sent quickly to us. In a perfect world we would like the invoice sent within 24 hours of the work performed. We then input that information into our accounting system within 48 hour of when the work is performed. Working in real time really helps track variances so that we can manage them properly.
The financial report that the team uses must be simple to understand and easy to read (large font really helps) by all TEAM members. We believe it be one of our competitive advantages. It has taken us years to develop a reporting tool that is accurate and simple to understand. Our employees are quite good at using this tool. They are getting better in training our clients.
We really believe that we must be great stewards of our client’s money. I like hiring competitive people. Maintaining a budget requires a competitive attitude. (The attitude can’t be so competitive that it curbs the learning process). All jobs have some sort of a variance. We must use that variance experience as a learning tool. We work hard at creating a culture that minimizing variances. Not repeating a job cost that creates a variance is a core competency of ours.
Next week I will discuss more about learning from our job cost variances.
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