Construction is all about putting together disparate parts—lumber, glass, steel, and more—to create a structure that is functional and beautiful. Data consolidation applies the same principle to very different materials.
Construction firms must track an overwhelming number of metrics to ensure financial and operational success. Taken individually, each one has limited utility to a busy construction company, contractor, or similar business, but when multiple data streams are combined and consolidated, they build a whole that is stronger than the sum of its parts.
Data Overload in the Construction Industry
Companies in the construction sector are used to juggling numerous projects at the same time. Each one comes with a slew of key performance indicators (KPIs) that should be monitored carefully: project profitability, material prices and other overhead costs, budget adherence, project duration, progress toward completion, workforce productivity and turnover, and more. That would be a lot to track for a single project—to say nothing of the full slate of projects in the works at construction companies with multiple entities, each with their own book of business.
Savvy firms know that monitoring and forecasting should extend beyond internal performance to maximize results. Market conditions and wider economic trends can also have a massive impact on a construction company’s bottom line, as proposed tariffs on imported goods such as lumber and steel have dramatically demonstrated.
It’s impossible to predict the future, but businesses that stay on top of changing conditions are ready to hit whatever curveballs come their way. To that end, it’s important for construction CFOs, financial professionals, and other executives to stay abreast of and plan for fluctuations in the housing market and Architecture Billings Index (ABI), supply chain disruptions, changes in material costs, and labor shortages.
Taking all of these different factors into account, it would be an understatement to say that construction finance department heads must wade through many different data points to get a sense of the company’s overall performance, define its place within the larger market, and produce accurate reports, forecasts, and financial statements. Doing so manually is even more time-consuming and introduces the possibility of costly errors.
Why Construction Companies Should Consider xFP&A
With an extended financial planning and analysis (xFP&A) solution such as Solver for Construction, companies get a much-needed assistance. Solver’s xFP&A consolidates information from unlimited data sources to provide a single source of truth. Information is gathered and managed in Solver’s Data Warehouse, while Solver's financial consolidation features such as automated currency translation, elimination rules, and process management ensure accurate insights. Together, these functionalities give CFOs, CEOs, and other key stakeholders access to the reporting, analysis, and dashboards they need to make timely, strategic decisions.
How Construction Businesses Benefit from Data Consolidation
Construction executives need to care about a wide array of different metrics, which may at times even seem to conflict with one another. Maybe a new project promises to be extremely lucrative—but, due to labor shortages and rising material costs, threatens to run over its defined budget and schedule. Or, perhaps high-level organizational figures obscure the fact that certain entities are reliably exceeding their KPIs, while other parts of the business are delivering sub-par performance.
It’s hard to stay on top of all of those moving parts manually. But when numerous data sources are consolidated in one easily accessible place, creating a single source of truth, employees throughout an organization can make timely, well-informed strategic decisions. Solver integrates a construction business’ ERP platforms, project management software, employee payroll, and other key data sources to enable that reality.
With a quick look at their customized Solver dashboards, CFOs and other company stakeholders can get a comprehensive sense of their entire organization’s performance on multiple levels, while also drilling down into single entities or specific KPIs when needed.
Why Consolidation Supercharges a Construction Firm’s Finances
Financial reporting and consolidation are critical to any construction company’s financial health. However, many companies struggle with manual processes that are time-consuming, error-prone, and difficult to scale. Multi-entity companies have particular challenges, given the need to square finances across parent and subsidiary organizations, potentially using different ERPs and/or charts of accounts.
Solver’s financial reporting and consolidation tools are designed to simplify and automate these processes, providing business leaders with a bird’s-eye view of their entire organization’s financial health. Solver’s xFP&A allows for automatic currency conversion, quickly identifies and eliminates intercompany transactions, and flexibly handles complex financial adjustments for reclassifications and other entries, enabling construction leaders to deliver timely, accurate reports with minimal manual intervention.
By consolidating financial data throughout an entire multi-entity organization, CFOs and other executives can also monitor financial KPIs with unprecedented precision. Whether they want the top-line figures or granular information about costs and profits from a single project, it’s all there in Solver. That means projects at any level can stay on budget, while executives have the resources they need to steer the entire parent organization toward success.
Solver’s consolidation tools also greatly simplify reporting and forecasting, a huge benefit in an industry that constantly grapples with uncertainty in market conditions, materials costs, and labor availability. Solver’s xFP&A isn’t a crystal ball—but when all the data needed to create evidence-based forecasts is close at hand, it might feel like one.
Take the Next Step with Solver
If your construction business is ready to harness the power of data consolidation, Solver’s xFP&A solution is waiting for you. Visit our Construction Industry page and schedule a discovery call to see how Solver can help your firm build toward a better future.
TAGS: Consolidation, Industry, xFP&A