Cost versus value

What does a company need to do to substitute value for cost as a driver for their projects? This was one of the key points of discussion at the recent Access All Areas online conference, writes David Chadwick

The Access Group, the company that recently acquired EasyBuild, held their Access All Areas online conference in March. It featured some interesting keynote sessions, an introduction to most of its clients to the two new acquisitions, ConQuest and EasyBuild, and roundtables on issues focusing on some of the most pressing issues facing both manufacturers and the construction industry.

The theme that caught my eye most though was the phrase 'cost versus value', which cropped up in the two sessions I was most interested in: a panel discussion on Construction Industry Insights, and Carol Massay's Product Spotlight on EasyBuild consrtuction ERP. The panel discussion was particularly interesting for the emphasis the members placed on the state of the industry, and the difference between public and private projects, which is where the phrase first cropped up.

Led by Professor Ian Reeves, CBE, Chairman of Synaps International and including a number of BIM and other experts from within the industry, such as James Gent, Head of Construction (England) CBS, and Andrew Rayner, a Chartered Architect and Financial Accountant, Ian Cook, Financial Controller, County Contractor, and Carol Massay representing The Access Group, the first thing that came under the hammer was the current state of much of the financial software used in the private sector of the industry, which is outdated and doesn't interact effectively with other applications.

Exploring the reasons for this led the panel through a catalogue of issues that precede both Brexit and Covid-19 and affect all parts of the construction industry. There is a skills shortage at all levels, either through a post-Brexit exodus of foreign employees or a reluctance of younger people to join the industry. The end result is a predominance of older people within the workforce, more set in their ways and with a reluctance to change how they have always worked. This is reflected, said Carol, in legacy software which has become part of the business DNA. "Why turn your back on it - it is doing what it has always done."

The same attitude reflects the reluctance of some companies to invest in newer technologies, to embrace new working processes like BIM and other digital workflows, let alone consider digital twin technology. Having expended time and money on developing their older computer systems, they are now reluctant to change, which would entail more expense and a complete reappraisal and evolution of the way their company works - its accounting systems, supply chains, reporting and communication systems, as well as the way it manages projects, drawings, documents and associated information. And all of it is siloed in various antiquated systems too.

THE CONSTRUCTION PLAYBOOK
Comparisons with the public sector were raised by the panel. It was noted that 40% of current construction projects lie within the public sector, and not only were contractors and suppliers involved within this sector more open about using the latest technology, but that they priced their projects on a value, rather than a cost basis. Their relationship to their clients - the Government - might allow them the luxury of working in this way, hoping to teach them how to make decisions based on value rather than cost, but the private sector is constrained with cost, rather than perceived value, in a project.

The reason why, it was suggested, is that the limited information provided by the software being used makes it difficult to show accountants the tangible benefits of any decisions they make and how they relate to savings. The bottom line is difficult to quantify.

The panel agreed that greater emphasis on both collaboration and innovation should be the main drivers within both the public and private sectors of the industry, pointing to the UK Government's Construction Playbook as a guide. The Playbook "aims to encourage collaboration and better strategic relationships between the public and private sectors and to drive improvement and innovation within the construction industry." While it was agreed that the Playbook hasn't yet filtered down to the private sector, there is some hope that where you can show value, you can, actually, win business.

With regard to labour shortages, various suggestions were made about encouraging younger people to enter the industry, with Andrew Rayner pointing out the need for greater involvement with universities, a greater focus on recruiting and then retaining staff, and getting people to believe in the business. As a result of her own work with women in the construction industry, Carol Massay spoke about the need to convince young women that the industry is a suitable career option for them, and indeed for all young people. The increasing digitisation of the industry could be a future driver for attracting a younger, more digitally aware workforce, along with a new focus on sustainability, as outlined by the Government's Construction Playbook.

COST VERSUS VALUE WITH EASYBUILD
Carol raised the cost versus value issue in her Product Spotlight on EasyBuild. This was another interesting session, as it highlighted the ability of EasyBuild's ERP software to provide the information that enables risk mitigation decisions to be made from the earliest days of a project - from estimating and pricing the project right through to the inclusion of plant, materials and the costs of subcontractors.

EasyBuild's ERP solution enables users to track costs on a monthly basis, but with instant visibility of live information, supported by an analytic dashboard which can be viewed online or on a mobile app, either as a snapshot or via detailed drilldowns. This allows companies to keep a check on budgets and to ascertain whether a project is being run in accordance with its prescribed aims and ambitions, empowering managers and executives to make instant decisions to meet targets.

It also enables commercial and finance teams to work more closely together using live data, collaboratively on or off-site, with access to invoices and documents, so that queries can be instantly addressed and resolved. This helps ensure that invoices match deliveries and subcontract work is being completed and properly accounted for.

The value here lies in the speed in which cost-saving decisions can be made: the time saved in not having to search for missing paperwork at the end of the month, and in avoiding the over-ordering and stockpiling of materials that don't reflect the speed of the project - not to mention the elimination of unnecessary paperwork. This in turn enables further savings to be made through attention to detail, such as the ability to sort out snags as they occur, the shortening of completion dates, savings on material costs, and the fostering of better relations with clients and, ultimately, customers. These are the hidden savings that the panel were looking for on the Construction Insights panel.

A PAPERLESS PARADISE
EasyBuild introduced a number of mobile apps in 2020. EasyBuild Mobile enables onsite managers to take control of accounting issues that fall directly under their remit, such as the handling of requisition and the receipt of plant or materials on site. They know best exactly what is needed, where, and when after all.

The EasyBuild mobile apps can also be used for timesheets for the on-site workforce, which can be sent direct to the office and not handed in half competed at the end of a weekly shift. The apps are the ideal medium for making and adhering to appointments for scheduled or reactive maintenance tasks, and for recording their completion and the time spent on each task. It also enables them to be assigned to individual projects or job along with detailed timesheets.

Smartphones have become an essential tool for every on-site worker. They have contributed to the streamlining and efficiency of data collection on-site, and are a vital constituent of the drive towards the adoption of value, rather than cost, of a project.

www.accessgroup.com