Solver Blog

Building Tomorrow: How xFP&A is Transforming Construction Companies

Written by Solver | 10/29/24 1:47 AM

The construction industry is at a crossroads. With increasing project complexity, fluctuating material costs, and labor shortages, construction companies are under intense pressure to deliver projects on time and within budget. In this challenging environment, financial leaders in the construction sector—CFOs, controllers, and budget managers—must embrace innovative tools and approaches to maintain a competitive edge. This is where extended Financial Planning and Analysis (xFP&A) comes into play. Solver’s xFP&A solution, specifically tailored for the construction industry, offers an integrated, data-driven approach to financial management that streamlines processes, increases visibility, and enhances decision-making capabilities.

Unlocking Potential: The Strategic Role of xFP&A in Construction

Managing finances across multiple projects, entities, and timelines is a daunting task. For financial leaders in construction, this complexity is compounded by the need for accurate forecasting, timely reporting, and operational efficiency. Project Management Offices (PMOs) and department heads also face significant challenges as their decisions directly affect project outcomes, workforce productivity, and profitability. Solver's xFP&A solution provides a bridge between financial management and operational execution, empowering construction leaders to make more informed, data-driven decisions.

Solver’s solution stands out for its ability to integrate financial and operational data, giving decision-makers a comprehensive view of company performance. With real-time insights into project progress, budget adherence, and resource allocation, construction companies can improve their financial planning and operational execution. This not only drives better outcomes but also allows companies to respond more quickly to changes in project scope, material costs, and labor availability.

Focus on What Matters: Mastering KPIs for Construction Excellence

Key Performance Indicators (KPIs) are essential for monitoring the health and progress of construction projects. Construction leaders need access to accurate, timely KPIs to make informed decisions that impact everything from project timelines to profitability. Solver’s KPI dashboards offer a snapshot of both financial and operational performance, helping leaders focus on what truly matters.

For construction companies, where delays and cost overruns are common, clear visibility into metrics like project completion rates, budget adherence, and workforce productivity can be the difference between success and failure. Solver’s customizable KPI dashboards provide this visibility, enabling executives to drill down into specific metrics, such as project profitability, labor productivity, and overhead costs. The interactive nature of these dashboards ensures that decision-makers can quickly identify trends and variances, ensuring more proactive project management.

Several pre-built KPI templates are available within the Solver solution, including:

  • Interactive KPI Dashboard: Displays variances and trends for selected KPIs in an interactive format, allowing for detailed analysis.
  • KPI Scorecard: Provides a tabular overview of KPIs, showing actual and budget comparisons for monthly and year-to-date figures.
  • Executive Dashboard for Financial and Operational KPIs: Tailored for high-level decision-making, offering an overview of both financial and operational metrics.

These dashboards offer unparalleled flexibility, allowing CFOs and controllers to monitor KPIs across different projects and departments, leading to more informed decisions and better overall performance.

Automating Accuracy: Modern Financial Reporting for Construction Leaders

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. Solver’s financial reporting and consolidation tools are designed to simplify and automate these processes, enabling construction leaders to deliver timely, accurate reports with minimal manual intervention.

In the construction industry, managing financial data across multiple entities, intercompany transactions, and varied financial periods can be incredibly complex. Solver’s reporting templates help streamline these processes by offering customizable reports that are tailored to the specific needs of construction companies. These templates eliminate the need for complex spreadsheets and manual reconciliations, significantly reducing the risk of errors and improving efficiency.

Some key financial reporting templates include:

  • P&L Variance Report: Automatically generates rows based on account categories and displays monthly and year-to-date actuals and budget amounts. Variances are highlighted, making it easy to identify performance differences.
  • Balance Sheet with Working Capital: Tracks trends in working capital and current ratio, providing insights into financial stability.
  • Cash Flow Analysis - 13 Month Rolling: Offers a detailed view of cash flow trends, including net income, net cash from operations, and financing activities.

With Solver, CFOs and controllers can consolidate financial data across multiple projects and subsidiaries, ensuring that stakeholders have the information they need to make informed decisions.

Data-Driven Decisions: Elevating Project Analysis for Better Outcomes

In construction, effective project management is critical to delivering projects on time and within budget. Solver’s xFP&A solution provides a comprehensive approach to project reporting and analysis, combining financial data with operational insights for a complete view of project performance.

One of the key challenges construction companies face is tracking project performance, managing costs, and analyzing profitability. Solver’s project reporting templates are designed to address these challenges by providing real-time data on project progress, budget adherence, and resource allocation. With Solver, PMOs and department heads can access detailed reports on project revenues, expenses, and profitability, allowing for more informed decision-making.

Some of Solver’s project analysis reports include:

  • Work in Process (WIP) Reports: Provide an overview of project profitability, billing status, and backlog, with customizable filters for easy analysis.
  • Variance Report - Project Profitability: Tracks revenues, expenses, and gross margin for individual projects, comparing them against prior year figures to identify performance trends.
  • Top Projects Report: Visualizes key metrics such as hours worked, budgeted revenue, and project manager performance, helping leaders focus on their top priorities.

These reports enable construction companies to monitor project health in real-time, ensuring that resources are allocated efficiently and that projects stay on track.

Optimizing People Power: Workforce Reporting That Drives Results

A company’s workforce is one of its most valuable assets, especially in the construction industry. However, managing labor costs, tracking productivity, and ensuring compliance with labor regulations can be challenging. Solver’s workforce reporting tools help construction companies gain insights into labor costs and workforce efficiency, enabling better decision-making and cost management.

By combining workforce data with financial and operational metrics, Solver enables HR managers and executives to track labor costs, measure productivity, and optimize workforce allocation. Reports such as the Human Capital Analysis - Compensation Report and the FTE Efficiency Report provide a detailed breakdown of workforce metrics, including salary trends, revenue per FTE, and payroll as a percentage of revenue.

With these insights, construction companies can better manage their labor force, improve productivity, and reduce costs—ultimately leading to better project outcomes.

Building the Future: Streamlined Budgeting & Forecasting in Construction

Accurate budgeting and forecasting are critical for construction companies to ensure financial stability and project success. Traditional budgeting processes, often reliant on manual data entry and spreadsheets, are time-consuming and prone to errors. Solver’s budgeting and forecasting tools automate and streamline these processes, enabling construction companies to create accurate budgets and forecasts with greater efficiency.

Solver offers pre-built templates that simplify the budgeting process, allowing financial leaders to manage budget submissions, approvals, and revisions with ease. By integrating these tools with Solver’s powerful reporting capabilities, companies can align their budgets with strategic goals and operational realities.

Key budgeting templates include:

  • Revenue Auto Forecast for the Next 3 Months: Automatically generates forecasts based on actual revenues, allowing for more accurate short-term planning.
  • Project Revenue & Expense Forecast: Designed specifically for the Project Management Department, this input model allows teams to submit projected revenues and expenses for ongoing projects.
  • Employee Payroll Budget with Assumptions: Enables budget users to first capture all key drivers for taxes and benefits and then input salaries and other essential employee information by department. Taxes and benefits, as well as the monthly distribution of salaries, are automatically calculated.
  • Operating Expense Budget: Department managers typically use Operating Expense input forms to enter their General Ledger-level budgets. They can either input their budgets manually on a monthly basis or utilize Solver’s spreading utility to copy last year’s actuals, apply a percentage increase, or perform seasonal allocations.

These tools not only improve financial accuracy but also provide a more agile approach to budgeting, allowing construction companies to respond quickly to changes in project scope, material costs, and labor availability.

Unlocking Construction’s Full Potential with Solver

Solver’s xFP&A solution offers construction companies a powerful platform for financial and operational planning, reporting, and analysis. By integrating financial data with operational insights, Solver enables construction leaders to make data-driven decisions that drive growth, improve efficiency, and enhance profitability.

For CFOs, controllers, and budget managers in the construction industry, Solver provides the tools needed to streamline processes, reduce costs, and ensure project success. Whether it's through KPI dashboards, financial reporting, project management, or workforce analysis, Solver’s comprehensive platform is designed to meet the unique needs of the construction sector.

If you’re ready to unlock your construction company’s full potential, Solver is here to help. Contact us today to learn more about how Solver can transform your financial planning and analysis processes, driving better outcomes and greater profitability.

Next Steps

If your construction company is ready to take the next step in optimizing project management and financial performance, Solver’s xFP&A solution is the answer. Visit our Construction Industry page and schedule a discovery call to see how Solver can transform your financial and operational planning, reporting, and analysis processes.

Solver’s tailored approach to construction will help you overcome the industry’s most pressing challenges, ensuring better project outcomes and more profitable operations. Don’t wait—start driving operational excellence and financial success today!