Following—and Forecasting—the Money: Financial Modeling for Project Managers
November 29, 2018.
‘Following—and Forecasting—the Money: Financial Modeling for Project Managers’ can be found on page 12 of the 2018 edition of Perspective, a compilation of insights from members of the RLB team around the world.
With construction costs comprising between 60% and 85% of the budget for commercial developments, the need to efficiently oversee and balance resources is a top priority. Key to this challenge is the project manager (PM), who synthesizes data on costs, materials, and time to maintain the integrity and momentum of the job.
An independent project management team can serve the owner as well as other stakeholders—including architects and contractors—by prudently shepherding the schedule and proactively monitoring costs. In order to extract the full value a manager can bring to a project, it’s wise to have them on board at the earliest stage of design. To wait until there’s a problem affecting design and construction before consulting with a PM wastes valuable time when a project is at its most vulnerable point.
Performance and Precision
It’s essential for PMs to have reliable, up-to-date information on which to base their counsel and recommendations to owners. While sophisticated software programs have simplified data collection, it’s the degree of skillful interpretation and application brought by project managers that is often the telling factor in the successful delivery of a job.
Over the past years, Rider Levett Bucknall (RLB) has taken several approaches to computerized project management, including using off-the-shelf software and working with clients to develop exclusive programs that address specific issues. The firm has recently developed a comprehensive platform that not only streamlines the process of project management, but also achieves the highest levels of flexibility and integration.
This fall, a new, proprietary project-management program is rolling out to RLB offices around the world. RLB|Pulse ties the financial modeling of a project into one robust software package that provides clients with a real-time picture of their budget, expenditures, and financial risks. By linking six key functions—contract management, invoice management, project forecasting, change management, cash flow management, and executive reporting—into a single system, clients are able to make informed, timely decisions about the direction of complex projects.
Among the dynamic forecasting features of RLB|Pulse:
- Inclusive vendor interaction: Large projects typically have an extensive consortium of consultants and vendors, each generating its own stream of transactions. Pulse is programmed to manage the execution of each individual contract against the overall construction budget.
- Big-picture view of change orders: Change orders are a time-consuming reality of construction; typically, by the time they are agreed upon, drawn up, and ordered, up to three months may pass, putting progress at risk. RLB|Pulse can forecast fiscal impacts at the time change-decisions are made and track their implementation, enabling owners to have an accurate budget in real time.
- A calendar for cash: To assist in financial reporting, the program uses benchmarks and milestones to track and forecast the cash flow of a project.
- Currency conversion: A new development is located in Dubai, financed with US dollars, EU consultants are on board, and materials are ordered from Asia—international construction projects pose unique payment problems. RLB|Pulse is designed to seamlessly resolve complicated currency scenarios.
RLB|Pulse complements another program which was also created by the firm, Ross 5D. A far-reaching yet nimble construction-cost management tool, it allows accurate estimates and bills of quantities to be prepared from diverse information sources, including BIM models, 2D and 3D CAD drawings, illustrations, schedules, and other project documentation.
In the same way that BIM and CAD models are facilitating re-use and integration, ROSS 5D utilizes concepts of modularity to build a working cost model of a project. Complete costings can be prepared from minimal project information, and are continually improved and refined as the project design is further developed. The cost model makes it easy to analyze alternative scenarios, helping clients to spend less money and delivering more efficient, cost-conscious, and environmentally sustainable results.
Separately or in tandem, the RLB|Pulse and Ross 5D programs bring clarity and economy to the increasingly complex task of construction management, and contribute to the science—and art—of modern architecture while advancing the central role of the project manager.
With a network that covers the globe and a heritage spanning over two centuries, Rider Levett Bucknall is a leading independent organisation in cost management and quantity surveying, project management and advisory services.
Our achievements are renowned: from the early days of pioneering quantity surveying, to landmark projects such as the Sydney Opera House, HSBC Headquarters Building in Hong Kong, the 2012 London Olympic Games and CityCenter in Las Vegas.
We continue this successful legacy with our dedication to the value, quality and sustainability of the built environment. Our innovative thinking, global reach, and flawless execution push the boundaries. Taking ambitious projects from an idea to reality.