Small business owners have a variety of options to choose from when they’re looking for additional funds. This can be a good thing…but it can also be overwhelming. Two of... Read More
How Developers Leverage Technology to Gain 24/7 Visibility into Construction Finances
There is a lot on the line when it comes to your project’s construction finances. Securing the loan is one hurdle you have to overcome on your path toward project success and profitability, but there are plenty more down the line as your development progresses. You’ve got to secure a GC, obtain permits and inspections, get your vendors paid, repay the loan and, ultimately, either sell or lease the project you just spent all that time building.
A construction project may be all about the evolution of the physical structure, but the project details are contingent on financing. This makes it more important than ever for developers to have a solid grasp on their construction finances and open, clear communication with their project partners, including contractors and lenders.
Thankfully, technology has made these tasks substantially easier. An automated construction management software program like Rabbet can not only ensure that all project partners are connected 24/7, but that they have round-the-clock access to project information that’s stored in one streamlined, secure space.
Data doesn’t do anybody any good if it’s locked away once you leave your office – or, worse yet – once someone else leaves their office. One of the biggest problems with traditional construction finance practices is that information is stored in separate silos and documents.
To mitigate this, you must request the information. This can be done through a number of formats, including in person, text, email, phone call, physical mail or fax. Not only do you have to hope your request was received and acted upon, but you then have to wait and see which medium the sender will choose for their response.
A Gen Z associate may have been tasked with addressing the faxes at the end of the day, but what are the odds they’re going to fax you the document back? Chances are greater that they’ll opt to email or text that document. If they don’t have that information on hand, this faxed request may end up on someone else’s desk…and the cycle starts over.
Let’s say you’re able to successfully secure that document from your point person or their assistant (this task, by the way, grows ever larger as more people – secretaries, assistants, associates and colleagues – are included in it).
You still have two problems:
- It is now your responsibility to store this document in an easy-to-access location, should someone now request it from you.
- This document became outdated the second the sender hit “Send.” Any further changes or updates executed on their end will not be reflected in the version that now sits in your email.
An intelligent construction finance software solution allows you to store all your documents in one portal that can be accessed anytime, from anywhere, by any project personnel that has proper authorization. Day or night, whether you’re in the office, at the job site or sitting poolside, as long as you have an internet connection, your project’s finance documents are at your fingertips.
Let’s expand upon Point #2 from above. An email, fax, text or print out is not a living document. It may be live while it’s still on the sender’s screen, but that electronic timestamp that corresponds to when the document was sent might as well be that document’s time of death. That’s because the sender can neither include – nor see – any future updates.
Of course, you can update the document and send it back, but that just means the timestamp shifts and now you’re the one left out of the most recent version. This digital ping pong game can have huge repercussions when you’re dealing with a multi-million-dollar construction project and numerous development partners. And this is to say nothing of the errors and omissions that can occur from manual data entry. Machine learning identifies those errors while flagging any inconsistencies or missing information. Plus, project partners are always able to see who is in charge of what tasks and on what timeline. Should a problem arise, they’ll know exactly who to contact.
A revision to a change order, an increase in materials costs, a substituted vendor or a rescheduled inspection can be problematic. However, when they happen without you knowing they can wreak havoc on your budget and timeline(especially if you’re working off an old version of a document).
Smart software solutions instantly reflect a user’s changes across all documents, ensuring you and your team are always working off the most up-to-date, real-time version. This is particularly important if there is a delay in getting the right document to the right person.
Let’s say a key development executive requested the schedule of values before he left on a four-day business trip involving another project. You tracked that document down, but didn’t want to bother him while his attention was on this other project, so you held onto it until he returned. Well, now he’s back – and that information is at least four days old (at a minimum!).
Simply put, working off old, outdated information…isn’t working. Intelligent construction finance software ensures you’ll always have the most accurate version of a document, no matter what.
Money and trust tend to go hand in hand. It’s certainly hard to get the former without the latter, anyway. While you should trust your vendors, lenders and development partners, this can only carry you so far. After all, seeing is believing, which is why draw requests can contain mountains of documentation!
Consider a portal such as Rabbet like your own personal surveillance system. You can login anytime to see exactly what’s happening with your project. You can ascertain where the project stands , what items are running close to budget, when change orders are pending, what the next project milestone will be and how much money is left in your budget, along with so much more.
Transparency not only builds trust; it keeps people honest. Since your project exists in a 24/7, interconnected digital platform, there is no way for mistakes or errors – whether intentional or not – to occur. That’s because machine learning is uploading, digitizing, organizing and analyzing all your data points and transactions. This includes all receipts, invoices and approvals. If a step is skipped or a receipt throws your budget completely out of whack, the smart software will instantly catch the error and notify the appropriate personnel.
As financial technology (fintech) evolves, the gap will continue to widen between two types of construction finance professionals: those who enlist automation, machine learning and live document software to assist with their project management needs, and those who don’t. For those who don’t, the risks and challenges are written on the wall (and in this blog!).
Let Rabbet show you how its software can allow developers to gain unmitigated access and visibility to their construction finance resources. Schedule a demo today.