Why is bookkeeping important for construction companies?
As we’ve mentioned, the importance of construction bookkeeping is given by its complexity. But what is this complexity made of?
Scattered custom projects
Construction companies and their work are decentralized by nature. While there may be a connection point that coordinates all the activities, these activities are many, no matter how small the construction site is: designers, engineers, suppliers, transport… Each function requires specific skills, a specific budget, specific care, plus it needs to be coordinated with the surrounding areas.
No two construction projects are the same. For this reason, it’s unlikely that you can implement the same strategies, expenses, or plans that you’ve already used on other projects.
Direct and indirect Costs
No two construction projects are the same. For this reason, it’s unlikely that you can implement the same strategies, expenses, or plans that you’ve already used on other projects. The construction industry involves direct and indirect costs. Direct costs are those associated with a specific project and they may include labor, equipment, materials… Indirect costs are those that are essential to run a construction business: insurance, transportation, equipment maintenance, software…
The entity of construction projects
Because construction projects usually have a high price, and because contracts can have a very long duration, keeping track of every transaction becomes extremely complex and requires unique scheduling and collection. Because contracts are so long, furthermore, bookkeeping becomes even more important.
Construction project costs are never the same because they can vary according to weather conditions, transport, the cost of materials, and more… This makes bookkeeping even more complex and more important.
Nobody can run a construction company or a single project on their own. Construction projects always involve workers, and because there are tons of workers you need to deal with tons of payrolls. They all need to be precise and punctual, and you can’t manage them without a perfect bookkeeping strategy.