They say hindsight is 20/20. You can take advantage of that hindsight by holding regular project closeout meetings to find nuggets of truth about how the project went and learn from them.
Not every project makes money for your firm. You can find ways to improve project and accounting management if you set a tone of openness to genuine feedback that will filter down to your project managers and other key employees. Here are some guidelines for success in this endeavor:
Distribute relevant reports weekly. No one likes extra paperwork, but your project managers will appreciate your weekly financial reports if you include the information in a way that is useful, relevant and on point. How do you format the reports? What to include? Well, what not to include is just as important a question.
Hold closeout meetings on all but the smallest projects. Even when jobs are extremely profitable, there is much to be gained from a 30-minute review after the project's final numbers come in. The meeting should include you, the chief executive, the chief financial officer, the project executive, project manager, project accountant, and the office manager who prepares and distributes the reports. Bring the following specialized reports with you to ignite discussions and keep them on point:
Let your finance, accounting or tax advisor who specializes in construction configure these reports for you. Don't let your bookkeeper waste time reinventing the wheel.
Project closeout meetings should be brief and productive. Set the tone and state the goal upfront. The primary purpose is to extract and develop insight from the financial results of this project for two purposes:
Open every project closeout meeting by having the project accountant narrate the rest of the group through the above reports. He or she should not only explain what every column means, but also point out significant events that affected cash flows, job costs and profits.
Then, use these questions as a guide. Pose them to the project manager one by one, and be sure that the manager answers them completely in front of everyone present:
Once the project has been put under the microscope and all cost, revenue, and cash flow matters have been brought out in the open, turn the meeting over to your CFO to hammer home any points that executive wants to make and to create takeaways for the project manager and project accountant to leave with.
The project manager should come out of the meeting knowing his or her real value. The project accountant should come away scribbling down notes for improving communication by getting more of the relevant information to the project manager more effectively, while removing information that is not beaming with intelligence.
Your project financial reports, in both form and content, are key to your firm's sustainability. It is imperative they be designed by a specialist in construction accounting and finance. Ask your accountant for guidance in this area.
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