Industry Insight

The Impact of COVID-19 on Construction Costs 

The novel coronavirus (COVID-19) has disrupted businesses in ways no one could have predicted and for a period of time longer than most anticipated. The good news is that the majority of U.S. businesses have been permitted to resume operations and are finding ways to adapt to the “new normal.” However, with that being said, the construction industry has suffered major financial impact as the cost of doing business has risen and the ability to complete projects on time has been impeded as a result of COVID-19. 


In this article, we’ll cover some of the major ways the coronavirus pandemic continues to impact construction costs.


New Standards for Workplace Safety

new safety measures implemented in the construction industry due to COVID-19

New health and safety regulations have required construction companies to develop plans for returning to work that outline how they plan to keep employees safe and operate in accordance with local laws and ordinances. Developing, documenting, distributing and implementing new safety protocols requires time and resources, all of which comes with a cost to construction companies.


New Personal Protective Equipment (PPE) requirements also come at a high cost. Not only is it difficult to calculate how many masks and gloves are needed to complete a project, N95 masks are still difficult to come by, especially in large quantities. As a result, some construction sites have begun to rely more on air scrubbers, HEPA filters and other dust control measures to save the N95 masks for situations where close contact is unavoidable. Sanitizing stations and temperature check programs also come at a significant cost and require rental fees, material costs and man hours for setup and management.  


Another factor to consider is how social distancing rules impact the pace of construction schedules. Before the COVID-19 pandemic, job sites would typically be packed with subcontractors which is no longer considered safe. With fewer people allowed to work at any one time, projects are taking longer to complete, which invariably costs more.


Project Delays & Cancellations

A workforce survey conducted by the Associated General Contractors of America (ACG) and Autodesk between August 4 and 26, 2020 reports that 60 percent of responding firms say they have had at least one future project postponed or canceled because of the coronavirus, and 33 percent report having projects that were already underway halted because of the pandemic. Additionally, the share of firms reporting canceled projects in August nearly doubled since the survey conducted in June, when 32 percent of respondents reported cancellations.


The survey also found the coronavirus has had a negative impact on firms’ confidence in the demand for future projects. Only 42 percent of firms report their volume of business has returned to the same level as last year, or is expected to do so in the next six months, compared to 52 percent who held this view in AGC’s June survey. Another 37 percent expect returning to normal levels of business will take more than six months, while the remainder don’t know.


Labor Shortages

The same ACG workforce survey found that while “the coronavirus has harmed the construction industry, prompting project delays and cancellations, layoffs and furloughs, it remains difficult for a majority of firms to find craft workers to hire.” Results from the survey found that 52 percent of firms are struggling to fill some or all hourly craft positions, especially openings for laborers, carpenters and equipment operators. 


Ken Simonson, ACG’s chief economist added, “Ironically, even as the pandemic undermines demand for construction services, it is reinforcing conditions that have historically made it hard for many firms to find qualified craft workers to hire.”


Global Supply Chain Disruption 

Global supply chain disruption due to COVID-19 affecting the construction industry

The COVID-19 crisis has had a global impact and caused disruption within every element of the supply chain. Suppliers, manufacturers, subcontractors, banks and the like all have been impacted in various ways, creating the need to develop mitigation plans for all aspects of business. 


According to Beroe Inc., a procurement intelligence firm, “the global construction industry will face disruptions for next 3-4 months from the pandemic as companies globally are being squeezed by the coronavirus outbreak, through labor market and supply chain disruptions.” Furthermore, “companies with worldwide supply chains may see tier 2 and tier 3 suppliers highly affected by disruptions related to the pandemic. The construction industry may experience constant supply issues surrounding construction equipment and materials from Asia.”


Final Thoughts 

Now, more than ever, it’s imperative to keep a constant pulse on your company financials and project costs—and we can help. Premier Construction Software’s all-in-one, cloud-based solution allows you to easily compare the original, current and estimate at project completion and account for anticipated costs. With over 20 customizable fields, and full drill down capability, project managers have access to all the job costs and accounting details they need to make more informed decisions.


And while the increased costs and other financial implications caused by the coronavirus pandemic are beyond any one person’s control, there are ways you can reduce other costs in order to mitigate the overall financial impact to your construction business and future projects—for example, by improving efficiencies across your team through automating complex processes to save you time and to reduce human error.


To learn more about how our software can help you save time and money, click here to schedule a personalized product tour. 


Author Biography:

Kathryn Dressler is a content strategist with more than 10 years of experience across the spectrum of marketing services, including blogging, social media, public relations, copywriting and editorial services.

Tips & Advice

4 Ways to Improve your Budget Forecasting Process

Budget forecasting is a strategic and integral task within project management and control. At a high level, forecasting can be used to answer key questions like, “When will this project be complete, and how much will it cost?” This type of information is critical because without a well-calculated estimate of costs, a business may find itself without the cash necessary to complete a project or to pay workers.


Forecasting is also important for determining anticipated revenue because companies will want to know how much they stand to make before taking on a project. Additionally, an accurate forecast will provide insight into future cash flow, which is especially important in an industry where the funding for a new project may likely come from the revenue of a previous one. 


Creating a budget and financial forecast is no easy feat when there are always a number of variables that may impact a project—for example, weather conditions, change orders, or even a global pandemic causing shutdowns like we experienced this year.


So, what can you do to improve your budget forecasting? Consider these four tips:

1. Review Regularly & Update Accordingly

Anyone in the construction business will likely agree with the saying “the best laid plans often go awry” because no matter how carefully a project is planned, things can change and challenges may arise. It’s important to keep a pulse on a project’s status by revisiting forecasts regularly to determine whether or not the project is on-track. 


It’s also important to keep track of the initial forecasts and use them as a baseline for comparison, otherwise you won’t be able to effectively gauge project success and make the necessary updates to mitigate future losses.


When you create a budget forecast, it’s wise to set dates and calendar reminders to review the forecast and adjust the resource and budget allocations as necessary. Not only will this help gauge current status, it will help you create more precise future forecasts and reduce the likelihood of under- or overstating rates for future projects.

2. Factor in Direct & Indirect Costs

Project managers reviewing construction project plans

When you’re creating your budget forecast, it’s imperative to include both direct and indirect costs. Investopedia defines direct costs as “costs related to producing a good or service. A direct cost includes raw materials, labor, and expense or distribution costs associated with producing a product. The cost can easily be traced to a product, department, or project”, whereas indirect costs “are expenses unrelated to producing a good or service. An indirect cost cannot be easily traced to a product, department, activity, or project.”


Three common types of indirect costs are overhead costs (e.g., office equipment and supplies, insurance, salaries), equipment costs (e.g., depreciation, repairs and maintenance) and labor burdens (e.g., FICA taxes, Workers Compensation). Indirect costs can be difficult to calculate, but they need to be accounted for in a budget otherwise your forecasts will be inaccurate.

3. Use Hindsight of Historical Data 

As the saying goes, “hindsight is 20/20.” Use your company’s historical data to your advantage and to feed the precision of foresight. Reviewing historical data will help you identify previous pitfalls and to predict trends that are likely to happen again, all of which will help you plan better for the future to create more accurate budgets and forecasts. 

4.Utilize an All-in-One Software Solution

With so many factors and moving parts dependent on one another, it can be easy for project details to slip through the cracks. Adding to this, many construction companies are using multiple disjointed systems for their project management and accounting needs. Not only does this create bottlenecks in processes and waste valuable time, a disconnect between accounting and job costing means the data is unreliable and can’t be used to accurately gauge success or view up-to-date financial information. 


One of the easiest and most successful ways to improve your forecasting is to utilize an all-in-one cloud-based solution that allows you to access the information you need, wherever and whenever you need it. Premier Construction Software offers the most powerful construction software solution on the market to ensure you can effectively monitor and manage two of the most important functions—job costing and accounting. 


Our software brings the key business data together into a single platform, with seamless integration between all modules, and a single source of truth for reporting. Up-to-date financial reports are ready to go at any time, and can be tailored to your requirements. Premier also offers the ability to lock-in forecasts to ensure project managers are held accountable for their monthly forecasting. 

Final Thoughts

The power and usefulness of a forecast hinges on its accuracy—forecasting in and of itself isn’t enough to guide critical business decisions. Investing the time and resources required to improve your forecasting will contribute to more exact budgets which, in turn, will optimize cash flow and boost revenue. 


To learn more about Premier Construction Software’s forecasting capabilities, click here to schedule a personalized product tour.



Author Biography:

Kathryn Dressler is a content strategist with more than 10 years of experience across the spectrum of marketing services, including blogging, social media, public relations, copywriting and editorial services.

Industry Insight Tips & Advice

Protecting Tight Margins in a COVID-Affected Construction Industry

COVID-19 has had a massive effect on the construction industry. From closing job sites to stretching materials thin, owners, general contractors, and project managers are seeing the consequences on their projects.



One of the most notable impacts of COVID was a drastic reduction in cash flow for almost all project participants. When the industry slows, everyone involved in a project tends to grab hold of what cash they have, holding onto it until we’re in the clear. Sometimes, it’s just the result of less available cash, as financing and projects begin to dry up.


Let’s take a look at the impact COVID has had on cash flow and what you may be able to do to shore up your bottom line.

COVID Cash Flow: Where’d it go?

The COVID pandemic has had a significant impact on construction projects across the globe. Owners, general contractors, Project Managers, and subcontractors have been scrambling to grab their share of the cash before it seemingly runs out altogether.


Jobs are becoming more expensive to complete. With the new rules on social distancing, personal protective equipment, increased regulations, rising material pricing, projects that used to be profitable now seem to be bleeding profits. Between purchasing masks, hand sanitizer, adding new safety regulations and paying for full-time cleaning crews, projects that were underway with profitable margins are now taking on water.  


Factor in that social distancing can double the amount of time it takes to complete a task, and it’s easy to see how timelines and schedules are suffering. While unloading a material delivery that used to take two hours with a full staff, it might now take four hours. You’ll have to budget time to unload the same amount of materials with half the manpower. After all, pinch points like entry doors and elevators could bring workers on your crew into close proximity to each other. 


Materials shortages are also stifling cash flow. If you’re lucky enough to find the materials you need, the prices are way up. Many plants and lumber yards had to shut down for some time during the height of the pandemic. As a result, materials are low, trucking costs are through the roof, and deliveries are becoming more difficult to schedule. 


All of these factors, and many more, are shrinking profit margins. They’re also leaving project managers, general contractors, and project owners wondering what they can do to survive. 

How project managers can handle tighter budgets

Most of the burden of these tighter margins falls on the project managers. They have to recognize the changes in these margins and adjust the project’s course to maintain some semblance of profitability. Holding project managers accountable to their variances and tracking the movement each month is vital to any construction company.


If you’re a project manager, all is not lost. There are some techniques you can focus on to ensure you maintain these tighter margins to the best of your ability.

Job forecasts and cash flow projections

To understand which direction the project might head in, you need to maintain detailed cash flow projections. This data is the baseline that helps you determine the health of your company or projects on a monthly basis. You’ll be able to recognize and budget for trends, allowing you to save for leaner times and make the most of your busiest season.


Effective cash flow projections need to account for income and operating expenses. They also need to track other incidentals like investments and equipment purchases. Thinking about taking out a loan? Your cash flow projection will take the payment and interest into account and show you how it will affect your monthly bottom line.


One thing cash flow projections do very well is point out trends. If you’re maintaining a proper forecast on a monthly basis, you’ll have years of data to look back at. You’ll see which months are the most profitable, which months are the leanest, and what might cause both of those scenarios.


For more information on how you can forecast with Premier Construction Software, you can schedule a personalized product demonstration here.

Estimate at Completion

With the right software, you can track your project’s progress with real-time updates on the Estimate at Completion. Your Estimate at Completion, or EAC, is an important tool for maintaining these tight COVID-related margins.


As the project moves along, and you’re updating your cash flow projections with actual costs, the EAC changes. For instance, say a one-time event occurs unexpectedly, like a change in materials, subcontracts or suppliers. You can input the change order and it will automatically impact the EAC. 


The effects of some other scenarios on the EAC can be a lot harder to track. An on-going change, like purchasing extra PPE for the duration of the project, can be a challenge. This is why it’s important to factor in pending commitments, pending change orders and anticipated costs in your EAC so you have a more accurate picture of where you will finish on the job and won’t be caught with any surprises. With the right software, the EAC should automatically calculate and should be easy to adjust. It should be easy to view the history, and raise budget transfers so you can more accurately determine the long-term effect on the margins and adjust on future jobs.

How owners can hold project managers accountable

For project managers to be effective, owners need to let them manage. But this doesn’t mean that owners shouldn’t hold them accountable throughout a project. Owners need to give PMs the room to make decisions but also maintain the ability to override the decisions when needed.


A smart way to allow your PM to operate is to use effective forecasting software. The PM can make adjustments, enter change orders, account properly for anticipated costs, or even transfer budgets through this software. With an all in one software that provides both accounting and job costing, it can auto calculate the EAC. This way you can trust the data providing the owners with a real-time update on the project’s progress and a more accurate picture of where they will finish on the job and account for all the variances. 


The owner can choose the information they want the PM to have access to and keep updated as the project progresses. The PM will then have all the data they need to make smart decisions to keep the project on track. They can compare line items on a project that are under budget and transfer those amounts to items that might come in above the targeted amount. This way, the PM can account for line items like sanitation costs or materials that have gone up in price.


To ensure that the PM is staying on budget and within these tighter margins, owners can track, approve, or deny these requests. Owners can also lock the previous months, giving them a baseline to judge the PM’s performance against.

Maintaining tight margins during COVID

Protecting what profitability you have left is the key to surviving the changes COVID has had on the construction industry. Some solutions are easy, like shifting budgets, creating change orders, or simply planning for the leaner months. But, you still need to track those items effectively to make smart decisions. You need whatever advantage you can get.


By equipping your project with the right software, you can shore up your bottom line against these profit-robbing changes. Be sure to keep an eye on your Estimate at Completion as well as your regular forecasting. These records will give you an up-to-date record of your project and where it’s heading.


What’s Next?


This new pandemic has influenced the construction industry to adopt technology and refine their business processes to help streamline operations. Traditionally the construction industry are ranked as late technology adopters as it is structured with in-person meetings, hard copy documents,manual signatures and more. In the wake of this pandemic, businesses are becoming more reliant on cloud technology, digitization, virtual meetings, real-time collaboration, and electronic sign-offs pushing the industry to a new world of collaboration and automation.


Cloud technology is now essential. Schedule a personalized product demonstration here and learn how Premier Construction Software can help empower your business. 


Author Biography:

Tom Scalisi has over 15 years of experience working in the trades. Since moving to full-time freelance writing, he has developed a passion for helping construction companies grow. He enjoys teaching contractors how technology can streamline their businesses and educating them about their rights during payment disputes. 

Company News

Premier Construction Software Named FrontRunner for Construction Accounting Software and Construction Project Management Software

It is with great pleasure that Premier Construction Software announces it was named a FrontRunner for Construction Accounting software and Construction Project Management Software by Software Advice.


We are honored to be recognized as a top FrontRunners for financial construction software. Our vision has always been to empower construction businesses to work smarter. By providing forward-thinking software that educates, optimizes and automates how teams work and collaborate, it opens a new world of opportunity and growth previously unimaginable.  We are thankful to our clients who have always steered us in the right direction and have worked closely with us to develop a modern accounting and job costing software solution that redefines how the construction industry operates.Karoline Lapko, Business Unit Leader
Software Advice FrontRunner Badge for Premier Construction Software
The FrontRunners badge is a trademark and service mark of Gartner, Inc. and/or its affiliates and is used herein with permission. All rights reserved. FrontRunners constitute the subjective opinions of individual end user reviews, ratings, and data applied against a documented methodology; they neither represent the views of, nor constitute an endorsement by, Software Advice or its affiliates.


FrontRunners is designed to help small businesses evaluate which software products may be right for them. FrontRunners is published on Software Advice, the leading online service for businesses navigating the software selection process. FrontRunners evaluates verified end-user reviews and product data, positioning the top scoring products based on Usability and Customer Satisfaction ratings for small businesses.

FrontRunners for Construction Project Management software is available here and Construction Accounting software is available here.

Leave a review for Premier Construction Software on Software Advice

About Premier Construction Software
Premier Construction Software is a true cloud, all-in-one accounting, job cost, project, document and drawing management solution designed to meet the needs of GCs, Developers, Design Build, and Homebuilders. Trusted by thousands of companies, Premier partners with forward thinking, progressive construction companies to provide a fully integrated solution for office and field staff operating on Mac, PC and any mobile device. Premier operates in North America as well as Australia, providing a true cloud solution that meets the needs of both markets today.


Required disclaimer: FrontRunners constitute the subjective opinions of individual end-user reviews, ratings, and data applied against a documented methodology; they neither represent the views of, nor constitute an endorsement by, Software Advice or its affiliates.