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Getting accounting aligned with the project management team
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March 12, 2024
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Summary
Regular meetings, goal setting, training, software and reviewing finances weekly can improve teamwork and bring accounting and project teams together to help construction companies make better decisions and reduce risks.
When a construction company uses its
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to its fullest potential, great things start to happen. Stakeholders make better decisions and risks are often identified and minimized sooner, with less effort. This means increased profits, shorter timelines, and a more well-rounded business.
But accounting teams can’t accomplish this if they’re left out of the picture. Rather than simply following behind the project management team, they need to work alongside them. We’ll identify not only the importance of aligning the accounting and project management teams but also some steps companies can take to make it happen.
The benefits of accounting and project management synergy
Project management teams and all their members have their strengths, but so do the folks in the accounting department. Bringing these teams together creates a situation where the whole is greater than the sum of its parts.
When accounting takes a leadership role in a construction or contracting firm, risk management efficacy skyrockets. Accounting teams are able to analyze financial data and identify discrepancies, delays, and cash flow issues far sooner than the average project management team can. While the project team is fantastic at mitigating tangible risks, the accounting team excels with risks on spreadsheets and reports.
Accounting folks are always very good at ensuring decisions comply with laws and regulations. These professionals use their extreme attention to detail and regulatory knowledge to avoid costly mistakes, prepare for routine audits, and ensure that any pending changes and updates in governmental policies and regulations won’t steer the company off course.
And, when it comes to managing, predicting, and improving cash flow, accounting teams reign supreme. This entire division is devoted to debits and credits, timeframes, and reporting, so they have the best grasp on how long it takes to get paid, how much accounts payable payouts will be, and what to do with the company’s cash flow reserves.
But these benefits can only become reality if the project team welcomes accounting to the table, and the accounting division steps up to fulfill the requirements of this new job description. Mike Trammell of Forvis notes that this is part of the trick, stating companies need ”a person or persons or a team, a department that thinks how to get outside of debits and credits, how to get outside of the accounting or finance or even the treasury function and start thinking about where are we going from a long-term goals and strategy standpoint.”
6 tips for aligning accounting with the project management team
The benefits might be powerful, but the road to fostering the relationship between the accounting and project teams might not be well-marked. That doesn’t mean it has to be tough traveling, though. The following tips will help bring the accounting department forward to sync with the project management team.
Hold regular meetings to bolster communication
It doesn’t matter what other efforts you employ, when it comes to project management and accounting synchronization, communication is the number one priority. Businesses should schedule weekly or biweekly meetings where members of these teams sit down. At these meetings, these teams can discuss current contracts, bids, job costing, and any financial challenges facing the project.
But conversation should reach beyond the juncture of where project management and accounting meet. Both teams should discuss the current status of initiatives or internal projects their departments are working on. If nothing else, accounting and project management minds often work differently and the insights they can offer each other can be invaluable.
Kathryn Schneider of Forvis suggests companies take these meetings even further, potentially turning them into retreats. She paints a picture of how this might look: “People are going to put all this stuff on little sticky notes, throw it up on the wall, and then we're going to break into teams and we're going to go try to figure stuff out. How can we fix some of these things?” she says. By giving these folks the creative space to identify these problems, they’re able to work together to solve them.
Set goals to create trackable progress
There is no silver bullet that will instantly connect the project folks and the accounting team. It takes time and deliberate action to merge these teams into one cohesive unit. Setting goals is one of the best ways to take that deliberate action, creating benchmarks by which the relationship can be measured.
The nature of the goals set will depend on the individual company, its processes, and the type of relationship it plans to build. However, some examples include achieving better report accuracy based on field data, accounting team members touring project sites to observe project progress relative to contract progress, a set amount of meetings each month including before issuing payment, and improving project costs and margins.
Check back on these goals at set intervals to track progress. Determine what’s working and what isn’t and what’s necessary and what’s simply not. Tailor the process to your company for the best results.
Provide training opportunities
While the goal is not to turn an accountant into a project manager or vice versa, the truth is that training can foster a better understanding of the two departments’ responsibilities. Beginner-level project management or accounting courses are helpful options. Team members can also shadow each other through everyday tasks to better understand what each other does.
When members of these teams are exposed to each other’s worlds, they’re able to understand how the decisions they make impact each other. For instance, a budget shift might be a simple line item to the management team, but it could have ripple effects and compliance implications for the accounting team. Conversely, cost-cutting practices might look great on paper, but using the wrong materials or removing an important player on the team could send the project completely off track.
Implement company-wide project management software use
Project management software is another helpful tool for improving communication and bringing the accounting team into step with project management. These software programs allow users to see the project from a higher angle, providing more insight into things like project budget, progress, change orders, and other significant aspects of the project that affect more than just the project management team.
Project management software isn’t a new theory, and it isn’t a cure-all either. However, accounting divisions might not be using the PM software to its full potential, as these departments often have their own software programs they use. Finding management software that will implement with their accounting department’s chosen programs is a helpful workaround, but also one program that simplifies the process can also allow companies to reduce their tech stack and simplify workflows.
Schneider says that not only does this streamline relationship building, but it also reduces risk. She says, “Take advantage of cloud and APIs to just really minimize that burden and the risk of having a very disconnected technology stack.” She says contractors should consider slowing their tech-collecting ways and “find a common platform that we can all make everyone happy on.”
Compare estimates to actual financials on a weekly basis
Frequent reconciliation is rarely a bad thing. Accounting divisions and project management teams should discuss and compare estimates to actual financial statuses at least once a week. This allows the team to identify inefficiencies or errors before they become too far-reaching, and also pinpoint activities the company is doing well.
Kirkpatrick adds, “How are the contract estimates reflected in the financials? How are they updated on a frequent basis or a routine basis? I would say they should be reviewed on no less than a weekly to biweekly basis.”
And, with the new SECL regulations, where companies can write off expected losses, accounting teams can review contracts to better manage cash flow and compliance. Kirk adds, “So that's where the accountant would come in. They would have insight as to, ‘Hey, we bill company X, Y, Z a hundred thousand dollars every month and every single month they pay us $99,000 and we always write a thousand off.’” The company could write those losses off against investments or bonds—but only if accounting is brought into the fray.
This is truly where the beauty of the two departments’ strengths might lie. The engineering minds behind both of these divisions are able to find the devil in the details during these meetings and truly devise a better overall trajectory for the company moving forward.
Create contract review workflows to promote clarity
In most companies, accounting doesn’t play a significant role in contract proposal or review processes. However, the accounting division contains some of the most detail-oriented minds in the company, and having their eyes glance over a contract before it’s submitted, approved, or accepted can go a long way toward improving profits and reducing risks.
But this is one area where things won’t happen organically. Companies need to create contract review workflows that intentionally put these contracts in front of review teams that consist of accounting staffers to ensure everyone who needs to see those contracts actually does.
Bring accounting forward
There are several ways to bring the accounting division alongside the project management team. And, each company is different, so the methods used may vary. However, what’s important is that construction companies do their best to bring these teams together to make better decisions, reduce risk, and keep companies growing into the future.
