For some large commercial real estate (CRE) developers, there’s a tendency to get comfortable with familiar methods for tracking a project’s progress and profitability. Deploying one-size-fits-all accounting software leans more toward a generic project management solution, unlike real estate development accounting software that’s specifically designed for complex land and construction pursuits.
Making matters even more onerous, some developers may still rely on spreadsheets that present unique challenges of their own. Despite the popularity of Excel and Quickbooks (and similar generic accounting software), neither approach adequately addresses the dynamic environment in which CRE professionals operate.
The Problem With Spreadsheets
Excel has been a valuable tool for developers since its inception, but the program currently functions as more of a puzzle piece rather than an end-to-end solution for construction projects. Tracking projects on spreadsheets presents numerous issues for finance professionals and project managers.
Primarily, functions such as job costing are rudimentary, and plugging data into cells requires time-consuming manual entry. Inputting labor and materials costs in this fashion also subjects large projects to overestimation or underestimation, which could result from even a single misstated value or errant formula. In this scenario, the inability to catch inaccurate projected expenses can lead to narrower realized margins, which will have a negative impact on the bottom line for owners or investors.
Also, since there are numerous ways to track job progress, each internal controller or CFO will likely have their own method of recording essential project information. Should any of these stakeholders exit the organization, more time must be spent on either learning how existing data flows work or redeveloping a new approach to land development accounting from the ground up. Valuable resources must then be allocated to a process that should be consistent as well as easy to learn and use.
The Problem With QuickBooks
QuickBooks is one of the most widely used accounting programs for global small businesses. It also offers an enterprise resource planning (ERP) iteration that includes a module for construction projects. While solutions such as QuickBooks Enterprise performs a variety of functions for small retail or service businesses, the software is not geared toward the unique needs of high-end commercial real estate developers.
Specifically, QuickBooks users may find it difficult to track retention or dollars that must be set aside for work performed by subcontractors. In addition, generic accounting-first software such as QuickBooks doesn’t offer the capability to house vital information. For example, it cannot track expiration dates on subcontractor insurance certificates, the absence of which may create significant exposures for a real estate development organization.
QuickBooks does integrate with apps to fill in gaps formed by what the software cannot tackle organically. However, add-ons often involve some data security risk as well as the possibility of bugs and a general incompatibility with processes, workflows, and legacy systems, if retained.
A Solution to the Problems
Anton Systems gives CRE professionals a way to manage projects with precision and accuracy. Its Budgetrac solution eliminates the need to piece together multiple platforms in order to keep a project on track and on budget.
From detailed reporting capabilities to estimated cost-of-completion snapshots to updates that track cost and income in real-time, Budgetrac covers all the bases for a successful development project. Contact us today to take the next step toward optimal profitability.