Publications / CSCE/CRC 2025 - Montreal, Canada

Unlocking Digital Construction Management Software to Support Cash Flow and Profitability Analysis

Soroush Abbaspour and Mazdak Nik-Bakht
Abstract:

Effective financial planning and control of construction projects depend on proper cash flow and profitability analytics to achieve successful outcomes. Digitalization of construction data, through construction management software tools, has gained momentum in the past 5 to 10 years. Procore is a leading example of such solutions, holding approximately 6.2% of the global construction software market and ranking second in the category. While offering avenues for collecting and organizing the data of construction operations and administrative processes, the full potential of descriptive and predictive analytics of these tools, alongside ERP systems, for managing project cash flows remains untapped. This study explores and discusses the analytics that can be derived from Procore, and one ERP system, to improve cash flow planning and control, and profitability monitoring and improvement for construction contractors. In this regard, an approach is developed to extract and aggregate cashflows from the data of transactions, and three use cases are enabled accordingly: (i) evaluating payment delay's impacts on profit using ERP system data; (ii) evaluating financial impacts of change orders; and (iii) performing cash activity-flow cross-analyses to improve project liquidity and resource allocation. Results of applying the proposed method to real MEP-related data and data of a sample project shed some light on how untimely payments, different project activities and types of change orders affect the contractors' cash flow and profitability. By harnessing construction data properly, contractors can be empowered towards improved project planning and control practices.

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