Point of View

Proactively control your cost-variances and protect your margins with Growsmart. Read on to find out how.

November 24, 2021

Cost management remains one of the significant challenges faced by Project Contractors today. Scope changes are inevitable in the face of an execution of a project. But if you can manage them effectively you can still look forward to a healthy profit margin.

However, cutting costs alone will not work effectively. You need a well-established set of processes, a system in place. Set it up initially and it is then self-sustained with minimal intervention. GrowSmart helps you establish that system. Let’s take a look at how GrowSmart elevates your Purchase process with its set of industry specific processes. 

How does GrowSmart optimise cost management?

Since GrowSmart is designed specifically for the Project Contracting business,we took advice from our existing customers and have come up with these features that if adhered to diligently will bring results sooner than later. They are listed below.

 Detailed Project Estimation at the BOQ line item level:   Prepare a BOQ item level detailed costing of all three costs - Materials, Items and Overhead. The estimates you provide act as automatic caps when an Indent or Purchase request is raised. Since your purchases are tied to these BOQ quantities your costs are tracked at the line item level. 

Your Purchase team can catch any variance that arises at the Indent or Purchase stage itself. They need to be given special approvals to go forward with the indent or purchases. Ensure you are always in the know about any deviations.

Mr. Sridhar of Enmac Systems says they were able to capitalise on this exactly. He states, “Earlier in the manual system we had ad hoc purchases. The site engineers will intend based on the site needs. He will not go in a scientific type, he may not even compare the BOQ. All those things are quite controlled. We have been able to procure materials that are lower cost, delivered to the project site, just in time inventory kind of thing”.

Historical purchase data put to good use: Your Purchase team can leverage historical data - cost and quantity previously ordered from suppliers -  at the click of a button. They can quickly review the order and rate history of your suppliers before approving a purchase. 

You don’t have to go through the trouble of pulling any data manually from multiple sources. GrowSmart automatically pulls data based on the selected sources, combines and presents it in seconds. If a quote from a supplier seems unsatisfactory, they can renegotiate prices to bring your rates down.

Mr. Imran Siddique of Air Design explains  “Since having GrowSmart, we can track our Purchase rates. Like there are default rates set up in the purchase module wherein whenever there is a hike in the market rates(higher ), it restricts the purchase department. It doesn't allow the purchase department to purchase goods at a higher rate.”

.Quick review of your current inventory before making a purchase: Not having enough clarity about your current stock will drive your costs up unnecessarily. Check your inventory forthwith before making a purchase. You won’t end up buying materials already in stock. 

Make efficient use of all the materials and avoid deadstock piling up in your warehouses. Your cost performance takes care of itself.

Mr Amitabh Sur, CEO of  Aircon India, says this about approving Purchase Orders, “I was approving a purchase order. When I was approving, it clearly told me that it is available in stock. And when I went and delved into it more, I saw it in which warehouse, and I immediately told my purchase team that I am not approving this. Because you go to that store, and you see that, you use that. And, certainly, we saved that.”

Get accurate Cost Variance reports: Compile variance reports against every line item. Quantity variances, cost variances, and any non-budgeted items are clearly indicated. Use the standard reports available or create your own using sources that you need specifically. Create a standardised framework for these reports once and keep using it always. 

Keep track of every single item and hence have tighter control over any deviations that occur. Approve them if they seem ok to you or suggest an alternative plan.   

Notify scope changes to customers on time: Customers need to be notified of any scope changes. Or they won’t pay. Simple. So notify them right away when there is any unexpected change. GrowSmart will prompt you to send that email as soon as that change comes up. Many of our customers have stated this has already reduced friction between them and their customers during billing.  

Quick Turnaround time between indenting and purchase: We hear from our customers that Purchase reaches a bottleneck when there are multiple ongoing projects. Purchase managers cannot sometimes keep up with the multiple indent requests in a manual system. This ultimately leads to a delay in the execution itself.

Alleviate all that using the automated Indent and Purchase process in GrowSmart. With timely Indent alerts, your managers will have ample free time and some more after approvals. Keep up with the project timeline always. No more escalations or customer complaints about delays.  

Key results you can expect after implementation

  1. Increased visibility through the entire process keeps you in control. 
  2. Data-driven decision making gives you a confidence boost as a business owner.
  3. Data flows seamlessly between teams.
  4. All of the variations are recorded accurately.
  5. Plugging of any kind of leakages that might happen in the Purchase process.
  6. Avoiding billing struggles with the customer. Always be in their good books! 

Would you like these changes for your company too? Book a demo today!

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