Effective cost control for contractors with AI

Costs have risen while activity levels have fallen. To ensure project profitability, contractors must be able to create even more accurate estimates and maintain strong cost control.

In Q3 2023, fewer new housing projects were initiated in Norway than ever since the Housing Producers began their surveys in 1999. Other markets for Norwegian contractors may be less dependent on the economic cycle, but rising costs still impact everyone.

In KPMG’s "Global Construction Survey 2023", 83% stated that their top priority is improving estimation accuracy for materials, equipment, and labor. At the same time, 54% of respondents emphasized the importance of developments in the ESG area, particularly concerning reputation and competition, but also access to capital and financing.

In Norway, many players have focused on streamlining or optimizing processes at the construction sites. However, some of the challenges the industry now faces may require changes in other parts of the organization. These can fortunately be easier to implement and often provide equally significant impact.

1. Invoice approval

Challenge: When those who need to approve incoming invoices work on a construction site, they are usually far from both their computers and the finance department. In some companies, the approvers also need to add account numbers, project codes, and make necessary clarifications, which can lead to errors, payment delays, and penalties.

Solution: With SEMINE’s AI-powered accounts payable solution, invoices can easily be approved through a smartphone app, split between multiple approvers if necessary, unless the process is fully automated. Internal and external communication can be handled directly in the app and web interface. SEMINE uses artificial intelligence (AI) to suggest account coding—down to the line item—and can be trained to automatically post invoices that meet specific criteria.

READ MORE: Løvaas Maskin: After 4 Months, 89% of all invoices are auto-posted

2. Better Overview with AI

Challenge: Contractors managing multiple and/or large projects simultaneously need not only to break down costs to the correct project. Incoming invoices must also be split and categorized by other dimensions such as account, VAT, department, and production code. Project managers also face the constant challenge of monitoring ongoing costs against the project budget to prevent overruns and maintain control.

Solution: SEMINE’s AI-based invoice management recognises patterns in incoming invoices, reducing or eliminating the need for manual review and account coding. SEMINE also automatically sends invoices through the approval flow. What’s equally important is that SEMINE provides project managers with real-time cost tracking, which can be compared to the budget in SEMINE Data. This allows for quick identification and resolution of discrepancies, giving project managers better control (and better sleep at night). If SEMINE's suggestions need to be corrected, this can easily be done—and the solution learns from the correction for the next invoice.

READ MORE: Reduce costs and gain better control with AI-driven accounting

3. Contract Follow-Up

Challenge: Contractors may have secured favorable deals with certain suppliers, such as better pricing for specific projects. Here, there may be money to save—provided the supplier doesn't 'forget' these prices when invoicing for deliveries. However, manual tracking of these agreements can be time-consuming and prone to errors.

Solution: With AI-driven automation, SEMINE reads project names and/or numbers from both invoice headers and lines, matching received goods prices to the contractor's agreements with different suppliers. If discrepancies are found, responsible parties are automatically notified, and emails can be easily sent to the relevant supplier, either manually or automatically based on validation triggers, without leaving the system.

4. Data collection for better decision-making

Challenge: Contractors increasingly need an overview of which materials they have used where, what prices they have paid, and from whom they bought them. Sometimes, the need may arise due to regulatory requirements, other times the data is essential for modernizing business operations—or for countless other reasons

Solution: Data has become a central component of good corporate governance and a prerequisite for making informed decisions based on knowledge rather than intuition. SEMINE’s AI reads every line item in all invoices, allowing the finance department to analyze the information or provide the organization with all the details about company purchases—not just which accounts they were posted to.

READ MORE: This is how easily the focus can be shifted from punching to analysis

5. Forecasting and estimating

Challenge: When contractors estimate costs for future projects, traditional methods can be time-consuming and based on historical data. This can lead to inaccurate estimates, especially in rapidly evolving markets.

Solution: With SEMINE, contractors gain access to real-time data down to the line-item level. This data can be linked to previous project results or other data sources, resulting in more accurate and dynamic estimates. SEMINE can generate updated estimates based on market changes, raw material prices, and other variables. This provides better conditions for increased profitability and proper progress in future projects.

Why is this important for contractors?

These five factors may seem like "hygiene factors." However, it is crucial to have a system that not only ensures reliable handling of these but also offers partial or full automation of tasks and is a modern software solution with extensive integration capabilities to other systems.

McKinsey has highlighted the need for greater transparency in the execution of megaprojects, focusing on internal transparency—ensuring that contributors and organizations in large projects have insight into what others are doing, complete with facts and real-time data.

If your organization wants to improve delivery on time and budget, you must obtain this data before you can improve processes elsewhere in the organization. By handing over your invoice workflow to SEMINE, you ensure at least two things: an invoice processing system with industry-leading efficiency and full access to all data contained in the invoices.