How Real-time Analytics Help Reduce Costs in Construction

Construction owners have always needed to balance speed, safety, and costs, but today's competitive markets have made cost reduction a pronounced challenge.

According to a 2024 study from Global Market Insights, 70% of the construction industry is leveraging big data technologies across software, IoT, and sensors — though effective use of that data still lags.

With the right technology and careful planning, organizations can turn the information they already collect into real-time data analytics that can reduce supply and labor costs, improve workforce efficiency, and streamline project tasks.

The Growing Importance of Analytics in Construction Management

The age of traditional construction project cost management is quickly coming to a close.

No longer can your team build a spreadsheet with a single budget and schedule, track and compare actual costs against that stagnant budget, and hope to react to changes in time to reduce costs.

Spreadsheets make traditional construction management a highly manual process, and even with project management software, tracking costs separately from the work opens the project to errors from manual work.

Further, this traditional method of managing project costs doesn't support modern risk assessment and prevention methods that reduce costs.

Today's construction market doesn't allow a wide margin for error, so more and more construction firms have turned to software that uses analytics to tighten their construction management processes.

These tools bring historical data, previous in-house work, industry trends, and real-time data from job sites and business departments to a central location, where intelligent analytics can help forecast risk and make proactive decisions possible.

Understanding Real-Time Analytics in Construction

Real-time analytics means using the available and ever-changing datasets a construction project produces to get a clearer picture of project progress toward small goals and completion. The major data sources for construction analytics include:

• Contracts
• Designs, blueprints, or building information modeling (BIM)
• Invoices, requisitions, and work orders
• Project management tasks
• Financial tools like accounting and enterprise resource planning (ERP)
• Labor schedules

Real-time analytics for construction management provides a centralized source of truth that enables all project participants to make informed decisions and adapt to a rapidly-changing workplace.

The table below shows common data types used on construction sites and the traditional source(s) of that data.

Analytics tools enable data comparisons across systems that are usually separate, unlocking otherwise difficult- or impossible-to-access insights.

For example, when labor assignments and project progress data can be compared side-by-side, the site managers can plan work schedules to cover specialized project needs with the right expertise.

Similarly, when project managers can compare actual material consumption with planned budgets, they can make more informed purchasing decisions that time inventory deliveries with supply usages to decrease storage needs or even find alternative materials to reduce spend.

Types of Construction Data Captured in Real Time

Today's technology means communication between the job site, home office, suppliers, and partners is increased, but that communication doesn't have to happen during a phone call.

When project plans include data from multiple sources, the whole team rallies around the project instead of trying to send emails or get others on the phone.

Some ways construction data is captured and communicated in real time include:

• Work hours can be tracked in a mobile app with location turned on (geofencing) or where employees can log in.
• Equipment performance is detected by IoT sensors and can signal safety risks and breakdowns that can be prevented with maintenance.
• Environmental conditions on-site can flag unsafe working conditions due to heat, cold, or storms and identify when supply storage may be at risk.
• Supply chain tracking software including inventory, logistics, and contract management software identifies supplier or transport delays that could potentially affect the speed of work.

When project owners learn of emerging risks or changes to the scheduled tasks, they can quickly pivot, rearranging schedules and determining backups and replacements, if needed.

The level of preparation and speed of reaction to evolving circumstances can significantly impact downstream costs.

How Real-Time Analytics Reduce Construction Costs

Centralized data and real-time analytics in dashboards and reports make project anomalies visible and actionable for stakeholders across the business, including chief finance officers (CFOs), project managers, construction business owners, and other parties concerned with cost management.

Preventing Cost Overruns With Accurate Progress Tracking

Live dashboards and progress monitoring allow project leaders to identify schedule slips or over-budget activities before they escalate.

These dashboards can help stakeholders, including those from finance or human resources (HR), identify trends and watch for warning signs that they need to step in or dig deeper.

On-site teams can track their progress in mobile project task tracking applications to update progress immediately and flag delays or risks. For instance, Kahua's mobile app empowers field teams to communicate directly from the job site, leveraging features like biometric login and click-to-call to keep progress transparent and secure.

Applications that allow for notes and notifications on key tasks or discussion sections provide context and quick turnaround to get the project back on course.

Optimizing Resource Allocation

Real-time analytics helps teams allocate labor, equipment, and materials more efficiently. If the electrical team completes an overhead wiring task early, they can move on to another electrical task that does not need their scissor lift.

The drywall team can then use that same scissor lift to install the ceilings, saving rental or transport costs that would otherwise be used to have two scissor lift machines on-site. 

To optimize resource allocation even further, identify dependent and independent tasks within the project. The foundation will need to be poured first, but does the flooring need to be laid down before you install the drywall?

Identifying when to schedule independent tasks based on labor levels and availability can bring flexibility and cost savings otherwise wasted on idle resources or overtime costs.

Reducing Rework and Waste

A robust, real-time cost management suite like Kahua's includes the ability to program quality checks or flag errors alongside other real-time metrics.

When project planners set acceptance criteria for automatic quality checks against internal standards, work approvals and change orders can happen quickly, reducing time wasted waiting on manual approvals.

Similarly, error detection tools show product or quantity deviation from requisition orders, purchase orders, or planned budgets, alerting stakeholders who can quickly mitigate problems.

These immediate responses keep incorrect supplies from being used, reducing rework and wasted product.

As the historic data from vendors, schedules, and other partners builds in the cost management suite, the tool can begin to predict vendor issues or anticipate potential quality issues based on historic evidence.

Combined with real-time and on-site datasets, these predictive analytics tools have more context and information to better surface quality risks.

Enhancing Equipment and Asset Management

Equipment performance tracking through IoT devices can signal when preventative maintenance or malfunction repairs are needed, so the team can update schedules to allow for repairs or order replacement equipment to keep the project on track.

Asset management tools prevent time loss due to unexpected repairs, and they let the company find an optimal time for equipment replacement that doesn't interfere with project schedules.

Implementing Real-Time Analytics in Construction Management

Real-time analytics for construction projects don't appear overnight. They require strategic planning and defined objectives as well as a shift toward iterative data-centric workplace practices.

You can lay the foundation for this organizational change with a well-designed first product. Start by following these steps.

1. Plan the Initial Use-Case for Your Analytics Project

While you may eventually want to use analytics to increase the speed of work and reduce costs across the entire organization, you'll want to choose a single initial use-case for your analytics project.

Consider what project within your organization would benefit the most from data analytics with a relatively simple lift.

If your team is particularly tech-savvy, consider mobile labor scheduling and analytics as your first project. If, instead, you have existing data relationships with suppliers, try building integrated supply cost and timing analytics.

2. Select Technology That Can Scale to the Portfolio and Manage Integrations

Your first project is a minimum viable project (MVP), but eventually you want real-time analytics working in all parts of your construction business.

Choose an analytics technology that has integrations with your existing business technology like accounting or CRM software. Think about the existing size of your project portfolio as well, and look for a software that can accommodate the full portfolio and grow as your business does.

3. Communicate With Internal and External Stakeholders

Identify and hold interviews with internal stakeholders from all departments that will help your real-time data initiative. In your discussions, ask the departmental representatives what their biggest data problems are and how data might work for them better.

With external stakeholders from supply, labor, and logistics partnerships, emphasize the data project's utility and your hopes to cooperate with them for mutual benefit.

4. Deploy Change Management Techniques That Build Stakeholder Buy-In

Change management is as much about listening as it is about relaying information to departments.

Use the lessons learned through your stakeholder interviews to demonstrate the benefits and effectiveness of the initiative for each department. Tie the project back to existing business-level objectives and report progress consistently.

5. Build Dashboards and Reports for Team Transparency

Using the business objectives and project goals, build dashboards that make metrics visible to stakeholders.

Use dashboards to show real-time metrics and progress toward goals, and publish dashboards, so stakeholders can check progress on their own at any point. Then, build reports that show progress over time, surface areas for improvement, and highlight team wins.

Overcoming Challenges and Pitfalls

Your data project will inevitably pose challenges, but with some prior planning and a little patience, your team will overcome the pitfalls of the new project. Some things to look out for include:

Integrate Data, and Break Down Silos 

Use technology to integrate data across departmental and technology silos that stand in the way of real-time data analytics.

Connect tools to your construction project management software with APIs, or choose a data management software that cleanses and deduplicates data from across systems.

Overcome Upfront Investment Worries

Data initiatives require your team to slow down now in order to go fast later. That means building out the planning and design first, so you're ready for the technology when it's needed.

By choosing a scalable data analytics solution, you pay only for the compute power needed to support your initial project, and can expand usage as cost savings begin to materialize.

Over-Communicate for Visibility

A common challenge for construction companies is the disconnect between the project team and the rest of the organization.

While it may feel like you're making a big deal over a project that isn't off the ground, consistently communicating the benefits, progress, and cost savings to internal and external partners will show that the business takes this initiative seriously.

Resistance to Change

Communication can go a long way in showing the importance of the data project, but people still may show resistance when they have to change their daily processes. Approach these concerns with empathy, and listen to worries and feedback.

Once the team feels heard, ask for their most frustrating data problems, and discuss how this project or future iterations may help alleviate their issues.

Finally, provide plenty of options for training to suit all business departments. In-person, online, written, one-on-one, and group training sessions may all be needed.

Take Control of Real-Time Analytics With Kahua

From budgets to schedules, real-time analytics has the potential to reduce costs across the entire project lifecycle.

Kahua is not just another dashboard; it's a unified platform that travels with you. Real-time analytics are captured, consolidated, and referenced right where the work is happening, with detailed insights built in from the start.

Schedule a demo today to learn how Kahua can help you build a data-driven construction site.