Over half of construction projects experience overbilling, new data reveals
A large proportion of construction companies are grappling with the issue of overbilling, signalling the need for tighter financial controls, according to a software firm.
A new report by construction software firm Payapps has found that 64 per cent of construction projects experience overbilling.
The report was based on a survey of over 1,000 construction professionals and found that overbilling was widespread across the construction industry.
"This alarming figure underscores the need for tighter financial controls in an industry grappling with soaring costs due to labour shortages and material price hikes," the software provider said.
The report said that 47 per cent of respondents occasionally face overbilling while another 17 per cent experience it frequently. Payapps co-founder Geoff Tarrant said while overbilling is not the main cause of cost pressures for the construction industry, it does exacerbate it.
"In today's economic environment, precision in cost management is more critical than ever," he said.
Around four in 10 respondents also found managing contract variations to be difficult, highlighting the importance of firms having effective management over variations including clear communication and coordination among all stakeholders.
"Without the right tools or processes, managing the documentation, approval, and implementation of contract variations can become cumbersome and time-consuming," the report said.
It also found manual processing to manage items such as progress claims was hampering the efficiency of construction firms. Around a quarter or 26 per cent of respondents still manage progress claims with spreadsheets and other manual processes.
"Manual handling of tasks such as progress claim tracking and contract management often leads to a lack of real-time visibility into project finances and status.
"This lag in information flow can hinder timely decision-making and proactive project management, exacerbating the challenges of meeting project deadlines and budget constraints," the report said.
"The implications of these manual processes extend beyond individual projects, impacting the broader construction industry’s ability to enhance productivity and competitiveness."
