Updated: Jan 25, 2022
Oct 18, 2021 | Devi Prasad Bal
Construction Progress billing, commonly known as Running Bills (RA) are the backbone of profitable work. Without a thorough, accurate, and detailed creation of bills in a timely manner, you’re unlikely to be profitable as you will be stuck with cash flow issues.
This is why it’s so important to get the progress billing organized and right from the start. Here’s your guide for how to ensure you do just that.
What Is a Running Bill (RA)? Its Purpose and Function
A RA bill sounds simple, and on the surface it is. Simply put, it is based on quantities of work performed as to how much a particular job is performed and hence cost based on purchase order rates. But there’s so much more to it than that, and a lot goes into creating the accurate bills.
Why Construction Progress Billing Is So Important
An accurate estimate accounts for all facets of a project to give the owner a clear picture of everything that has been executed. A thorough bill means fewer surprises, better project progress, solid data for material reconciliation. Without a thorough measurement calculation, contractors are at risk of performing work at a loss, as well as having cash flow challenges.
The Benefits of Accurate Billing Processes
Of course, the contractor is the primary party to benefit from a thorough and accurate estimate. They can be sure they’ve accounted for all aspects of a job and can be confident about achieving their profit goals.
But the positive outcomes extend further. When estimates are detailed, correct project performance, profitability and efficiency can be known. In general, better planning can be accomplished. Budgets for projects can be set appropriately rather than inflated to allow for mistakes. Across the board, pricing structures and expectations can be drastically improved. It’s a win-win.
What’s Included in a Progress Bill
A proper bill will have the following components:
Detailed Measurements (Quantity Surveying) Sheet
Previously billed cumulative quantities
This period performed quantities
Abstract Sheet - Costs based on Negotiated Rate
Cost of Total work Performed
Cost of Work Performed in this period
Adjustments to Mobilization Advances (if any)
Performing Quantity Take-offs (Measurements)
The first step is to perform a quantity (counts) or material (measurements) takeoff to get the amount of work performed. For the most accurate estimate based on your measurements, understating of the Bill of Quantity (BoQ) is a must. The material takeoffs involve the estimator taking physical plans or blueprints and carefully detailing every activity performed based on the BoQ. This is a time-consuming data management process and prone to human error. It’s the estimator’s knowledge of the BoQ, IS specifications for quantity compilations, experience in estimating, and skill in taking off material quantities that ensure accuracy. There is no replacement for meticulous attention to detail when using manual methods.
Following a proven process is all it takes to get a proper quantity takeoff. Proper material takeoffs begin with inputting accurate information into the excel spreadsheet. Setting aside errors and omissions, your material takeoff relies on a system of identifying activities, quantifying them, and then attaching data to a price schedule. This systematic approach, if done right, results in a fair and accurate invoice.
Some web-based takeoff tools have arisen on the preconstruction scene in the last decade, thanks to an increased usage of cloud technology. Tools like this Sq-Feet offer faster, more accurate takeoffs, which makes a big difference for estimators, but often they still require a time-intensive process of exporting measurement data to another form of software, usually Excel, which is used to create estimates.
From your progress bills, you can then generate material and labour consumption reports, forecast to go work, plan material procurement, – all within the same easy-to-use tool. This is a game-changer for contractors everywhere, eliminating error and rework at multiple stages of the process.
Looking for Quantity Takeoff, Running Bill (RA) cloud-based solution? Check out: www.sq-feet.com