Creating Departmental Accountability: Owning Costs in Construction

Introduction - Creating Departmental Accountability

In growing construction and engineering firms, budgets are often decided at the top and then communicated to department heads without much discussion. The result? Lack of ownership, overspending and finger‑pointing when numbers go awry.

True accountability happens when heads of operations, sales and service understand and own their costs. This blog shows how to gather data, measure performance and create a culture of accountability.

Owners and finance teams often assume accountability is built in, after all, department heads have budgets. Yet without clear ownership and real‑time information, teams may exceed their budgets or misallocate funds. Establishing accountability helps SMEs maintain profitability and make informed decisions.

1 Operations: Controlling Project and Manufacturing Costs

Operations involve labour, materials, equipment and overheads, the most significant costs for a construction firm. Uncontrolled costs lead to margin erosion.

Asana’s guide on cost control emphasises that businesses must plan budgets, monitor expenses in real time, implement change control systems, manage time and track earned value Understanding labour cost, material cost, actual cost and cost variance is critical.

Need to review

Department heads should know not only their budget figures but also the drivers behind them. For example, if labour costs increase due to overtime, operations leaders need to decide whether to hire additional staff or adjust project timelines.

Strategy

• Assign ownership: Assign each operational cost line (labour, materials, equipment) to a specific manager. Clarify that variance explanations are part of their role.

  
  

• Real‑time monitoring: Use project management software to track labour hours and material usage daily.

  
  

• Change control: Establish a procedure for approving project changes. The Asana framework recommends a five‑step change control process: initiation, assessment, analysis, implementation and closure. This prevents scope creep and unplanned costs.

  
  

• Earned value analysis: Train managers to calculate cost variance (CV = EV − AC) and schedule variance to assess progress. Provide dashboards for quick analysis.

  
  

• Regular reviews: Hold weekly or bi‑weekly cost review meetings where operations leaders explain variances and corrective actions.

2 Sales: Budgeting for Growth and Customer Acquisition

Sales teams often focus on revenue and neglect cost of acquisition. Marketing subscriptions, travel expenses and discounts can erode margins. Clear policies on allowable expenses and approval procedures help control spending.

Need to review

Sales directors should understand the return on each marketing channel. Without visibility, they might overspend on low‑performing campaigns.

Strategy

• Define spending categories and limits: Establish what counts as allowable sales expenses (e.g., client entertainment, travel, advertising) and set reimbursement limits by role.

  
  

• Monitor in real time: Use CRM and expense tools to track campaign spending and travel costs. Real‑time alerts can flag overruns.

  
  

• Track ROI: Compare revenue generated by each campaign to its cost. Adjust budgets toward higher‑return activities.

  
  

• Regular check‑ins: Hold monthly revenue and cost reviews with the finance team to ensure alignment between sales targets and spending.

3 Service: Managing Warranty and Support Costs

Service departments handle warranties, repairs and customer support. These costs can spiral if not monitored. Many SMEs treat service as an extension of sales and fail to measure its profitability.

Need to review

Service managers must differentiate between billable and non‑billable hours, track parts usage and monitor customer satisfaction. Over‑promising during sales can increase warranty claims and support costs.

Strategy

• Segment service activities: Identify which activities are revenue‑generating (billable repairs) and which are cost centres (free warranty work).

  
  

• Track labour and parts: Use field‑service software to record time and materials for each service job.

  
  

• Set performance metrics: Measure first‑time fix rate, average resolution time and customer satisfaction. Tie these metrics to cost outcomes.

  
  

• Collaborate with sales: Ensure sales teams provide accurate information to avoid unrealistic expectations and subsequent service costs.

Measuring, Monitoring and Incentivising

Without data, accountability cannot be enforced. Finance must collect accurate information, measure performance and share reports with each department head.

Need to review

Preferred CFO recommends assigning clear ownership of budget line items, providing timely, visual financial data, and shifting from policing to collaborative conversations.

Monthly or bi‑weekly budget vs actual meetings allow departments to adjust quickly.

Strategy

• Collect information: Implement centralised systems that integrate purchasing, payroll and project management. Use cost codes to categorise expenses.

  
  

• Measure performance: Generate budget vs actual reports, cost variance analyses and profitability dashboards for each department. Highlight deviations and trends.

  
  

• Monitor regularly: Schedule budget meetings monthly or more frequently if there are large projects. Encourage department heads to come prepared to explain variances and propose corrective actions.

  
  

• Create incentives: Link part of bonuses to cost‑control performance. Recognise departments that stay within budget while meeting service levels.

Upside of Owning the Numbers

When department heads understand their costs, they can make informed decisions about hiring, pricing and process improvements. Accountability fosters collaboration; operations can align with sales on project pricing, and service can provide feedback that improves product quality. Ultimately, a cost‑aware culture improves margins and competitiveness.

Key Takeaways

• Departmental accountability is critical for controlling costs and improving profitability.

• Operations leaders should track labour, material and equipment costs and use change control and earned value analysis.

• Sales leaders need clear spending policies and real‑time monitoring to ensure marketing and travel costs deliver ROI.

• Service managers must differentiate billable work from warranty costs and track performance metrics.

Accountability isn’t about policing; it’s about empowering leaders with data and authority. To learn more about aligning sales and operations, see our post on why bottlenecks happen and download our Department Budget Tracker from the resources page.

Wrapping up today’s insights, tomorrow we simplify another accounting challenge.