Using Construction Software to Make Informed Bids

Just imagine that you have to make a bid for an HVAC and Sheet Metal job for a large well-known company with whom you have had no prior experience. So you resort to your tried and true methods of creating an estimate using pencil and paper. You are confident that past experience and knowledge will enable you to create an estimate that will make a profit. After all, you have been in business several years and your business is profitable. But how do you know that you are not leaving any money on the table, and that the costs for this new job are in line with those of previously bid jobs? Without a construction software solution that tracks previously bid jobs, both successful and unsuccessful, the answer is you don’t know.

I have seen many small companies in these situations not make as much money as they should because they didn’t really know the level of effort it took to be successful with a project of given size and type. They typically underestimated the number of labor hours necessary to maximize their profit.

How does software help avoid these issues? Imagine if you could track the costs (material and labor), hours, contract size, and profits for each of your past jobs by project type (e.g., apartment, office, hotel, etc.) and then automatically and instantly analyze this information by project type and contract size.

For example, you may find that your apartment-type projects with successful contracted bids ranging between $100,000 and $200,000 made a 7% profit.  You may also find that bids between $200,000 and $400,000 made a 13% profit. In contrast, you may find that office-based projects with bids between $200,000 and $400,000 made a profit of only 8%.

Suppose the analyses also showed that all apartment and office project bids between $200,000 and $400,000 were rejected when bid with built-in profit margins of 15%. Furthermore, suppose you were able to further analyze these results by project manager and customer type (e.g., mechanical and general contractors) to see who were your best performers and most profitable customers.

Knowing this kind of information would allow you to make more informed bids on new projects based on type and size, and turn down projects that are not in your sweet spot. Additionally, the analysis would tell you which projects left money on the table (e.g. for apartment projects you did not, whereas you did for office projects). Why waste time and effort on going after jobs that are not as profitable? I have seen two multi-million dollar businesses fail for these very reasons.

Special thanks to Larry Bookman (lbookman@tracall.com), President and Founder of TracALL Technologies for his assistance in writing this post.

The Importance of Scrubbing Old Data in Construction Management Software Systems

Construction management system databases are wonderful and necessary adjuncts in today’s construction industry.  Without software databases, we would still be keeping track of all business activities in paper form; files, fiches, microfilms, and other hard-copy records.  Construction software databases virtually eliminate the need for all that paperwork, and help keep records up to date and accurate; providing the original data input is such.

Construction software can only provide so much in the area of data accuracy and usefulness; especially if software solutions are not carefully and thoughtfully evaluated, selected, customized, and implemented.  If a construction company’s current data is somehow flawed, no new software package will fix all the mistakes of the past.

It becomes imperative for construction companies looking to implement different software to ensure that their data to be interfaced with the new software is as accurate and up to date as possible.  That way, the new software program will be starting with a “clean slate” baseline without a lot of excess baggage and erroneous information.

The team that is responsible for evaluating and ultimately implementing the construction management software must also ensure there are resources available who can study and scrub current data, to eliminate, rework, revise and otherwise clean up anything that does not belong or does not add value to the construction company’s business plans, going forward.

How to Work with Construction Software Salesmen

As is true with any important business system selection process, finding a reputable construction software company with dedicated, knowledgeable, proactive sales people can be a difficult endeavor.

However, doing some up-front homework can help to minimize risks and provide promise for a successful selection, design, and implementation process.

Selecting a good software system always means more than making random selections from local Yellow Pages!  Some of the most important aspects for making such a selection are as follows:

Do some online research into the topic of Construction Management Systems, so you understand what options and functionality are most commonly incorporated in the most common and most recognized software packages; i.e., those designed for enterprise-wide integration.

Talk with some of your acquaintances in the industry; even your competitors.  Learn what works for them, and what does not.

Once you select a particular company, invite someone from that company to visit and pitch their product, including a working demonstration.  Be sure to include representatives in your company who will ultimately be involved with selection, design, and implementation; and, be sure some potential end-users are involved as well.

Get to know the Sales representatives.

• Ask about their background in the Construction industry, and in construction accounting software functionality.
• Pay close attention to how questions are answered; i.e., do they come across as knowing their product inside-out, or do they fumble and stumble and make guesses?
• Pay close attention to how the sales people talk about their competition’s products and functionality.  Quality sales people tend to refrain from too much bashing; it only makes them appear less confident in their own products.
• Be careful not to let sales people become your “friends,” as such a relationship can spell disaster in these circumstances.  You can perhaps have lunch with them, but the relationship should always remain one of seller and buyer, for obvious reasons.

Positioning Yourself to Implement New Construction Software

When construction companies begin to entertain the thought of implementing new construction management software, it is critical that they take a long, hard look at their current business processes, procedures, management controls, data protocols, and other related construction company functions, in order to be solidly positioned to institute software solutions.

Some construction companies, depending mostly on overall size and budget, will make feeble attempts at selecting and implementing new construction software without even thinking about their current “state of affairs.”  That is, they tend to think the software will fill any voids and make up for any lack of perfection in current business processes and procedures.

Unfortunately, construction management system software cannot fix all the imperfections; it’s that simple.  Thus, it is imperative that construction companies thoroughly examine, evaluate, redesign and improve upon current processes and protocols; in an effort to bring those up to date and into alignment with current best practices and construction management system software design parameters.

Rather than try to make the construction software fit old and outdated processes and procedures, Construction companies should always be looking to keep their business practices current with the latest Construction industry benchmarking and best practice philosophies.  That way, construction companies can keep their competitiveness keenly honed, and their proposals and project management endeavors will represent their attention and desire to being the best they can be.

Selecting a New Construction Software System: What to be Aware of

When construction companies are engaged in looking for a Construction Software package, it is critically important that those involved in the evaluation and selection process be keenly aware of the overall business practices, procedures and processes, in order to make the selection process a success.

While most Construction Management Software solutions provide the basics for most construction company models, there are some important major factors which need to be addressed as the process moves along.

For example, many Construction Management Software packages might come with innovative and useful modules or components which promise to help streamline some processes; but sometimes the streamlining might be a bit too straight-forward for the particular business model at hand.  When that happens, some processes or procedures already in place might need to be re-designed, in order to work effectively within the software parameters.  While process improvements are typically a welcome adjunct to any business, such efforts can bog employees down significantly.

Such scenarios can be frustrating and time consuming; and can slow down the selection process as well.  However, some of this might be a necessary part of fitting the business to the software, if the software cannot be easily fit to the business.

Furthermore, Construction Management Software selection can often lead to frustration with regard to assistance and input from other members of the construction company seeking the software solutions.  Everyone in the company should have plenty of work to do just to keep the business operating, and it is often difficult to solicit help or input from employees who are busy trying to keep up with everyday duties.

In order to ensure a smooth, comfortable, meaningful and successful Construction Management Software selection, it is imperative that upper management within the construction company be behind the effort fully.  Without management sponsorship, the selection process will drag on and on, and the outcome might be far less than what is needed or desired.  If upper management fully supports and backs the software selection team or individuals engaged in that, things will go much smoother; and the outcome will be far more agreeable.

Another source of frustration is that of picking and choosing the right vendors and suppliers of Construction Management Software.  Which ones will provide the most expertise; the most in-house, hands-on assistance; the most comprehensive and complete software solution and implementation for your construction company needs?  Choosing the right vendors, though sometimes difficult, can be overcome if the team or individuals engaged in the selection process do some research and homework about a variety of vendors.  Such an effort can save a lot of headaches going forward.

In other words, the software selection process must include some kind of measurable vendor-evaluation methodology.  Brainstorming for what is critically important to the particular business at hand will help to establish the basic vendor traits and characteristics needed to ensure a successful software selection and implementation.

The old adage “don’t put the cart before the horse” is probably a good one to remember when trying to select which Construction Project Management Software package is best suited for your particular construction company.  It is often very difficult, however, to know whether you should focus on fitting the business to the software, or the other way around.

For the most part, it is probably easier and more effective to study existing processes, procedures, and other internal controls as the software selection process is under way.  If you try to re-design those controls ahead of time, you might not fully understand enough about how the software works to fit the controls to its functionality.

Likewise, if you wait until you fully understand the software functionality to start looking at existing internal controls, you will undoubtedly lose momentum in the selection process.  A successful software selection and implementation is best accomplished when the selection team or individuals have opportunity to see the software functionality in action; that way, they can more effectively re-design processes for the best fit within the software parameters.