Implementing New Construction Software & Change Management

Corporate management and software resellers alike tend to view implementing  new construction software as strictly an IT and technical process.  That approach sometimes leads to failure, particularly with extensive systems involving  accounting,  equipment, inventory and project management. A significant number of IT projects fail, with failure ranging anywhere from not meeting initial goals to having to abandon a new system outright.  Certainly many elements of such failure relate to technology issues, but a number have been traced to failure to provide change management.

The reasons are simple: most people and organizations resist change and change generates conflict.  Without specific countermeasures, this resistance and conflict erodes the organization’s ability to make the requisite adaptation to a new IT system where some changes behavior is needed.  In other words, system change is a disruption, which management is rarely equipped to handle.

Most simply, change management involves analysis, communication and leadership to ensure that an organization can effectively adapt to a required course of change.  Following are some of the key issues to consider when that change includes a major new software system:

Hire a Change Management Consultant:  Probably the most important issue is engaging a suitable consultant, as few mid-sized firms have the requisite skills internally.  And software resellers are likewise not equipped to handle this aspect of new systems implementation.  More importantly, they will almost never mention it.  The reasons are that it is:

• Not relevant to them, and outside the scope of their thinking
• A diversion of funds from their project
• A wild card third party that they may have to deal with

An experienced consultant can forestall major problems, some of which can be virtually unfixable if not addressed up front.  The appropriate consultant should be able to lay out specifically what the problem areas and risks are, based on an assessment of the organization and type of system under review.

Employee Involvement & Communication:  Involvement of effected employees should begin early, and not as an afterthought.  Communication needs to be a two-way process, starting with a forthright discussion of:

• What will happen
• When will it happen
• Why it is being done
• What is the expected outcome
• Who it will effect
• How it will effect them

Without this communication, management should expect everything from people not understanding priorities to outright opposition (frequently covert).  In addition to telling employees about the changing environment, they need to solicit specifications and suggestions about the system, alternatives and other issues.  This is called buy-in and also helps to prevent mistakes and oversights throughout the process.

A good way to execute on the necessary communication is have interdepartmental workshops where the data needs of each business area (project managers, field supervisors,  accountants, equipment managers, payroll, etc.)  are discussed in detail along with flow charts mapping the movement, and justification,  of data between each department.

When Management is Not Leadership:  Most organizations are management-led, not leadership led.  That is, they rule by fiat, simply issuing memos to obtain their objectives.  That rarely works when complex systems are involved.  There are several reasons, but probably the most important is that if the new system and change management are not seen as having an unequivocal CEO mandate, both employees and senior executives will feel free to virtually ignore them.  Thus the needed integration, cooperation and participation may never materialize.

Companies often have the idea that complex new construction management software systems are plug-and-play, not realizing that leadership may be required to make them fully work, organizationally.  Although large enterprises often, but not always, have both the understanding and resources required, that is often not the case with mid-sized organizations.

Sell the New System:  Selling the system means informing employees of why and how the new system will benefit them.  Unless they have a stake in its success, they may be indifferent or downright hostile, for a variety of reasons.  This is a serious element of success and assuming that it is unimportant has caused some implementations to fail.

Dealing with Fear:  Fear is a natural byproduct of implementing a new system.  These are some of the main manifestations of such fear:

• Are they going to eliminate my job – or me?
• What if I can’t learn the new system?
• What if my position isn’t as dependent on my years of skill?
• What if I lose power?  (This is a management fear)

The problem with fear is that it leads to behavior that in some way is oppositional to the new system.  Or it may lead to departures, from employees who can’t deal with the uncertainties.

Be Prepared to Resolve Conflict:  Conflict can easily arise with a new system, as gateways are opened up between different departments and divisions, and turf battles erupt.  Often it is based on the last fear noted above, but there may be other motivations as well, most specifically a drive for personal power at the expense of the organization.

Most organizations prefer to ignore conflict and send signals that it should remain hidden.  Unless specific steps are undertaken in order to first identify and then resolve conflict, it will just fester and the system performance will simply degrade.  Often an honest broker is the only participant who can take these two steps, but only if granted an unwavering charter to do so by the CEO.  Conflict can include anything from refusing to attend project meetings (too busy) to not allowing employees time to work on conversion issues.

While  the scope of this  article is referring to mid to larger sized organizations, ($20M and up), the principles involved effect companies of all sizes. Leadership and motivation carry the day even in small offices. All it takes is one or two uncooperative employees with  key operational jobs to sabotage new software!

Simple Steps Small Contractors Can Take To Reduce Exposure To Fraud

Small contractors, and even larger ones,  often lack good internal control systems.  With today’s economic climate, it is a good time for small businesses to take a look at their internal controls to minimize their exposure to fraud.

Larger companies rely on the segregation of employee duties as the backbone of their control systems.  This is more difficult to do in a smaller business, as there are often fewer employees who perform a broader range of job duties within the business.  Here are a few ideas of controls that can be easy to implement, yet result in stronger deterrents against fraud.

It is not unusual in a smaller business to have one person who is able to record cash transactions and reconcile the checkbook.  Sometimes this person can also either sign checks, or has access to the signature stamp.  Taking away the ability to sign checks, or custodianship of the signature stamp from the person that reconciles the cash accounts is a good first step.

Presenting the check signer with the vendor invoice, purchase order and receiving slip (if applicable) along with every check for the check signer to sign is another good procedure.

An additional control procedure would be to mail the bank statements with checks or check copies to the owner’s home, rather than to the Company’s place of business.  The owner would briefly review the returned checks or check copies prior to turning them over to the person that will reconcile them.  This will improve the chances of detecting someone writing an unauthorized check.  The owner reviewing the bank reconciliations and lists of outstanding and cleared checks and deposits is also a good procedure to implement.

Many accounting software programs, including QuickBooks, allow a user to change the vendor name on a check or delete a transaction after a check is issued.  Using a software program that requires transactions be reversed and not allowing them to be changed or deleted is much better.  Turning on the audit trail function in QuickBooks, while not nearly as strong, can help detect unauthorized changes to transactions if the owner will review the list of changed and deleted transactions each week or month.

More robust construction accounting software programs have stronger controls over user access to sensitive areas or functions.  If your company’s software will control access to vendor maintenance, consider implementing procedures to require all vendor changes and deletions to be signed off by the owner and to be made by a person or persons without any other accounts payable or check writing duties.  If your software isn’t able to do this, consider changing to one with better access controls.

Another good procedure that is not to hard to implement is to export both vendor and employee lists to Excel, and sort both lists by street address.  Compare the street addresses of the two files and investigate any vendor activity where there is a match.

These were a few relatively easy procedures to implement.  A good system of controls protects employees from unwarranted suspicion in the event of fraud.  Employers benefit from the reduction in exposure to fraud.

Special Thanks to John Reed, Principal, LarsonAllen LLP, Fort Myers, Florida for his help in writing this article.