Tips for Choosing your Next Construction Software Package

Once the decision has been made to implement new construction software, the goal is to make the process of selecting new software as easy and successful as possible.  A number of factors will need to be considered when you review potential software solutions.

Every company will come to the table with existing processes in place, regardless of whether or not those processes are the most efficient or are best practices.

However, in most cases, companies are better off looking for new construction software that fits their specific business models.  There are a number of commonalities in nearly all construction businesses that are accounted for in most software, so being aware of how well a piece of software matches with your unique business models is the key.

Construction projects all require manpower, materials, equipment, vendors, and other components that are similar for most projects.  Therefore, when selecting new construction software, make sure your new solution includes a user-friendly workflow module that will give you the ability to monitor and manage resources in real time with a certain degree of flexibility.

Workflow processes in the construction industry are pretty similar from company to company and many projects need the same resources to be executed effectively and efficiently.  Thus, although the workflow module is important to have, rest assured that most construction management software packages have a workflow module.

Additionally, construction software should be flexible enough to change orders when confronted with inevitable unforeseen circumstances.

Also important is to ensure that the new construction software has an integrated accounting module.  Construction accounting software gives companies the ability to track and control costs in real time.

Finally, consider the new software’s functionality in relation to field operators.  Many field supervisors use wireless devices to keep projects up to date and manage data.  If your company uses field operates to this degree, make sure that your next construction software package has web-based applications that will allow these activities to take place.

In searching for the next software for your company, make sure that you begin by mapping out the busineeses processes.  Once you can see how things are done within your organization, you can check to ensure that any new software will align well with your processes to provide your company the greatest benefit.

Selecting New Construction Software with End-User Input

When selecting a new construction software package, one of the most important things you can do is make sure that you involve an entire team in the selection process.  We’ve already talked about the importance of having a software champion, but more individuals need to be involved in the process from multiple departments within the company.

One group that is extremely to include in this group is the end-user community – those that will eventually be using the construction software on a daily basis.  They need to be represented in the software selection team and consulted with as they are the ones that will be using the software the most and will eventually have a key role in whether or not the new software “works.”

Depending on the size of the company and the size of the system, “end-users” could be a very large or small group.  If they span a variety of disciplines and have varying degrees of system privileges, you should do your best to ensure that all sub groups of the end-user group are represented and/or consulted with.  The bottom line is that anyone in the company involved with data creation, input, manipulation, or system maintenance needs to have a voice in the selection process through a single or multiple end-user representatives in the software selection group.

When soliciting input from the end-user community, be sure that all groups are considered.  Each company will be unique in regards to who uses the software and who does not, but in every case it is important to consider all involved with the software since everyone that interacts with the software will play a role in the eventual success or failure of the new system.

If proper care is taken in establishing the initial protocols of the new construction software functionality, the impact on the end-users should be on par with the latest best practices.  The other side of the coin to this statement is that all company procedures and practices must also be up to date with industry best practices for the software to do all that it can.

Keeping a new system healthy is also a concern.  In general, the more automation that a software system offers, the easier it will be to keep the system healthy, provided the end-users are using the new software properly.

Thus, if end-users are not consulted when new software is selected and instead are forced to deal with a change in which they had no ability for their voice to be heard, the chances for maintaining a healthy system will decrease.  End-users will likely take longer to learn a new system that they had no input selecting and may even resist change to the new system to show their resentment towards management for not valuing their opinion.

In the end, the end-user community is probably the most important part in whether or not the transition to new construction accounting software is smooth or not.  If they are not happy with the new system or are not involved in selecting it, the implementation of new software will likely not be a smooth process.

Additionally, the importance of training cannot be understated.  It is extremely unlikely that all end-users will be directly involved in selecting new software, so it is important to beging training end users on the new system as soon as possible.

Training can be the most critical aspect of how well and fast your company implements a new software system.  See previous posts for more information about the importance of training – here and here.

New Construction Software Success Depends Largely on Training

Success with software depends, of course, on what the  software can potentially do for your business. Notice I said potentially because the truth is that construction software is only as good as the people who use it and the people who use it are only good as the training they have received from the software vendor.

Whether you are talking about job cost, project management or financial accounting or more specialized applications like purchase and inventory control, there are literally  hundreds of ways of entering, editing and processing transactions in  most construction management software systems.

I don’t think it’s an exaggeration to say that the quality of training and implementation may actually be more important than the software itself!

So once users understand the critical function that training plays in software successes, the next question is how is that training going to be  delivered?

There are three primary models that vendors offer for training:
* On site
* At vendor headquarters
* On-line  or a blend of the first two

On-site (user location)

The main argument for on-site is simply that your company location is where the software is going to be used and it makes most sense to train people in their home environment. You can also “read” people better as to how they are catching on to the new software as well as their openness to new software.   There is total focus on you and communications between staff is optimal when questions come up as they always do. You can also have hands on access to old reports, information, etc that is needed for setup and training.    If you are away at a vendor’s location and only certain staff is there for training, it’s a lot more difficult to get answers from executive management on how certain things must be done, for example.

It is during software setup that key decisions must be made on how to go about configuring the software to accomplish certain tasks.  Examples might be how configure job and phase codes, the way purchase orders and inventory transactions will be accepted, and deciding how to handle month-end payroll accruals. When specific information is required, it is much easier to access when staff is on-site.

One major  disadvantage of on-site training is that, due to travel time and cost, on-site training usually needs to cover several consecutive days.   This can be overwhelming and when the session is done the employee(s) may not have time to do their “assigned tasks” since they just lost a day or two working on the new software.  They can also suffer from “burn out” and not absorb everything over multi-day intensive sessions.

Vendor headquarters

There are some vendors who do not offer the option for on-site training and  require that you go to their headquarters for training. This can be successful if all key personnel are involved in the training and the company can afford to pay for all their travel expenses.  The vendor’s technical staff will be available if and when difficult questions come up.

It may  also be helpful in terms of avoiding distractions by being away from their regular work place.

On-line Training

The major advantage of on-line training is the flexibility of scheduling training sessions – both in terms of when they are scheduled and for how long.   For example, it could just take an  hour or two to show a client how to enter customer, vendor, and general ledger accounts in new construction accounting software.   Trainees could then complete their assigned task of entering this information and then schedule another on-line session.   A strong  argument  can be made for numerous, shorter training sessions in implementing new software for smaller, less formal companies.

Summary

There are a number of approaches to training, all of which can be useful ways of preparing company personnel for software success. They key to making it all work is employee and management commitment based on realistic expectations of what has to be done and allocating the necessary resources to do it.

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.

Using Construction Software to Keep Tabs on Customers

Construction companies must keep close tabs on their customer base, since that is the source of their bread and butter and their overall success.  And, as they say, “it is cheaper to keep customers than find new ones” (or along those lines).   Without solid customer service, customer follow-up, and customer marketing and advertising, many construction companies would be hurting to stay afloat.

Much of the modern construction software is designed to help construction companies with keeping communications open with their customers; not only while construction projects are in progress, but after they are complete, as well.  Of course, good software is capable of keeping customers abreast of their ongoing project work; including cost, changes, problems, milestones, and more.

Communications features are always important, and software companies recognize this.  Most reputable software companies usually include solid customer account management in their products.

Some software customer account functionality helps with establishing periodic customer ticklers; such as scheduled mailers and other advertising instruments, to be sent to existing and potential customers.

Sometimes all it takes to pick up new work on construction projects is for a past customer to receive some type of reminder of previous work performed for them, coupled with an invitation to help with any new work on their planning horizon.

In addition, some construction companies use construction accounting software for automated billing of long-term and ongoing customer work-accounts.  For example, if a construction company is contracted to provide a particular repetitive construction service, the construction software can be used to keep track of charges, and for automatic billing and overall contract reconciliation.

Construction company customers, of course, come in many shapes and sizes; and each customer is unique in their own way. Construction software helps construction companies in their marketing strategies, with focused promotions and communications targeting customer profiles.  When construction companies decide to incorporate construction management software into their business practices, it is important that they remember to clean up the current customer account records, in order to start with a clean, fresh customer account database.

Construction software often allows for archiving out of date customer records; even if the customer is no longer a viable account.  Some states or jurisdictions require record retention for specific periods of time; thus, management of some of the older records becomes a necessary part of the new software functionality.

There is no magic about keeping good customer account records, but it is perhaps one of the most important records a company can keep track of, as explained earlier in this article.  Without accurate customer account records, and without the capability for automating some of the customer follow-up contact and marketing strategies, construction companies will be less effective, in the overall view, which can waste a lot of money over time.

“There is no substitute for quality”, it is often said.  And this is so true in this case, as well.  Construction companies need to treat their customers with quality services; and with quality follow-up; and with quality communications; and with quality marketing and advertising.  Remember; it is the customers that provide the butter for the bread!

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.

Construction Software’s Achilles Heel: Report Writing

All businesses, including construction companies, need to be able to produce accurate, up to date, easy to understand, and complete reports for a variety of end-users.  Construction company owners and leaders will want a different set of reports than the field supervisor will want.  And, the company Accounting department will want yet another set of reports; the Legal department yet another; the Payroll department will want another still, and so it goes.  And, if the company is publicly traded, other reports might be needed for investors and brokers.

Sometimes, business software packages fall short on delivering the kind of reports many construction company employees or leaders might prefer, probably because reporting is a fairly nebulous arena and a difficult one to develop in generic functionality and still expect it to fit specific-to-company needs.

Some Construction Management Software programs make responsible and respectable attempts to incorporate a Reporting module in their packages, and some might rely on third-party reporting add-on packages to fill that need.  In most cases, the reporting functionality will provide generic and basic business information; unless great care is taken to customize such modules or add-ons to the specific construction company business needs; if, indeed, such modules or add-ons are even customizable.

If, during your search for Construction Management Software solutions, you find that reporting functionality is weak, or otherwise does not meet your specific construction company needs, you will likely want to include a third-party that specializes in construction company business reporting, since they would more likely be geared only for business Reporting details, and often are completely customizable to fit nearly any business reporting needs.

In many cases, third-party Report generating modules and add-ons utilize web interfaces to access and report out on business data, information, trends, and details; thus the construction software solutions being considered should be web-enabled or even web administered, to ensure seamless integration of components and modules, and to round out your Construction Management Software package selection.

Construction Management Software Reporting functionality should include a number of business report levels, to meet the needs of the various end-users.  Such reports might run the gamut from a simple snapshot-in-time view for customers, investors, brokers and company leaders to a variable-enabled and comprehensively detailed report for company Managers, CFO’s, Supervisors, Lawyers, Accountants, Public Relations Officers, and others.

While it might be difficult to select a Construction Management Software Reporting segment that will readily fit neatly and seamlessly into existing construction company business processes and procedures, chances are that you will be able to find, perhaps with the help of a construction software review, just what is needed to fit your particular construction company reporting requirements.

Using Construction Software to Get from ‘90% Complete’ to ‘100% Complete’ and Remain on Budget

The business is pretty simple.  There are two principal tasks: 1) get the projects; and, 2) do the projects.  Successful companies have productive business development programs and efficient project execution teams.  Although simple, the business is not always easy and can be subject to a variety of common problems.

One typical problem seems to be completing projects within budgets.  Getting from 90% complete  to 100% complete often consumes more than 10% of the allotted resources.  Reasons (or excuses) vary widely but a troubled project should never come as a surprise to management (although often they do).

To avoid going under water at the end of a project, budgets and variances need to be set and tracked properly.  This requires:

1. Making realistic and detailed initial cash flow/spending/invoicing projections, and

2. Monitoring the project’s financial performance and making proper adjustments

An effective construction accounting software system will tell the Project Manager how much of the budgeted costs have been expended.  However, without a good projection, the Project Manager will not know if the percent expended is correct at any given point during the project.

Variances need to be recognized early so the proper adjustments can be made.  Too late, and the best you can do is damage control.  It is critically important to understand the contract scope of work and, in particular, the client’s expectations to recognize when out-of-scope work should require an amendment or fee adjustment.

A number of construction software programs are available to establish and track project budgets.  These programs are often integrated with the company’s financial accounting package.  One key is to balance program complexity with simplicity.  The project tracking program must be capable of breaking the project down into components for an accurate projection.  For example, shop drawing review during construction happens long before development of record drawings.  However, the programs can’t be overly complex or they won’t get used.  Resource allocation programs used by construction project managers are generally too high powered for engineering applications.  Acceptance and effective use of the programs requires the right balance between program capability and simplicity of use.  A sophisticated spreadsheet approach can work, but without integration into a financial system.

As is often the case, completing the latter stages of a project while staying within budget depends on early planning, variance tracking and making the right course corrections early enough to be effective.

Special thanks to David F. Edson, P.E., Sr. Vice President of Hoyle, Tanner & Associates, Inc. for his assistance in writing this post.

More Construction Software Conversion Tips

This article highlights more elements that are vital to getting your software up and running quickly and effectively. Following these guidelines and the guidelines posted in the previous construction software conversion tips post  before conversion provides the framework for your implementation and gives you control over the entire process.

Converting Your Data

There are two basic options when it comes to data conversion: manual and electronic. The choice you make will depend on the services offered by your vendor and how much data you want to bring into your new software.

Manual Data Conversion
This option entails manually re-entering specific data into your new software. A time and labor-intensive task, using a team approach can help, especially if your entire staff tackles the data entry with gusto. Some companies choose to bring minimal data over to the new software, keeping their old system around for look-up purposes. In this case, manual data conversion is adequate.

One caveat of manual conversion is data entry errors. Long hours and tight deadlines are a breeding ground for mistakes. Make sure you implement quality control procedures to verify the accuracy of entered data.

Electronic Data Conversion
Electronic data conversion involves the use of technology to bring your existing data into the new software. This option is ideal in many cases and for a multitude of reasons. Less labor-intensive than the manual method, the electronic route benefits smaller conversion teams or more aggressive timelines.

If electronic data conversion is available through your software vendor, give this tool serious consideration. Guidance on how to retrieve your data from your old system should be provided, as well as a listing of acceptable import formats.

Data quality, validation and formatting are key issues with electronic data conversion. Make sure you fully understand what your vendor can and cannot do, what your responsibilities in the process are and what procedures are in place for error checking.

Although electronic data conversion can import master files, job cost history, customer information, vendor details and open invoices in a very short period of time, it does require some technical knowledge. If this is a problem, your vendor may offer technical consulting or services to handle your electronic data conversion for you.

Data Cleanup
The “garbage in, garbage out” principal applies to data conversion. The quality of your converted data will only be as good as the source you import from – whether that import is done manually or electronically. Taking steps to clean up your data prior to conversion gives you the opportunity to:
• Standardize your data (capitalization, abbreviations, acronyms)
• Identify missing or duplicate records
• Purge unnecessary data
• Reformat your data if necessary
• Evaluate for corrupted information
• Test your data’s validity when exported

Testing
Testing your converted data is just as crucial as data cleanup. Manually or electronically entering data into a test database on your new system gives you the chance to evaluate critical processes and review vital reports for accuracy.

Think of testing as a practice or dry run for the real thing. Verifying data integrity, running queries and comparing reports in the new construction accounting software with those from your old system are just a few safeguards gained by testing. The end result? Issues can be identified and corrected before going live.

Tip: Consider hiring temporary help during your conversion to assist with data entry or to provide day-to-day business support during this time.

Training

Once your software is installed and your data converted, training is the next phase in your implementation. Do not cut corners on training. Adequate instruction on the functionality and features of your new software will lay the foundation for continuous improvement in your workflow processes.

On-site training will be your best option for hands-on learning using your own data. Start with training on the core modules such as job cost, payroll, accounts payable and accounts receivable. Once these fundamentals are mastered, you can begin to roll out your additional program modules.

Follow-up training can be done on the phone, via e-mail or perhaps another on-site training session. Proactively improving knowledge of your new system will result in a more complete implementation, providing a strategic advantage to enhance your construction management processes. In any case, heed your vendor’s recommended training guidelines for the system you have purchased.

Tip: Consider on-site training “refreshers” once a year, when you upgrade to a new version of your software or when you experience staff turnover.

A Continued Partnership

Long after your go-live date has passed, your relationship with your vendor will continue. Nurture that relationship whenever possible. Communicate enhancement requests to the development team. Offer to be a reference for prospective clients. And if regional or national user conferences are planned, attend them if you can.

Construction accounting is a complex environment. The time and monetary investments made in a new management system are commitments to your long-term profitability. Building a partnership with your vendor will contribute to your ongoing success.

Choosing Between Construction-Specific Accounting Software and Generic Accounting Software

Trading up from a small business bookkeeping package to a full construction accounting software system is going to ask a lot from you in terms of time and expense. The issue comes down to – do you want to go from simply recording job data into your accounting system or do you want to proactively manage jobs, deadlines, and costs using software specifically designed for your industry?

Here are some questions to ponder before you take the leap.

In addition to the capital expenditure required to purchase mid-market construction software, are you committed to providing the resources required to be properly trained on the new software? That means spending the money and having staff who have the right attitude and skills to learn the new system.

Furthermore, are you committed to getting all the requisite job information into the system to give you the output needed to better manage your jobs?

What is driving your initial interest in construction-specific software? Is just because you think you need it ?  Or do you have job experiences that went bad because you did not track your estimated costs to your committed costs? Or have you just been lucky so far ? Does your current job costing system not recognize costs at the time of commitment but only when you receive the bills or when you pay your labor?

How do you handle your Progress Billings? Do you create your Progress Billings separately from your accounting system?  Where do you maintain your schedule of values ? What system do you have in place to ensure that all costs incurred are actually billed?

What type of job purchasing controls are in place to ensure that committed costs do not deviate from your estimated costs? Is your purchase order and subcontract system allowing you to job cost at the time of commitment?

How does your estimating process work? Do you have dedicated construction estimating software or is it all spreadsheet based and very specialized? Do you have a handle on tracking estimating costs and revisions against your job ledger?

Where do you store all of your job file information and documents? Do you see any advantage in maintaining all of this in a construction software package? What is your litigation exposure for incomplete job files?

Has new management been added? One of the key drivers for seeking out new software is new management. A new CFO or Controller may recognize the need for better information systems and may even have been brought in for that purpose.

Is your company growing? Growing companies will stretch and eventually break the boundaries of a small business package in terms of transaction volumes and functionality. A classic example is the need for integrated project management and document control. What needs to be in place for you to manage the performance of your projects?

Finally, and perhaps most important for many, is the surety issue for performance bonds. Surety coverage demands detailed metrics for job costs and job progress. In many cases, this type of detail simply cannot be provided without a robust  industry package.

How much can you justify spending? Some metrics suggest that you can afford 2 – 3% of net revenues but if you are struggling to manage your business due to the lack of realtime information, you may be able to justify more.

How will you find the most appropriate options? If you surf the web you may identify dozens of products that look like they might work for you.  You now have a two step challenge; identifying who to put on your shortlist and then making a final choice between them. This is not a simple task. Often, users actually become more confused as they go through their research instead of less due to all the claims and counterclaims of competing vendors. That means you need someone on staff that has the time to invest and knows how to navigate the muddy waters.

Who is in charge of the search?  Sometimes the person(s) tasked to find the new system may be selected simply because they are the most convenient, least cost choice. A bookkeeper/accountant or office manager usually does not have the breath of experience to handle a major project like software evaluation and selection.

The best choice to lead the project is someone who understands all the operational and accounting aspects of the business, has strong communication skills and who has the full confidence of the decision makers.