Construction Accounting Software Meets Builder Needs

Today’s construction projects often involve a multitude of expenditures to a variety of different sources.  There is the cost of labor, supplies, and subcontractors to consider.  Keeping track of costs and being careful not to exceed the project budget is necessary to ensure a profitable outcome.  Construction Management Software makes it possible to keep track of the many expenses, and allows you to successfully complete even a large project without exceeding your bid.

Construction accounting software makes it easier to keep track of direct material purchases.  Direct materials consist of basic building supplies like drywall, wire, pipes, and wood.  Essentially, direct materials are everything purchased for a project.  Sometimes these materials are purchased tax-free or with a builder’s discount.  These items are generally recorded separate of labor costs to ensure accurate profit and loss statements.

Direct labor is another variable that must be kept track of separately.  Labor comes in different forms, each requiring special treatment with regard to taxes.  Some employees are on the payroll while others may be hired on a contractual basis.  Other work might be performed by subcontractors.  Construction software really comes in handy when keeping track of direct labor spending.  Often this software integrates with payroll software to streamline wage calculation and tax withholding.

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What Matters When Selecting Construction Management Software

When used properly, dedicated construction management software is capable of handling a number of tasks that may currently be bogging down your company’s resources, time, and money.  Many companies can benefit immensly from not only the software, but the associated improvements in processes and practices that are commonly associated with acquiring and implementing new software.

So what should you look for when you’re investigating possible solutions?  What really matters?  In the end, the software must be able to deliver on all the promises that the advertisements, promotions, and salespeople tell you.  Beyond that, what really matters the most in making the software work is ensuring that your company knows how to use it properly and that it “fits” your organization.

One factor that will go in to determining what size and level of functionality you need in construction software is the size and organizational structure of your company.  This is a fine line of balancing your need to streamline operations with the help of software without getting in over your head.  Plan carefully to ensure that all the functionality that you want is realized in your new construction software package.

Since most construction companies operate, at least on some level, in similar manners, most construction software is designed with ways to cover the most common denominators and industry best-practices.  This makes most systems relatively adaptable to most applications, but that is not to say the all software will work for all companies.

Examples of these common denominators are things like job costing, estimating, planning, payroll, project tracking, and so on.  Since just about every company needs these types of modules, they are pretty standard in most software packages.

The real trick, therefore, is to find the software that works best with the processes and activities that are unique to your company.

For example, if you operate a compnay that has a pretty unique way of handling project change-orders and believe that your current system is the best solution for your company, you’re going to need to find a software package that is customizable in a way that it can be made to work with what you do.

In this situation, you essentially have two options.  The first option is to buy a software package that is way more powerful and over the top (and expensive) than you really need.  The alternative is to find some sort of plugin that will allow a more basic software package to operate using your procedures.

The above example speaks to the need to thoroughly investigate and audit your internal processes before selecting new software.  If you select software that is incompatible with the way you operate, you’ll be forced to make drastic changes to your company processes or find another piece of software – neither of which is ideal.

Selecting new construction accounting software is certainly no easy task and the process of evaluating, integrating, customizing, implementing, training, and managing a new construction management software system should not be taken lightly.  In fact, it can be so difficult that some companies jump ship before they reach the end, which essentially turns the entire operation in to a waste of time and money.

Improve Communication With Customers with Construction Mangement Software

Having a robust and versatile account management module to track customer accounts is one of the most important features of a good construction management software package.  The software that your company uses should be able to automatically and effectively communicate with your customers about any number of project-related issues in real-time to ensure the best customer experience and service level.

These days, people are not satisfied with “old” information.  They want to know what is happening at the instant that it happens.  Information that is days or weeks old is no longer good enough.  If your company has the ability to provide customers with real time updates, this will not only provide them with the most satisfying customer service possible, but will also give you an advantage over your competition that may not be able to provide the same real time data.

Further, the tools that people use to get their information are constantly changing.  Most companies use the internet and its associated capabilities as much as possible, allowing them to access information from cell phones or PDAs while they are away from a computer, but do so in real time.  Having a construction management software application that supports these devices and functionality will improve your internal communication by allowing people to access information from job sites or while stuck in traffic.  It will also enhance the experience that your customers have as they will take comfort in knowing that they can view the progress of their projects at any time from any place.

Along with having the ability to access the construction software on the go comes increased needs for security measures.  While it is important that your software have these abilities, make sure that you invest in the proper security measures for your construction software package so as to not compromise the security of your organization or your clients.

If your construction company is in the market for a new software package or enterprise system, you would do yourself a huge disservice by purchasing a solution that does not include a user friendly account management module that operates in real time.  Check out construction software comparisons for more information to help you find the solution that is right for you and within your budget.

People often blame communication for a number of problems in the business world.  The truth is that communication isn’t the problem – a lack of proper communication is.  Purchasing a construction software package with the account management features discussed here will help you ensure that you stay ahead of the pack as communication methods continue to evolve and become more connected.

Executive Dashboards in Construction Software

Most construction software systems are designed to be used in “Enterprise” configurations, meaning they usually include executive dashboard modules aimed at giving executives a quick view of every area of operations.  Typically, this can be done in real time.

These dashboards serve a very specific purpose – top level execs do not have the time to spend looking at reports full of numerous confusing details.  Instead, they need a report or module that can be their “one stop shop” for all primary business indicators.  If they notice any problems with the key indicators (which can be customized for each business or kept at software presets) they will then have the ability to “drill down” to the real data and identify the problem if they feel the need.

For example, C-Level executives may only need to see the basics of the P&L and other reports – things like sales figures, monthly comparisons, current market data, and maybe even competitor positions.  In other words, the things most pertinent towards making the most effective high level decisions.

Moving down the chain of command, executives and managers at mid levels may need to see the data in a bit more detail, such as which projects are impacting the particular indicators.  They may also benefit from dashboards that break the data down to each business segment that reports to them so they can choose where their time and expertise is best spent.

Suffice it to say, different levels of management will want different sets of reports.  In each case, the report should have the indicators that each manager is most concerned about without having so much information that the crucial data is difficult to discern.

Just because a construction company makes money by digging in the dirt, they should not be limited in their ability to have a clear overview of their entire business operations at all time.  This is the benefit of the customizable, real-time executive dashboards available in many construction management software packages.

If the software that you are currently using does not have a dashboard feature, rest assured that there are numerous third party applications that will interface with most construction accounting software packages on the market.  In fact, some can be so seamlessly integrated that they appear to be standard equipment.

Finally, it is worth noting that these dashboards and the decision making that they facilitate are only as good as the data that is put in to the system by the end users.  If garbage is put in to the system, garbage will come out.  Therefore, as always, I stress the importance of thorough and frequent end-user training for all companies that use industry-specific construction software.

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.

Reasons to Consider Changing Your Construction Management Software

Probably the most significant influence on a construction company’s decisions for changing its software is because they think they can find something better; something that will take away all the “glitches” they have been experiencing with their current systems.

Unfortunately, it is often more a case of an inadequate current system, inappropriate user input and interface, or changes in company practices, procedures and protocols which the current construction software is incapable of handling effectively.

Construction Management Software, like any software, becomes out of date and even obsolete, sometimes within just a few years.  In addition, business practices change frequently, whether through continuous improvement measures or outside influences like Federal, State or local regulations.   Consequently, construction management systems and construction companies alike need to keep abreast of all of the above.

In order for software development companies to keep up with the construction industry, they must stay in touch with construction companies and their needs.  Likewise, construction companies need to stay in touch with system providers, in an effort to help with improvements to construction management system functionality going forward.

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.

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.

Successful Construction Software Conversion Tips

Implementing new construction management software can be a significant challenge. To ensure success, it’s important to fully understand your business objectives regarding the new software and develop a plan to meet those objectives.

This article outlines some elements that are vital to getting your software up and running quickly and effectively. Following these guidelines and strategic planning suggestions before conversion provides the framework for your implementation and gives you control over the entire process.

Assemble Your Team

Your conversion team should resemble a pyramid of sorts. With a team leader at the top, followed by layers of support personnel with various levels of involvement, you will create a strong foundation for positive results.

Conversion Lead
Your in-house conversion lead is the primary contact between your company and your software vendor. This might be the company owner, CFO or controller. This person should play an integral role in using the new software and will be responsible for keeping your implementation on track.

Top Level Managers
The next layer of your team is comprised of the top-level managers. Some examples would be the controller (if he or she isn’t your conversion lead), chief project manager, equipment manager and service manager. These individuals will provide valuable input on what they need from the new software to most effectively perform their jobs.

Data Entry Staff
At the base of your pyramid is your data entry staff. During your conversion, it’s important to include staff that will use the construction project management software on a daily basis. Discuss current processing procedures and identify ways that the new software can improve or streamline work flow.

In addition to these core groups, make sure you include other personnel at some level. This from-the-top-down approach to assembling your conversion team will effectively gain company-wide commitment and support for your implementation.

Tip: consider bringing in your outside CPA as an additional team member or consultant.

Get Software Vendor Assistance

The most knowledgeable source for conversion assistance is your software vendor. With hundreds or thousands of implementations under their belt, your vendor can provide invaluable guidance every step of the way.

If a conversion or implementation manager is available through your vendor, take advantage of their experience. Use vendor-supplied conversion checklists and do the legwork suggested to best prepare for your transition.

Resources offered by your vendor are worth the financial investment and will deliver a significant return on investment.

Tip: Get your vendor’s recommendation on where to order new checks and forms for your software.

Create a Timeline

With your vendor’s assistance, create a detailed timeline for your implementation. List everything that needs to be done, start to finish. Brainstorm with your entire in-house team to gather additional to-do items; the more thorough your list, the greater your chances are for success.

It may help to designate general categories to organize your thoughts. Some examples include: Pre-Installation, During Installation, Data Conversion, and Training Topics. Hardware and software installation dates and are just a couple of specific timeline items for consideration.

Conversion is an excellent time to evaluate your current chart of accounts and cost codes, and to make changes if needed. Adding these items to your timeline will prompt you to review and revise before it’s too late.

Develop your timeline in calendar format with hard dates or date ranges for each milestone. Assign a team member to each item, making sure your conversion lead checks in frequently.

As you create and complete your timeline items, it will be important to ask questions. Communicate with your vendor and conversion team by asking: Are we on track? Are there things to add to the timeline? What potential pitfalls or delays can we anticipate and avoid?

Tip: Don’t forget to add your “Go Live” date to your timeline.

These are only a few tips for a successful software conversion.  There are several other things that you can do to ensure a successful conversion to new software.  I plan to return to this topic at a later date.