Expensive Lessons in Construction Software Training

By Sheldon Needle

I speak with various users of construction software on a daily basis. Many are very disappointed with the software they now have and want to look for new options. In most cases, their reasons are legitimate and they do, indeed, need a functional richer and technologically more advanced solution. But users who change software will be just as disappointed in the new system as they are with what they have. The reason is very basic. The users of the software simply are not properly trained to get the most out of it. This is a fact regardless of industry or company size. This article will explore a true life case of why a new software installation can fail despite the best intentions of management. The company name is not revealed for reasons of privacy.

A few years ago I worked with a medium-sized print electrical contractor that had many jobs to complete in a short time frame. Their major challenges were managing scheduling, tracking all costs to the job and being able to respond to job status when customers called. They were using very old software that lacked any of the niceties of new Windows software even as basic as having multiple users access an application at the same time. Needless to say the software was a serious hindrance to office productivity.

Of course, the simple answer was to get new software. After months of research I came across a system which, while not state of the art, was adequate to the task. I sat in on several demos and everyone concluded it looked like a good possibility. The next step was to have the primary accounting person to try out the software herself and see if she really liked it. This, however, meant burning some midnight oil because she did not have the time to test it during regular work hours, a common situation with many companies who are bringing in new software.

No one in management volunteered to work with her, on that difficult assignment so after a year, absolutely no progress had been made in evaluating that solution . Finally after 2 years, they finally acquired the software, had some initial training and started to use it. The staff, not being very sophisticated, entered all the necessary data in the new system (job cost, work orders, and progress billings, etc.) but insisted in continuing to use the old system in parallel mode for an entire year because they were afraid to let go of it. Essentially, out of needless fear, they did double work for an entire year! Why? Because no one with experience was there to manage the process.

Several important lessons were learned as a result of this wasteful process. First, key managers should be brought in to initial meetings with the vendor trainers to give them an overview of the implementation process, all strategies involved and the expected time-frame.  Second, when the manager doesn’t fully buy into the process and understand the tasks and time-frame, they may not choose the employee most qualified to learn the system and to train other people, but the employee they can most do without for the ”train-the-trainer” sessions.  Without the supervising managers involvement, classes were routinely skipped by staff employees and the entire training process broke down.

What the company learned was that the direct managers must be involved in the initial training sessions as well as be active participants in managing the implementation. (In a small company this means the CEO or owner.) They need to know what resources will be required to get the system up and running successfully and be prepared to commit qualified people to learn the system and to train other staff as necessary. Everyone must be motivated so they are fully committed to the success of the new system.

Bottom line, construction project management software is only as good as the people who use it and that means proper training and motivation.

Collaborative Project Management Considerations

More and more contractors are involved with construction project management as part of what they do.  Some will be heavily involved in pre-construction doing design or engineering work or helping oversee  these functions. They may also be soliciting and comparing bids from prospective subcontractors.

Once construction actually begins, they will monitor progress on the schedule and costs to date versus expected costs at completion based on the percentage of work that has been done. This may result in over or under billing the job to date which, of course, can have a major impact on working capital. If government work is involved they will have to keep tabs on “earned value” which is measured by comparing costs to date to the total contract amount to assure that they are not going to release funds that have not been “earned” by the contractor based on actual progress.

In addition to tracking actual costs to estimates by time, phase and cost type, phase, construction managers have to deal with documents such as change orders to the job, RFIs and submittals which must be routed for approval.  Ideally software should allow for a specific work-flow process that routes documents from one individual to another via email alerts or reports. Furthermore,  the software  will need to keep track of meeting minutes and comments from various stakeholders in the process as subcontractors, the GC, etc.

Collaborative project management involves more parties and is more complex. In this case, an owner may commission one or more construction projects and contracts with general contractors to deal with hiring subcontractors and taking full responsibility for actual construction.  Since owners are funding the project they are very concerned about things like job progress and tracking costs to date. They also want to provide a platform for end to end project management  where various stakeholders such as with design engineers, architects, mechanical contractors, etc.  will use one software solution  that supports  entering labor and materials cost  data, along with relevant documentation,  on a real time basis and tracking these costs  to budget. A construction software application that includes document vaulting is also desirable to allow scanning and storing documents associated with specific transactions with some kind of indexed subject lookup. This goes toward the paperless office concept that many people want.

An intelligent work-flow process will be needed in these situations such as tracking how many change order dollars were approved for a contract as well as how many are pending along with how many punch list items are unresolved to date and those responsible for it.

The owner will want to allow specific access rights to stakeholders based on their roles but not allow them to see data that is outside their area of responsibility. In this case the software has to support very sophisticated security configurations for various users.

Well designed construction project management software will continue to serve owners for  capital projects, maintenance and preventative maintenance well beyond the initial construction. Sometimes owners want to monitor multiple projects at multiple facilities (e.g. universities or multi-location retailers) and track post construction costs like maintenance or simple renovation costs.

Construction Project Management Software Controls Costs

More than ever, with tightening credit and downward cost pressures, it is important to control costs on construction projects.  Even government and municipal projects have greatly reduced budgets. What may also be important is payment timing has stretched out as well.  All of this combines to create an environment where controlled costs are the rule for survival.

One of the major functions of project management is cost control.  Along with materials, labor and timing, budget and cost are central to the project manager.  Construction software helps project managers control budget cost on a real time basis.  Companies looking to control costs should consult construction management software reviews for the futures we will be discussing.

All construction projects have budgets. The major components of the budgets are the funding and the disbursements. In most cases neither will be a lump sum, broken into parcels. This makes the construction budget dynamic in nature and underscores the importance of timing. A budget can’t have more go out than comes in.  Construction Project Management Software helps because like the actual project, the software can also be dynamic.  As goals and priorities constantly shift, the construction budget will constantly shift. With regular input the Construction Project Management Software will be able to help plan disbursements that are in line with the budget and actual cash on hand.

Another important aspect of budgeting is cost centers. Cost centers are costs that are broken into categories.  By using cost centers, various aspects can be micro managed with greater precision than if they were lumped together.  Many times on a large project, cost centers will have their own manager with budgetary responsibility.  Construction Software allows for the use of cost centers, which are actually an integrated part of the process.  There is no need for cost center data to be put together separately. It’s all part of the same package like having tabs on a spreadsheet program, and yet one tab contains data from all.

Financing is also an aspect of a budget that is important. As has been stated, funds are generally not available in a lump sum.  They may also not be in the form of case but credit or a credit line.   This is critical in project management budgets.  Money must be taken only as needed.  As money is taken, the interest meter begins to run, and the
construction project costs more.  This is probably factored to an extent in the quoting process, but the project manager needs to work to not exceed this budget.  Again this is where the tools in Construction Project Management Software come into play. By managing each task on the project, keeping the Construction Project Management Software input data up to date; the project manager can control the financing costs to a minimum in order to maximize profits.

With Construction Project Management Software all of the activities here can be accomplished in near real time.  This allows the project manager to response to changes and allow for the best and most profitable conclusion possible.

The Need for Speed in Construction Software

I don’t think anyone would argue against the claim that ANY software must be fast!  Of course, software speed is relative to the computer hardware and other devices being used to express that need for speed!

Without the proper network and other interface hardware and devices, construction software might as well be left in the box.  After all, software is just that; it is the “soft” part of a partnership that must include equally capable “hard” parts as well.

Depending on the size and scope of a particular construction company, some companies might utilize such technologies as RFID (Radio Frequency Identification) tagging, GPS devices, data loggers, scanners, and other high-tech time and money saving devices.  Smaller companies can also benefit from software that is similarly suited with such capabilities.

We know that using RFID tagging helps crews locate kitted materials and supplies; we also know that GPS devices help crews save time and productivity through effective travel routing; we also know that real-time project data-logging saves schedules, budgets, manpower allocations, and much more.  Such benefits, made possible in large part by good construction project management software functionality, helps to keep construction project costs in control, as well as to keep the bottom line in the black!  So when considering your next software package, remember to consider what kind of hardware the software will working with.

Construction Software for Large and Small Businesses

It would be impossible to completely describe the many and varied functions and processes that a good construction software package needs to have.  One size does not fit all, and frequently, no size is the perfect size, unfortunately.

It is clear that not all construction companies will be looking to the same vendor bases for their construction software solutions, since construction businesses vary by overall capacity and scope of the particular construction company.  America’s largest home-building company surely uses a software package that is quite different than the local home-builder.

Large construction companies will want to get in touch with vendors who provide enterprise type systems, which more readily incorporate and interface with all business functions typical to the large construction industry.

Small construction companies will want to get in touch with vendors who specialize in small business software systems; many of those include useful options and configurations to fit most any business model, including small construction company models.

No two construction companies operate identically; therefore the more unique processes, procedures, record-keeping, and other practices a business utilizes, the more difficult it is to find an off-the-shelf construction project software package.

Thus, it is important to keep an open mind toward re-designing some of the existing business practices to more readily fit with up to date best-practices in the construction industry.  Additionally, this speaks to the benefits that a construction company can receive if they speak with construction software guides during their search for new software.

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.

Construction Management Software Strengthens Project Management

Things are hopping in the construction software industry. Mid market vendors (who address the $5M -100M market) are working hard to add and enhance project management features to their products. Why? Because it’s what contractors need to run their operations more efficiently.  Adopting “best practices” can improve paper work flow and provide better access to information to control jobs.

But the overall benefit of a robust project management solution is a lot more than just managing paper.  It’s also about monitoring data on a real-time basis. In computer parlance, real-time is about information being available at the time it is created. In past times paper time sheets were completed in the field to capture job labor.  This is still the case for many contractors.  These time sheets are sent to the office where the information is either keyed into the job costing ledger or into the payroll system, where the information sits until the payroll is run. With newer technology you can use a PC, a tablet PC, terminal services or a web-based system to capture the data from field offices where it can be immediately sent to the server computer and posted to job cost. The data is now available for more timely progress billing, up to date cost to complete reporting and accurate budget analysis. Bonding agents, who often push for more complete and up to date information systems, also appreciate this kind of capability!

Let’s take it a step further with project management that involves contracts and documents such as change orders, RFI’s and submittals. This paperwork can be created and tracked via a collaborative online project management system. Since these documents require approvals, project managers can route them to the staff for handling, note making, approvals, and so on.  Project managers can also have the documents appear in the “to do” queue for staff where they can be seen, annotated, or forwarded to other parties as necessary.

A construction project management software system can also be used to scan in documents such as changes, purchase orders, and vendor invoices and attach them to any associated transaction. The document is stored and becomes part of the transaction record for reference purposes if any questions come up. For example, let’s say an invoice is received with a price that does not match the original PO. You will be able to access the original PO, attach it to the vendor invoice transaction, and have supervisors view it before approval.  Furthermore if the document involves a change to the budget (e.g. a change order or pending change order) the project management system can be used, at the option of the user, to update the budget as soon as it is created.

Another current technology is the ability to monitor job schedules through Gantt charts with critical path information.  This technology also allows users to write notes about the schedule with a live link to job cost for transactions that affect job costs and forward them to project managers for action.  This capability was previously only available in very high end, expensive, solutions.

Other useful applications that can be found in some midmarket products include tracking small tools usage and costing; work order creation from the field; and invoicing and payment collection.  All these new areas can lead to a vastly more productive operation with a reduction of paperwork and more timely information for managing jobs.

* A conversation with President John Meibers of ComputerEase was very helpful in preparing this article