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.

After all, it’s something you think you need and that would help your office get organized, run more productively as well as provide needed management information on a timely basis.

All this is certainly achievable. The problem is most users are not seriously looking. They just don’t realize it until the time comes to write the check   and go through the inevitable pain that comes with converting their data and learning a  new system.

Yes, it is a major commitment even for a small company.

Here are the some of the signposts that companies should keep in mind to find out if they are truly serious about acquiring new construction software.

• When the search is initiated by an office crisis such as the old system crashing or executives raising hell about not being able to get the information they need at a particular time.  As soon as the crisis passes, everyone relaxes and drops the new software search.
• When management thinks their chaotic office processes will be straightened  out by getting a new system.  This common myth is simply untrue. Your office will remain chaotic because well understood procedures and disciplined staff must be in place to follow them.
• When records are out of date or inaccurate. Moving bad data from one system to another only complicates data conversion and guarantees you will start you new system  with a shaky foundation. The lesson is work on getting the information correct before you start looking for new software.
• The budget for new software is “as little as possible.” There is no such thing. Without some kind of expectation of what you need to spend depending on your needs and number of users, you will suffer sticker shock  at any amount the vendor quotes.
• Lack of staff support. The smartest manager in the world cannot be successful with new software without active support from his staff, whether that staff is a room full of people or a single bookkeeper. Qualified staff has  to be properly trained  in order to get value from  the new system.
• When everyone using the current system is unhappy and management fails to troubleshoot the problem.  What makes you think they will like a new one? Many a  “failed” software installation has been rescued  once the core problem is understood.

In summary,  while we are initially excited by  the prospect of a better way to manage our business, the fact is that  the vast majority of the companies who start a software selection search never complete it because they were never fully committed in the first place.

Not long ago, Computer Aided Design, or CAD became available.  However, only the most elite construction companies could use this technology.  Not only did the software itself cost thousands of dollars, but the computers necessary to run it could cost well over a hundred thousand dollars.

Eventually, though, the software became affordable to even the smallest companies. Today, CAD software can be purchased for as little as $50 and added to your construction software arsenal. And with computers being so cheap, an additional $500 is all that is needed to set everything up and start using computer software to design construction projects.

It’s not all about cost; it’s about productivity, portability and enhancing the abilities of a builder. CAD software can be considered building software because many companies produce CAD programs that are enhanced for builders. There are two relative classes of CAD programs, which we will generically call high end and low end.  As we will see, high applications tend to be focued on analytical tools. Low-end applications focus on basic blueprints and visual renderings.

High end CAD software is distinguished by its powerful analytic tools that make advanced structural analysis possible.  These features are used by engineers to calculate structural fatigue.  In addition, software models can often be paired with even more advanced data analysis systems to create dynamic structural analysis.  This sort of analysis is essential when building large buildings or bridges, or using any newer building medium.  Without this advanced software, it could take months to perform the same calculations.

Low end software is merely a reduced version of the high end software, meaning that is it the same software but it has limited ability. With this type of software, blueprints can be created. Some of the low-end versions even contain building feature libraries. These libraries help those with little training add accurate details. According to construction software reviews, the programs are user-friendly and easily learned by those with limited computer knowledge.

Most low-end CAD applications used in construction are graphics heavy. While they lack the structural analytical tools, many of the programs create realistic 3D renderings, allowing a builder to walk a client through a virtual building.  Feature libraries include furniture and accessories, allowing a builder to virtually “stage” a house or condo, or even a public building.

In some cases, CAD software is no longer optional.  It is becoming more common for municipalities to accept and review building permits online.  This requires the creation of CAD blue prints to be uploaded electronically in order to secure permits.

Another great feature of CAD is its mobility. Gone are the days of carrying around bulky blueprints that could become damaged at any step of the journey. Now, plans can be put directly on a jump drive and carried easily in a pocket or briefcase. You can even email your plans.

CAD as Building Software is just a natural extension of CAD programs and can enhance a business, large or small.

They usually have a laser like focus on how the software looks on the screen, what the salesman says about it, and what it costs. While those issues may be important, asking the right questions about technology will tell you an awful lot about the vendor and their commitment to their product and, ultimately, their long term commitment to you as a satisfied customer.

You might ask – does what’s under the hood really matter as long as the car gets me to where I want to go? That’s a legitimate question. Now lets do a little exploring.

Programming Languages
First, technology matters for the vendor in terms of maintaining and improving their system. For example, outdated programming language may require more machine horsepower to run and they are not as adaptable, or incompatible, with new operating platforms. Finding qualified programmers for those languages can also be a challenge.

Databases
Older databases are not as efficiently designed as newer ones (like MS SQL) for data queries and reporting. It may take much longer to run reports and be more difficult to access data due to outdated technology. File formats for importing and exporting may not even be available to work with office productivity products or estimating programs used by contractors. Furthermore, error recovery in case of power failures can be more difficult with older databases.

Project Management and Document Handling
More and more contractors are looking for robust platforms for managing projects. This means that functions like document scanning, storage and lookups need to be efficient, manageable and secure. It will easier to accomplish with modern programming and databases.

Financial Reporting, Drill Down and Auditing
The ease of creating financial reports, accessing specific transactions, and related documentation is enhanced with more current technology.

Vendor Commitment
Using more up to date technology is a statement by the vendor that they are serious about keeping up with improving their products and keeping their product competitive. There are a number of vendors who do not qualify on that front and it’s pretty easy to find out who by asking the technology questions.

Here are Some Questions you May Want to aAk:

• What database are you using?
• What office productivity programs can you export to and import from?
• What industry standard report writers do you work with?
• When was the last technology improvement you made to you program?

Of course, technology is not the only thing you want to ask about and newer technology can come with its own set of issues.

But when you are being asked to pay the typical annual maintenance fee of 18 – 22% a year of the current retail value of your software, you are entitled to know whether the vendor is earning it by improving their product and protecting you from software obsolescence.

Many contractors realize they need help with their office record keeping and paperwork so they start poking around for an upgrade to their office systems.

1. Web searching for the best solution
The first thing just about everyone does today to find information is do a web search for new construction software.

They will type in something like “compare construction software” or “construction accounting” or “project management software,” etc. This will result in pages and pages of links and they will select a couple that catch their eye, based on a slick marketing message or nice logo, and then contact those vendors or search services for information.

This may help them identify some vendors but it has little or nothing to do with qualifying them for their business based on their needs and budget. It’s strictly pot luck if you wind up looking at the right products.

2. Shopping based on price
Following the intial search prospects will then ask for pricing and a demo of the product. Various websites offers demos and pricing information but you will get neither. Instead you will receive a marketing CD extolling the product and hear from a salesman.

The salesman will never give you an initial quote over the phone until he finds out whether you are a serious candidate for his product and your specific application requirements. Vendors rarely have list prices for their products. Even if they do, prices are subject to change based on many different variables.

3. Web demos
Showing you a demo is a little like watching a magic show. The salesman, like the magician, will show you the most capable parts of the product and conveniently leave out what it does not do well.

At most a demo will show you only 3% of what the construction accounting software can do. You may not be overly thrilled with some of the other 97%.

4. Failure to consider requirements against business goals
Most companies are focused on solving immediate operational pain such as the difficulty in finding documents or staying on top of estimates to budget. But there may be many other opportunities for impact such as improving customer service or reducing inventory shrinkage that are also available. In order to execute this kind of analysis all major departments should be participate.

5. Top down buying decision
Many small contractors manage autocratically and fail to include their staff in evaluating vendors and participating in the decision of what to buy. This is a serious mistake as staff whose opinion is not solicited before the software is purchased are likely to be resentful and not fully support the new installation, or even sabotage it in subtle ways.

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.

Although it isn’t necessary to keep track of withholding for contract work, it is still good to generate 1099 forms.  Construction software makes this a simple process, allowing generation 1099 and W2 forms at the end of each year.  In the case of an audit, this software is a time-saver.  It keeps track of your tax information year after year.

Construction businesses must keep track of services in a separate category.  This need is reflected in most construction software.  Services differ from direct labor because workers performing the work are actually in the employ of another business.  For example, workers sent to repair rented equipment or refuel equipment might fall under service expenses.  These expenses are tracked separately and considered a direct expense.

Today it is becoming much more common to subcontract or sublet portions of a construction project.  Some construction business models rely heavily on contracted work and have very few payroll employees.  Some of this sublet work consists of both labor and supplies, while other work consists solely of labor.  Common sublet work consists of foundation work, grading, cabinetry, and even framing.  Construction management accounting software makes it possible to keep track of these expenditures.  The ability to review sublet work allows the construction company to keep tabs on sublet spending.

Some construction companies keep track of expenses in traditional accounting software.  However, this software doesn’t meet the needs of most builders.  Construction accounting software was designed with builders specifically in mind, and it allows them to keep accurate records of costs without devoting excess time to it.

In fact, most of them are probably are a pretty good solution for 97% of what you want to do. But it’s the last 3% that might just do you in. And that is where buyers can take a big hit.

When it comes to entering job cost transactions and running essential reports, most products are just fine. However, if you have to deal with any of the following, straighten-up and pay attention because these are items that separate the average vendors from the stronger ones. And these are areas that sales literature (or so called “Demo” CDs) will never call to your attention:

• Union reporting, especially multistate
• Multistate , multi-tier sales taxes reporting
• Equipment costing
• Fixed Asset tracking
• Purchase order creation, receipt and inventory control
• Custom report writing
• Multicompany consolidations and intercompany transactions
• Workflow for document alerts and approvals
• Project management and accounting integration
• Under the hood technology (database) and potential ramifications
• Posting and ability to access realtime information
• Field capture of labor and transmission to central database.

Vendor sales literature is deliberately vague – an actual case history

A few years back I spoke with a large heavy contractor, doing extensive excavation work with large, expensive machines. He was evaluating a number of programs to see which ones could best handle its need for fully burdened .job cost to include its high cost daily rate of internal machine rental costs in order to compare actual overhead to standard overhead rates.

Fully burden charges per day for his using the machines included wear and tear and salaries to make use of the equipment.

They also wanted to see journal entries with the related amounts. Despite the representations of the salesman that the program could meet this requirement, they found out after using it that it was severely lacking in this area. To get around the limitations they would up spending a lot of time gathering and tracking the information in Excel.

The product did the other 97% of their requirements fine but could not do this critical item and that made the system a major failure for them.

Why does this kind of thing happen?

The prospect was told by the vendor that they did do standard vs. actual costing with variances. Unfortunately the prospect did know not know enough to follow that up with further clarifying questions and made the assumption it would work for them.

Lesson learned:
Salesman demonstrate what their programs do well and try to leave out the hard stuff. If buying prospects don’t ask the right questions and demand to see a demonstration (better yet do it themselves) of the specific inputs and outputs of what they need done, chances are very high they won’t get what they expect.

When it comes to buying construction accounting software, never assume anything. Check it out for yourself.

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.

Input that is “Nice to Have” (highly recommended)

The following individuals are recommended to be included in the software selection team.  They may not need to be permanent members, but their input should be taken in to consideration.  In most cases, the size of your company, more than anything, will dictate how involved each member needs to be.

• End users (anyone that will ultimately be using the new software)
• Management (all levels in large companies)
• Accounting (they need to provide input on how the new software will impact their operations)
• Payroll
• IT ( they will need to know the technical aspects of the software implementation, among other things)
• Sub-contractors (if necessary)
• Suppliers
• Vendors (once selected)
• Other members that are deemed necessary, which will vary depending on each unique company

Factors that Must be Considered in Any Evaluations

Smaller companies, especially, will probably not have the time and resources to justify dedicating an entire team to a full-time software evaluation.  Additionally, the benefits in terms of process improvement that a formal team may be able to identify and implement will likely be less significant in smaller companies.

Thus, smaller companies need to make the most out of what resources they do have.  They cannot afford to be lazy in evaluating software any more than larger operations can.  At a minimum, the following things need to be thoroughly evaluated for each construction accounting software package that they consider:

• The number of varieties of each product and what makes each version unique
• The number of available vendors
• The history of the product, including testimonials from current users
• The history of the vendor, including testimonials from current users
• The functionality of the product
• The product interface and any potential issues that it may create
• The necessary steps require to integrate the new system with current processes
• Other factors that are unique to your company

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.