Construction Accounting Software Payroll Feeds – Internal or External?

The question about whether to receive data from an internal or external source is a good one, although there is no rule of thumb to determine what is best for each company.  However, the bottom line is that your data in your construction software needs to be accurate and stable since it will have a dramatic impact on your overall success or failure.

The truth is that the optimal solution will be different for every company.  Some construction companies will benefit from tracking payroll internally while others will be better off having this task outsourced.  The following factors will weight heavily in to that decision:

• The size of your company
• The number of employees you have on payroll
• The business acumen of employees
• The number of departments in your organization
• Your overall budget
• How available other alternatives are
• Business-specific parameters

Construction companies, more so than most companies, must keep a close eye on payroll impacts on projects and profits.  Decision makers need up to the minute and real time project data to make informed decisions, and this is only possible with a stable and powerful piece of software that has accurate data collection methods.

To put it another way, the more accurate and up to date your software is, the better you’ll be able to make decisions that will enable you to maximize your labor force and profit margins.

However, we all know that no business or part of a business will ever operate perfectly.  That is not to say that you should not strive for perfection, though, especially when it comes to maximizing the use and beneftis of your construction software.

With the right software, properly implemented, you will be able to constantly improve your processes and procedures with the constant goal of maximizing efficiency and working smarter, not harder.  This can be done regardless of where payroll data is collected, so long as all systems are integrated properly.

Since the software will only be as good as those that use it, it is imperative that you invest in quality training for all users when you purchase new construction management software.  Users need to understand their specific tasks and interactions with the software as well as how their input impacts the overall system.  In short, they need to be able to see the forest from the trees.

Concerning payroll, users need to understand the importance of accurate payroll tracking as well as any important federal, state, or local regulations that will impact their reporting.  They need to be able to see how their input has a “butterfly effect” on the entire operations of the business, and good software should be able to show this quickly and easily.

Finally, before investing in new software, construction companies are urged to ensure that their operations and standards are up to speed with current best-practices.  New construction accounting software will be designed with those in mind, so taking care of these modifications before installing new software will make the transition much easier, faster, and more effective in the short term.

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.

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.

Implementing New Construction Software and the Importance of Training

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.

I speak with various users of construction software on a daily basis. The vast majority 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 need a functionally richer and technologically more advanced solution. However, about 20% of the time they are going to be just as disappointed in new software 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. I’ve found this to be true regardless of industry or company size.

A few years ago I worked with a medium-sized electrical contractor that had many jobs to complete in a short time frame. They were using very old software that lacked any of the niceties of new Windows software.  Even things as simple as having multiple users access an application at the same time were not possible with their software. 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 more than adequate for 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 try out the software to see if they really liked it. This, however, meant burning some midnight oil because there was not enough time during the day for the testing.

No one in management volunteered to work with her, and due to the difficulty of the assignment, absolutely no progress had been made within nearly a year.  Finally, after two years, they acquired the new construction accounting software, completed some initial training and started to use it. The staff, who was not very technologically sophisticated, entered all the necessary data in the new system (job cost, work orders, and progress billings, etc.) but insisted on continuing to use the old system in parallel mode for an entire year. 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 vendor trainers to give them an overview of the implementation process, all the strategies involved, and the time-frame.  Second, managers must buy in to the new software.  When the manager doesn’t fully buy in to the process and understand the tasks and time-frame, they may not choose an employee who is the most qualified to learn the system and to train other people.  Instead, they often choose the employee they can most do without for the ”train-the-trainer” sessions.  Without the supervising manager’s 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. 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, software is only as good as the people that use it and that means proper training and motivation.

Implementing New Construction Software & Change Management

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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.

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!

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 Make Informed Bids

Just imagine that you have to make a bid for an HVAC and Sheet Metal job for a large well-known company with whom you have had no prior experience. So you resort to your tried and true methods of creating an estimate using pencil and paper. You are confident that past experience and knowledge will enable you to create an estimate that will make a profit. After all, you have been in business several years and your business is profitable. But how do you know that you are not leaving any money on the table, and that the costs for this new job are in line with those of previously bid jobs? Without a construction software solution that tracks previously bid jobs, both successful and unsuccessful, the answer is you don’t know.

I have seen many small companies in these situations not make as much money as they should because they didn’t really know the level of effort it took to be successful with a project of given size and type. They typically underestimated the number of labor hours necessary to maximize their profit.

How does software help avoid these issues? Imagine if you could track the costs (material and labor), hours, contract size, and profits for each of your past jobs by project type (e.g., apartment, office, hotel, etc.) and then automatically and instantly analyze this information by project type and contract size.

For example, you may find that your apartment-type projects with successful contracted bids ranging between $100,000 and $200,000 made a 7% profit.  You may also find that bids between $200,000 and $400,000 made a 13% profit. In contrast, you may find that office-based projects with bids between $200,000 and $400,000 made a profit of only 8%.

Suppose the analyses also showed that all apartment and office project bids between $200,000 and $400,000 were rejected when bid with built-in profit margins of 15%. Furthermore, suppose you were able to further analyze these results by project manager and customer type (e.g., mechanical and general contractors) to see who were your best performers and most profitable customers.

Knowing this kind of information would allow you to make more informed bids on new projects based on type and size, and turn down projects that are not in your sweet spot. Additionally, the analysis would tell you which projects left money on the table (e.g. for apartment projects you did not, whereas you did for office projects). Why waste time and effort on going after jobs that are not as profitable? I have seen two multi-million dollar businesses fail for these very reasons.

Special thanks to Larry Bookman (lbookman@tracall.com), President and Founder of TracALL Technologies for his assistance in writing this post.

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.