Construction Software: Is It Time to Trade Up?

Posted by ctsguides
April 9, 2008

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Sheldon Needle is President of CTSGuides.com and helps construction companies make smart technology decisions. Get your free Construction Software Selection Kit and 10-minute Smart Shortlist(TM)Consult by visiting http://www.ctsguides.com/construction-accounting-software.asp or calling 800-433-8015.

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