by Fred Ode

Q: We just landed a very large job-our biggest ever. We're excited, but I've heard stories where big jobs have literally put companies out of business, because they couldn't track job progress and costs. I'm fearful we will be in this situation as our current system lacks any job costing abilities-I do it all in my head. The job starts in four months. Should I consider getting a new program?


A: Large jobs can put a company out of business. To avoid this on your job, you need to track your progress using the right tools. Doing it in your head just won't cut it for large jobs. You'll also want to steer clear of generic, off-the-shelf accounting software, even though the price may look more attractive. This type of product usually requires the use of external spreadsheets and lots of double entry, increasing the risk for error and taking extra time to produce reports. With a generic system, you will rarely be up-to-date on your jobs.

Job cost accounting software built for construction allows you to compare estimated vs. actual costs to see where you are on a job at any given point in time, as opposed to waiting until the job is over. In addition to overall job performance, you will be able to track different phases, cost codes or tasks on a job to see how well you're doing on each one. It is absolutely essential to track your progress on a frequent and regular basis. You will want to review reports like estimated vs. actual costs and percent complete. And you may even want more elaborate reporting such as production reports showing how many units of measure you are completing per man hour. All of this is possible with a construction job cost accounting system.

You mentioned that you have four months before the job begins. This is plenty of time for you to select and implement a new system. Narrow down your search to two or three reputable companies by getting references from CPA firms, industry professionals and peers or by doing an Internet search. You will then want to view demonstrations of each product and perform due diligence on the vendors in terms of company, product and technology. Once you select the best fit product for your company, allow six to eight weeks for implementation and training before you will be up and running live on the software.

Best of luck with the job. If done right, large jobs can be very profitable. Once you get the right construction accounting software in place, you'll have overcome the first hurdle on the track to success.



Construction Business Owner, July 2010