Technology has changed the way construction companies do business.
E-mail is becoming the standard method of communicating between owners, managers and subcontractors. Electronic drafting systems have virtually replaced manual drafting. Automated accounting software has replaced manual bookkeeping systems. Estimating systems and electronic spreadsheets have replaced the pencil, pad and adding machines in preparing estimates. All and all, the technology advances have had a positive effect on the efficiency of a construction company, which equates to increased profitability.
The latest technology getting attention is "the paperless solution." However, there are many definitions of this technology and its application in the construction environment. Following are definitions of the various "paperless" opportunities that are available, as well as, some of the advantages that exist with a paperless environment.
First, let's define what paperless means. Probably the most misunderstood concept within this technology is getting rid of the paper. Going paperless is about electronically duplicating the paper and organizing it together with existing electronic documents, files and e-mails. Getting rid of the paper can only occur if the procedures and technology are in place to support the transition of the originality of paper to an electronic format. That requires a company's legal and accounting consultants to approve of the disposition of the paper.
The main advantage of "going paperless" is the instant access to information from anywhere. When information is needed, it is much more efficient to access your computer system, locate and distribute what is needed to the person requesting the information, rather than going to the filing cabinet, pulling the file, making a copy, putting it in the fax machine and re-filing the information. Today, with the ability to put high-speed Internet at the jobsite with laptops and air-cards, critical job information can be made available to superintendents at any time, at any place and with security.
The second advantage of "going paperless" is the organization of all electronic information in one central location. The problem is most construction companies today use networks with public file systems to organize their electronic files, e-mail systems to organize their e-mails and application specific files within the application. While the efficiency is still there, the lack of structure and controls creates some very specific issues regarding the capture, organization and disposition of these critical business records.
Simply put, electronic files are scattered around the network, leaving gaping holes in the management of these records that can become a tremendous risk to any construction company. A paperless solution can provide the necessary structure to define the management, life-cycle, disaster recovery and security of important electronic business records. So much so, that a well-defined paperless solution can give a construction company the protection and compliance necessary to eliminate or destroy paper records.
Another advantage to implementing a paperless solution is the ability to integrate the electronic images with standard business reports. An example-taking a job cost transaction detail report that pulls transaction details for a job from the accounting application and combining it with images of the invoices that reference each transaction. This enterprise reporting can be integrated with current business reports.
Most construction-specific paperless solutions can integrate the indexing and searching functionality with existing applications. The advantage here is that when filing electronic records the index information can be validated against existing information located in other applications and can automatically update several index fields from one entry.
An example would be when scanning and filing invoices, a user would enter the invoice number and vendor and the paperless solution would read additional information from the accounting system and update the job number, phase, cost codes, amounts etc. Also, when searching for records, the user could simply select index information from list boxes generated from the accounting system.
When going paperless, most people are looking to archive paper information electronically. Paperless solutions provide construction companies with much more functionality that just archiving. While you may start there, the goal is to apply paperless technology into the actual workflow of the company. An example of this is in accounts payable processing. By implementing a paperless solution, an accounts payable clerk can:
- Scan the documents when they are received
- Automatically match them electronically
- Route them for approval and coding
- Have them returned
- Export the transactions to the accounting application while automatically filing and indexing the electronic images of the invoice and support documents
For some companies the cost of writing a check is about $125 when you consider the time spent and hard cost of processing the transaction. A paperless solution can reduce that cost by at least 50 percent.
Paperless workflow applications can reduce the cost of processing time and material support documentation and virtually eliminate data entry for payroll time sheets, accounts payable invoices and billing documents. It also allows you to electronically route, manage and control contract documents, both internal and external to your organization, electronically capture e-mail records and maintain e-discovery compliant controls on all e-mail correspondence.
There are four categories that all paperless solutions fit into. Each has its advantages and disadvantages. They are:
1. Application specific solutions
These are modules that exist with your project management, accounting or estimating applications. They are generally sold by the vendor or their representatives, but usually are limited to the documents generated or associated with the application. Most use a "paperclip" or non-index/link technology to attach files to records. In time, this method can become difficult to manage.
2. Generic document management solutions
These applications are index-based, but are not construction industry specific. They are usually sold by non-construction vendors like your copy machine dealer and do not integrate with construction applications. While they do provide index based management of records, each index must be entered due to the lack of integration.
3. Construction specific solutions
These solutions are generally indexed based and integrate with most of your existing construction applications. They normally are sold by experts in the construction industry who can adapt specific construction functionality to the solutions. These solutions have growth potential into workflow automation built around specific construction functionality.
4. Window file server
This is the existing file services that come with your Windows operating system. Most companies are invested in their network file storage equipment today. Setting up a paperless solution using the Windows file system is easy and very cost effective. However, when it comes to adding electronic paper images, the non-index aspect of the option can become an issue.
Finally, with any paperless solution, engineering, training and support is always the most important ingredient to a successful solution. Make sure you budget the funds for these items over and above the cost of the software. A successful paperless implementation can cut up to 50 percent of administrative operational cost through reduction in full time equivalents (FTEs), cost of handling paper, courier cost and efficiencies. An unsuccessful paperless implementation will cost you money!
Construction Business owner, December 2008