As a construction business owner, you need to know exactly where you stand with your customers, your employees, vendors and suppliers. They all have a direct impact on your profit.
There are many ways to do this. Sticky notes on the fridge and a big shoebox in your passenger seat might have worked when you were starting out. But as businesses grow, the systems to keep organized need to as well. Most construction business owners know that there are very sophisticated construction software programs out there for managing business and many will use them for accounting.
What is not as common, because it sounds so basic as to be unnecessary, is project management. Isn't that what any good contractor does? Doesn't everything that is part of a project simply need to be completed? "Just let me work," you may think. But it's how you work-the productivity of you, your staff and others you depend on-that can determine whether you bring projects to completion on time and at a profit. A good project manager can deliver on one, two or a few jobs. But what happens when you have five-or ten-or more? Your business complexity grows exponentially, you hit information overload, and the overall efficiency of your business can suffer.
However, with all the facts in one central database, the ability to view and schedule labor and materials and inquiries and reports that are easy to customize, you're able to quickly get to the details that will identify issues before they grow into problems.
With the right construction project management software system in place, you'll be able to:
- Stay on top of subcontracts and performance
When you are able to see who is working well, or who isn't, you can easily make changes that impact profit immediately.
- Effectively manage change orders
Compare actual costs against budgets, so you see whether you'll end up in the red or black. It also enables you to have realistic discussions with customers instead of a big unexpected bill at the end that is harder to collect.
- Streamline your RFIs, submittals and other project documentation
Improve workflow between accounting and operations. Good construction software puts an end to shuffling data and entering the same information twice.
Once commercial contractor Gardiner & Gardiner realized its hundreds of requests for information were taking too many hours to log and track, it turned to a construction software supplier for a project management application.
The software enabled the contractor to automatically create, track, and retrieve RFIs, submittals and transmittals and link to accounting to exchange cost and contract information.
According to the Crofton, Md.-based company's chief financial officer Ron Block, the savings in time and money is substantial.
"The project manager no longer has to keep a separate log in a separate software application," Block said. "Instead, he can just update the log already created (in the software). That simplifies the process since those RFIs and submittals go through several stages before they're totally handled or the issue is closed."
The fact that the software works with Gardiner & Gardiner's accounting is a plus, he said.
"While project management is very useful on its own, there's added value because it integrates with the other applications," Block said.
A core project management application lets you view it all. It's the software to keep the right people well informed at all times by providing access to up-to-the-minute costs, contracts and document information.
Here are some things you should look for in construction project management software:
Centrally integrated data
Through integration with accounting, estimating and purchasing systems, you're able to issue and see all prime contracts, subcontracts, updated plans and drawings, change orders, purchase orders, meeting minutes, requests for information (RFIs) and other project-related documents. You can set up your job as early in a project as you wish, then renumber the job to fit company standards and release all information to accounting at a later date for review, approval and use. And as new project information is entered in accounting or operations, all updates automatically appear in project management and all related accounting applications.
Real-time information for solid decisions
A centralized source of information is your assurance of having a complete and current picture of any project. For example, make sure you can instantly see the status of contracts, profit, billings, costs, cash, RFIs and submittals all at once.
Make sure there's no need to manually synchronize accounting and project management software. The project information should always be current and there should be no limit to what information can be shared-costs, budget revisions, change orders, forecasts, prime contracts, whatever you like.
Create, track, retrieve documents
Make sure you can create and track common project documents, such as RFIs, meeting minutes, submittals and transmittals.
Check for the ability to take a look at which RFIs haven't yet been approved and understand the potential impact of outstanding requests on a project's cost and schedule.
Access to information
Ensure you can delve into the details behind the numbers. If you're ever on the phone and need to know about the payment of an invoice, you want to pull it up in a hurry to see exactly how and when it was paid. Job cost reports can also contain unposted costs as well, so you know where you truly stand today.
Construction Business Owner, September 2008