The first computer software products geared toward the construction market had an accounting focus, and most construction companies started their IT systems based on these software packages. This has led many mid-sized construction companies to delegate their IT function to the accounting department rather than operations.
And because of the considerable investment involved in deploying an accounting package, construction companies have used these platforms to complete tasks that fall well beyond their traditional scope. Over time, many construction companies have relied on these accounting applications too much.
This has usually resulted in a clumsy system of disconnected reports, spreadsheets and manual processes that do not help businesses control their profit centers, such as labor, equipment, materials, direct job expenses and services. To effectively manage operations, contractors need software that can give them complete control of their businesses—a platform that integrates with accounting software rather than competing with it.
Construction accounting software works better for complex financial reporting and regulatory compliance but does not account for the realities of field operations. Information flows from the field to the office, and accounting software typically cannot manage that information flow. Add to that the procurement, fleet management and equipment management requirements of field operations and one can see how companies waste resources and encounter confusion.
Operational software integrated with accounting software can provide a full view of productivity and real-time reports, which can mean the difference between profitability and loss.
Who Should Select Operational Software?
Often, business owners ask their CFO or comptroller to find operational software, but these professionals often do not have a real understanding of the challenges encountered in the field.
At most construction companies, the finance department researches software vendors, selects a solution that meets the finance department’s needs and then tells the operations team to implement the software.
Naturally, those who work in the field resist a solution that does not meet their actual requirements, and they revert back to temporary systems that consist of manual reports and spreadsheets—information that must be rekeyed into the accounting system.
The complex nature of accounting platforms, which form the backbone of a construction company’s IT system, dictate that accounting executives must play a key role in IT procurement and delivery.
But it is often most beneficial to use accounting platforms strictly as financial platforms managed by accountants, and then implement an operational control platform that complements and integrates with the accounting system. This gives construction business owners control over every critical aspect of their businesses and results in labor and administrative cost savings.
The operations team must answer key questions before making a decision about an operational platform. They should consider any ideal features that could assist the project manager in streamlining and managing operations.
They also must consider how the software will integrate with the accounting software. The operational software should complement the accounting software and route information seamlessly into existing accounting systems to help speed invoicing and accounts receivable.
The realities of field operations must be considered as well. For instance, a construction company that works predominantly in the oil and gas sector will have workers in remote pipeline locations where they most likely will not have access to a cellular network or Internet connection. This means that any platform selected should have a robust offline capability—ideally one that can be deployed on handhelds or tablets.
If information can be synchronized as soon as a connection becomes available, workers will not have to use ineffective manual processes when faced with a poor or non-existent connection.
Given the remote nature of many jobsites, finding a tool that can handle information flow from the field to the office eliminates the need to have an administrative staff in these locations (where it can be difficult to recruit and retain office workers). The right operations platform places project controls in the hands of jobsite supervisors rather than administrative workers.
With the appropriate tools, information can be captured when and where the activity happens and can be instantly routed to the right place. Payroll, accounting, project reporting and invoicing can be expedited, which increases profitability.
By selecting operations software that corresponds with accounting software, construction businesses can effectively conduct job cost management and project control, while limiting the redundant or manual processes that have historically been used to manage operations.
Construction companies that include their operations executives when selecting and deploying operationally-focused software will be able to find purpose-built applications that take into account the realities of field operations.