Choosing the software system to run your business is a major decision for all construction business owners.

Software is a considerable investment, and unlike other tools that your company uses to complete projects, very often software requires a change in the way things are done. Usually buying a new piece of heavy equipment doesn't require a major overhaul of business processes and the implementation of new training programs, but buying financial and construction project management software often does. Also, a construction business owner needs to be sure that the software and the vendor are the right match. The construction business owner places a certain amount of faith and trust that the software solution will keep sensitive financial data safe and that the vendor will continue to provide applications that meet the needs of the company, and the industry, as it grows and changes.

When a company starts out, business needs are usually met by a simple accounting application. But as the company grows, a solution is added for project management, then later a more sophisticated solution for financials, perhaps another solution to handle customer relationship management information and an imaging application to process invoices and drawings. This leads to a collection of different systems, none communicating very well with the other and each requiring resources to maintain. Eventually the company arrives at the point where executives realize that more time is spent on running this non-integrated set of systems than on completing projects. It's at this stage that executives recognize that they need to span the gap between financials and project management by using an integrated system, one that will also keep up with the company's growth.

A crucial step before selecting a software solution, whether it's integrated or non-integrated, is a thorough examination of the company's current business processes. The processes can be divided into two sections-integrated and non-integrated. The non-integrated processes are ones that are usually performed by one department, such as site management or the process of turning financial budget into financial statements. The integrated processes, however, touch different departments and are often filled with unnecessary steps and wasteful procedures. Though the terminology may differ for each contractor, the seven main integrated processes can be called:

  1. Job Initiation
  2. Estimate to Job Cost Budget
  3. Estimate to Subcontractor/Purchase Order
  4. Payment Management
  5. Contract Billing
  6. Potential Change Item to Posted Owner Change Order (PCT to PCO)
  7. Job Forecast to Work In Place (WIP)

A key factor in successfully examining these processes is to map out each step, how long each step takes and the factors and systems involved. It's quite common to have a "sense" that processes are not being performed efficiently, but it is crucial to have quantifiable numbers to demonstrate inefficiencies. Very often executives are surprised at how much effort goes into a process, particularly effort done behind the scenes. Many companies have processes being performed off-line, which creates stacks of paper and opens up the possibility of mistakes being made. To determine the true cost of each process, the time required for each step needs to be added, but it is often difficult to put hard time values against individual processes. Generalizations can be made, and after completing this examination, companies will be able to identify areas where improvements can be made by either reducing the processing time through automation or moving processes online and have them performed in the system.

Out of this evaluation the identification of key risk areas occurs. A true return on investment analysis of implementing a new software system requires dollar values to be applied towards the time each process currently takes and compare that with the time savings a new system will create. However, this doesn't tell the whole story. Software can help an organization lower risk in areas that are hard to quantify in numbers, such as increasing the reliability of project data and enhancing the access to data. A software system with a collaborative function can also help contractors prequalify subcontractors by providing the ability to store past work performance, verify insurance and track and approve vendor applications online, so a subcontractor can be vetted before they start work on a project. This function could lead contractors to potentially saving millions in losses by choosing the right subcontractor over a wrong one, but this situation is difficult to quantify in hard numbers.

During the business process evaluation, some desired attributes of the new software system will become apparent. The most notable one will be the need for integration, which means all information stored in a single database. Many software vendors promise integration, but what they actually deliver is a system linked together by data bridges that provides the illusion of integration. On closer examination, what these systems are doing is shifting the burden from the project managers and financial staff to the IT workers, so there are productivity gains on the front end, but there are productivity losses on the back end. The danger is having a system that takes too many resources to maintain. Some companies compensate for this by having a large IT staff, but given the current economic outlook, it makes more sense to focus on your company's core competency-completing projects-than running a software system.

Another desired attribute is to have a system designed for the construction industry. Larger companies are often attracted to non-construction industry solutions, but these systems often require heavy amounts of programming in order to make them work for the industry. The construction industry has unique requirements that separate it from other industries, and the software vendor should understand these needs. For example, the system should have out-of-the-box functionality, so you can get the system up and running without heavy amounts of customization.

The solution should be web-based and be deployed easily in the field, so a project manager on the jobsite can enter information that the project executive back in the head office can review instantly. The technology that the software solution uses should be scalable to accommodate any future growth that the company might have, so the company doesn't have to go through this process again in a few years. The technological infrastructure should be flexible enough to accommodate the integration of outside applications, such as BIM and online plan rooms, into the enterprise and have that information travel bi-directionally, meaning that both databases are updated and there is no need for multiple data entry.

Once the immediate financial and project management needs have been addressed, executives should also consider the future and what applications the software provider offers. Customer relationship management (CRM) is often considered a second-tier need, but if used effectively, it can be the lynchpin to a project's success. Applications such as imaging and workflow are often second thoughts when deciding on a solution, but having those applications capable of being integrated in the enterprise at a later date is crucial.

The biggest change that a company has to undergo when selecting a new software system is the cultural shift that comes with implementing a new solution. Often a software system will perform a process differently from the way a company does it now, and instead of forcing the software to follow the company, the company should follow the software. Just because a process was performed a certain way before doesn't mean it is the best way to do it. This is the hardest step for a company to take, but by doing so, the selection of construction software will be successful.

Construction Business Owner, June 2010