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Software Solutions Manage Time and Budget Effectively
By Joel Hoffman, Maxwell Systems
For light commercial builders, time and budget are especially crucial. Profit margins for smaller projects tend to be lower, so every job must hit the deadline and generate revenue — or else the business takes a hit.
Yet many contractors still rely on inefficient operating methods, including paper reports or outdated technology, to manage project timelines and budgets. These inefficient methods require much manual work, slow down the approval processes and leave too much room for data error.
As a result, it’s more difficult to identify workflow snags, and contractors too often end up playing catch-up to get projects back on track.
However, contractors can prevent slowdowns and take a more proactive approach to project management by using the new generation of business management software.
When the process is done right, contractors know exactly what’s going on at all project phases and can identify problems sooner rather than later. When it fails, contractors can be subject to increased liability and exposure on a project.
Owner Challenges
Owners know the real work on a project begins the moment they win a bid. They must begin to order needed materials, coordinate the labor line-up and review their insurance limits. Every project has nuances and different tasks, but all involve a few core business challenges, including:
- Making profit. The smaller the construction company, the more critical profit on each project becomes. When a project produces marginal profits, there’s very little room for absorbing any loss. If enough small projects go under — no matter how shallow the drop — the business itself could face bankruptcy.
Smaller projects often also have shorter deadlines, which in turn shortens the revenue stream. Contractors must have an accurate gauge of anticipated cash flow to make payroll, buy materials and fund other business expenses in a timely fashion.
- Bringing projects in on schedule. Contractors must constantly monitor a project’s status and make sure certain tasks are completed on time.
One delayed task can hold up the entire project. Slipped deadlines can carry penalties in the tens of thousands of dollars — including penalties incurred for missed completion dates.
If the job is completed ahead of schedule, on the other hand, performance payments may be triggered. Therefore, it’s crucial for contractors to know what their completion timeframe is throughout the project life cycle.
- Managing subcontractors. Contractors must monitor numerous subcontractor commitments and activities during a project’s life cycle.
Managing a subcontractor includes entering into an original contract, monitoring the insurance and bonding status, recording positive and negative change orders, tracking invoices and requisitions, processing retention and making payments.
- Tracking documentation. Keeping track of documentation, including requests for information, change orders, submittals, transmittals, meeting minutes, e-mails and more, is critical to organized workflow, which affects every aspect of the timeline and budget. When items are misplaced, hard to find or hard to read, tasks are much more likely to be delayed, forgotten or done incorrectly.
Today, many companies are seeing the benefits of converting their paper documents into electronic versions because they are much easier to store and share via e-mail.
Keep in mind, however, that even with electronic documents, contractors still need a good electronic filing system to keep every document easily accessible. Otherwise, they waste time searching through dozens of electronic files — just as they may have wasted time looking through office file cabinets.
The Software Solution: Tracking Project Stages, Increasing Profitability
Fortunately, many contractors have turned to systems that are run with business management software. When those systems are robust, they allow contractors to track all tasks, employees, costs and deadlines. Software today can be used throughout every stage of a project, and it can benefit contractors in several ways.
First, it can increase profitability by giving contractors more insight into their own business processes — from the moment they win a bid to the last punch list item, they can see what’s working and why. Such a system lets contractors see the origin of costs and investigate what doesn’t add up right away.
In many systems, this is done through alerts — contractors can easily configure software to warn them when the project reaches certain points, such as halfway completion.
Contractors can look at their expenses to date and see if a project is still on budget. If it is, they are assured their workflow methods are working efficiently and cost-effectively. Proven workflow methods can then be repeated on future projects.
On the other hand, if a project is exceeding the budget, contractors can find out why by clicking on phases and tasks. They can check the status of each phase, see what materials have been used and see which workers are involved in which task or phase.
Let’s use as an example a building in the first-floor construction phase whose total cost is above the allotted budget amount. An owner looking at the expenses involved would be able to see that the high cost is due to inflated HVAC expenses.
Contractors can then send in a change order before the cost reaches unwieldy proportions. And the project manager could very well decide not to use that HVAC subcontractor again.
Tracking Progress and Performance, Meeting Deadlines
Business management software also helps contractors to meet deadlines. They can look at the workflow spreadsheet to see which tasks are completed, which are in progress and which need to be tackled next. By monitoring the progress of the project, contractors can identify slow spots and take action to get the project back on track.
Today’s software also helps track material shipments and labor scheduling so contractors don’t send workers or new materials to a site before requisite phases or tasks are completed.
Software solutions also can help contractors monitor the progress, performance and payment of subcontractors. For example, a contractor’s software solution may highlight a change-order request. Once alerted to the need, the contractor can use the software to expedite routing and approval of the change-order request. When the change is approved, costs and bid item budgets are automatically updated by the software.
Tracking Documentation, Speeding Approval Processes
In addition, business management software can index and store files electronically to help track documentation. Today’s software allows an owner to link scanned paper or e-mailed invoices to the appropriate tasks as they come in. This builds an organized electronic filing cabinet through which project managers can easily search for and access needed documents in seconds.
Maintaining electronic versions of documents and field information also speeds up approval processes, which allows owners to make quick, well-informed decisions. In addition, they can now quickly e-mail documents to vendors and subcontractors for approvals.
Business Management Software A Benefit to Businesses of All Sizes
Finally, light commercial contractors who think they’re too small to need or afford a full-service software application are mistaken given what’s offered today. Many software packages are scalable to a business’s size, and some can be tailored to grow and take on more tasks as the business grows.
Contractors don’t have to be tech-savvy to use well-designed business management software. Intuitive setup and processing functionality can take much of the legwork out of managing projects.
Above all, business management software gives contractors total control over their projects and insight into their businesses. Contractors are no longer simply reactive in solving problems, but can be proactive to prevent them — which is just the solution for bringing every project in on time and on budget.
Joel Hoffman is the product manager of Maxwell Systems, a supplier of fully-integrated business management software to the construction and commercial property management industries and headquartered in King of Prussia, Pa. For more information, visit the company’s Web site at www.maxwellsystems.com, or call 800-688-8226.
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