Business Matters: The digital difference

A lot of heavy construction accounting is done by the seat of the pants. If you work in any craft or industry long enough you get a pretty good idea of what your costs are going to be on any given job.

But in today’s marketplace, especially if you want to grow your company, pretty good is not good enough. The most competitive contractors today are using a variety of computer software programs to manage everything from payroll and back office functions to estimating, fleet maintenance and project management.

These are not the off-the-shelf programs you buy at Office Depot, but robust, construction-specific software packages that cost anywhere from $600 at the entry level for small companies to $10,000 and more for big fleets and companies with a lot of employees. Most of these programs run on ordinary PCs, although some of the bigger programs are set up to run on networked computers through a server.

But if spending that kind of money for something that doesn’t move dirt makes you want to lock up your checkbook, consider this. At a minimum most programs will allow you to reduce direct costs by 4 or 5 percent, often more. If you could shave 5 percent off your maintenance, labor or equipment costs, in almost every case that savings will more than pay for the program. Plus, by keeping your activities better organized, you’re less likely to skip, overlook or reschedule important service items, thereby reducing equipment downtime.
We talked with a handful of companies that sell these construction-specific software programs. Here’s what they had to say about the benefits of going digital.

Fleet maintenance
“Software does two things,” says Charles Arsenault, president of Arsenault Associates. “It gets you organized and it keeps you that way.”

Without the precision, instantaneous feedback and access and multiple reporting capabilities software provides, you’ve only got a rough guess of what your downtime is and what your cost per hour is, he says. Contractors typically focus on their yellow iron and forget to cost things like trailers, stationary equipment and licenses. Maintenance requests get scribbled on a yellow sticky note and stuck inside a folder. Unnecessary parts and inventory stack up in the shop. And urgently needed supplies aren’t ordered until the service technician files a paper request or makes a call to the parts man.

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Arsenault’s company sells Dossier Fleet Maintenance Software version 4.0, which automates the reporting and tracking of all these everyday fleet maintenance activities. With the program, all maintenance, inventory, labor and cost data are entered into the computer rather than paper files. The program then slices and dices the information to give you immediate feedback in 97 different report formats, or you can custom build your own report formats. Anybody who needs to know the status of a machine, how much it’s costing to run or what scheduled service is due or pending can find out instantly with just the click of a mouse.

“Having good software and using it properly will drive rework to its knees and hence reduce downtime,” Arsenault says. Outside the shop, fleet management software also lets you know to the dime how much money it costs you to run the equipment. “If you don’t know that and you go out and bid on a job you may be forcing yourself into a marginal position,” Arsenault says.
Being able to track the amount of money spent on each vendor is another feature of the software contractors like, Arsenault says. “In one case we had a contractor who showed a vendor that he had spent $600,000 with him in one year. Without blinking an eye the vendor gave him a 10-percent discount.”

Accountability for the shop
Grant Christensen, vice president of sales for Qqest Asset Management Services, cites another important reason to bring fleet management software to the people who manage and maintain your fleets.

Maintenance personnel are in a role where they don’t necessarily care about accounting or administration, Christensen says. Their job is to fix equipment and keep it running. Given the breakneck pace of construction operations today, the last thing maintenance supervisors want to spend time on is a sophisticated financial analysis of their activities. Software does this for them automatically, the moment they enter the data into the computer.

Job costing and reducing redundancy
A lot of small contractors start out automating their accounting work with an off-the-shelf program like QuickBooks. And these are usually sufficient for companies with sales up to about $1 million and 10 employees or fewer. But once your company starts to grow beyond that, you can benefit from a more robust, construction-specific cost accounting software program, says Mike Ode, sales manager for Foundation Software.

“The No. 1 thing you’re going to get out of a system like Foundation is timely and accurate reporting, especially in the job-costing module,” Ode says. “If you want to know where you are on a job when you’re 30 percent done, we give you reporting capabilities that tell you exactly where you stand, what you’re ahead on and what you’re behind on. You can enter major repairs and service against the equipment, run profit-and-loss statements against each piece of equipment and check for over/under billing. All these are a daily routine with our software.”

In addition to accurate, real-time information, software eliminates redundant, double-entry accounting that takes up a lot of office time, Ode says. “You see people doing things two, three and four times that need only be done once with the right program. Your bookkeeper may be spending up to 15 hours a week on things like payroll, but with a system like ours that may just take 40 minutes.”

Training as you like it
Any new technology can be intimidating, especially when the technology is digital and your expertise is mechanical. Fortunately, when you pay for a big-ticket software program you get a lot more training and a more intuitive interface than you get from a Microsoft product.

Foundation Software’s systems take 20 to 24 hours of training and a four- to five-week period from the day it’s installed until the day you start using the software, says Ode. “We can train people here or we can go to their location,” he says, “but nowadays the most popular way is to train people online with conference calls and computers that are tied together.”

Arsenault says his training takes a day or two and the company regularly holds two-day training seminars. “We pride ourselves on the fact that the program is intuitive,” he says. “When you look it you just get it. We understand that the average user is not a computer person.”

For its Manager-Plus asset management program Qquest offers online training over the Web and self guided tutorials with a manual. “It’s very easy to get through,” says Christensen. “We can also fly out to train customers. It’s all about the cost. We have training sessions that run a few hundred bucks and those that go over $1,000.”
The key to getting up to speed and making a program work is just to jump and not be afraid of the technology. “We were all new at this once,” Christensen says. “If you put it into action and make things happen you’ll get a lot out of it.”

Considering consultants
While a leap into unknown technological waters might make some contractors consider hiring a consultant, the experts we talked to, for the most part, advised against it.
Consultants, they said, tend to be experts on hardware – computers, wireless devices and network systems – rather than software applications.

The experts you want to consult are your fleet managers, mechanics and office personnel, Arsenault says. “Ask them what they want and what they need,” he says. Start there first and develop a needs list, then find a product that fits those needs.

If you’re a contactor in the $2- to $10-million range you’ll want to go to the Internet and pick two or three programs to research, Ode says. You don’t want to research too many because you will go around in circles forever, he adds.

The future is gaining on you
Perhaps the best reason to consider investing in construction-specific software is the simple fact that this is the direction the industry is headed.

Many of the young people coming out of tech schools now are being trained for and anticipate working in an environment where there is a strong IT component to their jobs, Christensen says. “The world is going this way and it’s very important for your maintenance guys to know software, regardless of whether it’s ours or not,” he says.