August 2009

Bassem Hamdy
Vice President of Solutions
CMiC
For a contractor, the key to survival in this economy is to have complete access to information and full control over their environment. With the ability to access information in real-time, contractors can make crucial business decisions to positively affect the outcome of a project. With full control over their environment, contractors can spot red flags on projects and enact measures to keep the job on time and on budget. The only way to achieve this level of efficiency and control is to use a software system that integrates financials, project management and customer relationship management on a single database.

By having all mission-critical information stored in a central database, contractors can track financial information as it flows across the company. Using a web-based integrated system, the information a project manager enters in the field can be instantaneously accessed by an accountant in the head office, decreasing the amount of data entry points and reducing errors. The data therefore becomes more reliable, allowing contractors and executives to make better business decisions.

With this high degree of access to information, contractors can use past project data to predict future project needs. For example, contractors know if they should buy materials in bulk, such as concrete, from one supplier and save money in the long term.

This level of control and access cannot be found in point systems but only in a fully integrated construction software system.  

Jeff Gerardi 
President
Construction Management Software
While technology-oriented contractors readily invest time and money to establish strong accounting controls and analytics, many of those same construction firms continue to use spreadsheets for estimating and manual tools for takeoffs. What these companies may not realize is that estimating and takeoff software provides the foundation for a profitable job, which is the cornerstone for survival in the current economic climate. 

Manual estimating is time consuming and error-prone—two issues that threaten business viability in a down market. Automating estimating and takeoffs increases bid accuracy and gives contractors the data transparency needed to be competitive and profitable. Over time, historical estimating data even provides analytical insight into the most lucrative project types and most productive field teams.

New advances in estimating technology offer an unprecedented return on investment. Greater efficiencies allow a small estimating team to increase bid production without adding staff. Estimate details seamlessly transfer to accounting to automate job setup. And paperless takeoff technology uses digital plans, saving thousands of dollars each year in time, blueprint storage space and printing costs.

When compared to other construction management tools, implementing a cutting-edge estimating solution is a faster and less expensive way to gain the controls and analytics needed to prosper. Some estimating software developers even offer trial versions that allow contractors to test their technology before making a financial commitment. In today’s economy, these factors lessen risk while delivering a greater potential for reward.   

John Meibers 
President
ComputerEase Software, Inc.
One factor predominantly determines the success or failure of any business, especially a construction company: cash flow. With the current state of the economy, this factor only heightens in importance. Consequently, one wonders how to manage this monumental determinate.

First and foremost, logic comes into play. Understanding the concept and crucial aspects of cash flow seems like common sense. And yet, somehow, an unfortunate number of contractors close their doors due to a lack of cash flow. To succeed, a contractor must have a comprehensive understanding of cash flow management. Of course, understanding is only the beginning. Implementing an effective system is entirely different. Timing and taxes are everything. Whether the logic comes from an in-house accountant or an external service, a solution to track and manage cash flow is imperative.

Communication is also a key to liquidity. To sustain in any economy as a successful contractor, clear communication among the owner, the employee and the client is vital. Adhering to a planned timeline for completion and billing dates can generate and maintain sufficient cash flow. If schedules are slack and documentation of completion dwindles, the contractor is prematurely out of luck—and out of cash.

Luckily, contractors have several opportunities to manage and secure cash flow and build a solid foundation for a prospering business.  

Jim Flynn
President & CEO
Maxwell Systems, Inc.
To survive and succeed in this industry, and especially through the current economy, contractors must improve control and analysis of important data.

With a complete solution for estimating, job cost accounting and project management, contractors will be equipped to recognize the projects that are most profitable; identify the crews that are the most productive; assess whether and when they should rent or buy equipment; understand which jobs are worth bidding; and efficiently manage every change order for optimal profitability.

Here are three things every contractor should think about.

1. Improve power to negotiate. Many contractors know that Digital Takeoff improves speed and accuracy, but it also helps businesses attribute and prove changes throughout projects. This ability to verify and illustrate helps negotiate payment for additional work beyond the scope of original estimate.
2. Guard every nickel with knowledge. An end-to-end solution helps construction businesses recognize overruns and easily identify the cause in time to do something about it; or even better, trigger alerts to such problems before they arise.
3. “Please” doesn’t pay. In this market, going back to clients for payment after any additional work has been completed is often a losing battle. Manage jobs with critical attention to detail and rigor in the process. Use easy methods to measure and report, and manage the entire process to be profitable.

Intelligent software solutions can help answer questions like these with insight for short-term and long-term strategies and stability.  

Jim Wenninger
CEO
WennSoft
There are three keys to surviving and even prospering in the current economy. Minimize overhead, have real-time access to financial data and only bid on the projects that will be profitable. To accomplish these, contractors should equip themselves with an effective software solution.

An effective software solution can reduce overhead by seamlessly integrating the various parts of an organization—service, accounting and inventory—so that information can be entered once and used by everyone who needs it. This minimizes the administrative support necessary to handle and enter information multiple times.

A good software solution gives immediate access to financial information, which improves the speed in which decisions can be made. Too often, project managers need to wait several weeks or longer before they can access essential data, such as labor reports. By the time they realize a problem threatens job profitability, it’s too late to react. Having real-time access to data provides project managers with the tools necessary to make timely and effective decisions.

A quality software solution can help contractors create more successful job bids by showing them their true costs. Historical data on labor, materials, permits and other essentials can be categorized and quickly accessed in the system when it comes time to prepare a bid. This information can prevent contractors from bidding too low and winning a job that won’t be profitable, or creating a bid that is too high and uncompetitive.   

Michael Ode  
President
Foundation Software
Construction business owners are under enormous pressure today to decrease costs and lower profit margins just to survive. In an economy such as this, the only way to save money is to become more efficient at what you do. And the best way to achieve greater efficiency is through technology.

First, contractors need to identify areas of their operations where redundancy and inefficiency exist. Any time employees spend their time on unproductive tasks, such as manually recording transactions or duplicating records from one application to another, it has a negative impact on the company’s bottom line. Luckily, construction-specific technologies cover just about every trade and every known task, allowing even the smallest contractor to streamline processes and save money in the long run.

Second, and perhaps most importantly, contractors need to make sure they have access to accurate and timely financial data. Many have turned to construction-specific solutions that provide fast and efficient methods of tracking job costs and managing cash flow. Unfortunately, companies that once “got by” with generic accounting systems and manual reporting methods are suddenly finding themselves at a serious disadvantage.

Whether bidding on government-funded jobs or privately owned projects, contractors now must comply with detailed reporting and accountability requirements. Highly competitive jobs, slim profit margins and a louder call for financial transparency are forcing contractors to either embrace technology or step aside. When the dust settles, the proactive companies that choose to put these processes in place are going to be far ahead of their competition.  


"What emerging technologies in construction accounting do you see having the greatest impact on contractors and construction accountants?"

Catherine R. Terwiliger  
Marketing Director
Construction Industry Solutions (COINS)
Mobile applications are emerging now in the industry to expand the reach of systems to the field, the strategic use of data through business intelligence and dashboards, electronic trading between contractors and suppliers, the use of the Internet for application interfaces and workflow, and building information modeling (BIM).

Major benefits are being realized, for instance, with electronic trading. Although not new, it is more accessible and acceptable as a way to drive down the cost of doing business. A procurement team may negotiate the best prices for materials; however, without an electronic trading system, both suppliers and contractors encounter huge overhead in handling an enormous volume of paperwork and queries.

The strategic use of data via dashboards, workflows and alerts is allowing contractors to be proactive in responding to changes in their key performance indicators. The Internet allows this information to be available at all times from any location without the need to access the accounting system.

BIM is enabling project-based professionals to see accounting information in 3D formats, which bring context to data that isn’t available from traditional reports and inquiries.

And, mobile devices in the field are bringing data to the back office more quickly, facilitating better decisions and allowing for advances such as earlier billing.  

Roger Kirk  
President and CEO
Computer Guidance Corporation
Several emerging technologies are enabling contractors and construction accountants to significantly streamline and more effectively manage their operations. These include:

Dashboards. These interactive user interfaces gather, organize and present selected information at a single location on a desktop. A dashboard not only launches a user’s system applications, but also “publishes” selected data from system applications based on the user’s parameters. Standard dashboards are limited because they integrate only with the financial system applications offered by a particular vendor. The newest dashboards use web-based technology allowing them to function as a “portal” — that is, an Internet site with access to other Internet sites.

Imaging/Workflow. Using browser-based electronic imaging/workflow technology, contractors can quickly scan documents to be stored, cataloged, retrieved and shared. Single or multiple image files can be assigned to another application, a project or an accounting discipline (e.g., accounts receivable/payable, general ledger, etc.). Electronic storage and retrieval improves cash flow by enabling a contractor to generate invoices quickly and speed up collections. When combined with document imaging, a workflow application saves time for the entire company by eliminating manual tracking and processing paper invoices and documents.

SaaS (Software as a Service). Construction applications are now available as a hosted solution offering the same fully integrated financial, project and productivity management solution functionalities as traditional enterprise-class systems. Additional benefits include remote access to a secured system with individual partitions, where solution upgrades, software updates, system maintenance and administration are performed without customer involvement.

High Availability/Disaster Recovery. Services are now available to provide contractors with access to clustered servers and storage area networks, enabling them to quickly recover critically important financial and operating information following an IT system failure, natural disaster or human tampering. These Level IV Data Centers, managed by outside vendors, are intended to reduce risk while keeping disaster preparedness planning and costs to a minimum.

RFID/GPS. Radio Frequency Identification and Geographical Positioning Systems are powerful tools that can be used to remotely identify a tagged item, manage and locate materials and prevent theft. With RFID, contractors can now track vehicle stock and warehouse inventory via a barcode. GPS can identify the location of equipment, provide automated meter reading and to effectively manage equipment usage.  

Fred Ode 
CEO & Chairman
Foundation Software
Plenty of new and exciting technologies exist today, but the ones that will have the strongest impact are not necessarily emerging. That’s because many contractors are not ready or willing to use them. From a practical perspective, the technologies offering the greatest benefits are those that help contractors perform their work faster, more accurately or more efficiently. For some companies, that means acquiring cutting-edge solutions, but for others, it may be as simple as upgrading from spreadsheets to estimating software.

In the area of construction accounting, sophisticated job cost systems continue to add construction-specific features and reporting capabilities that help contractors understand their costs and manage their businesses. Most systems have evolved to the point where they can handle more than just back-office bookkeeping. In fact, contractors have opportunities to join accounting and operations functions so that the entire company benefits from improved efficiency and easy access to data. Some companies are taking full advantage of these technologies to create success and profitability but, unfortunately, many others are not.

So what’s the key to gaining contractors’ acceptance and use of technology? As someone who’s been developing construction software for 25 years, I can tell you that it has more to do with understanding how contractors work than it does with forcing the latest and greatest technologies on them. Trends come and go. It’s more important to give contractors products that will increase their efficiency, improve their profitability and handle the “real-world” nuisances of construction.  

Will Anderson
General Manager
Jonas Software, Ltd.
In the construction ac-counting environment, the ability to achieve up-to-date information is limited by the amount of time needed to get data from the field back to the office. Even when an integrated software solution is in place, information must be manually gathered and entered into the system before it becomes meaningful. But the emergence of online portal technology is changing the way contractors manage information—and shortening the cycle times for critical accounting tasks.

Recognizing the need to eliminate double entry, accounting solution providers are now developing tools that allow field staff to use secure, Internet-based portals to enter information directly into the main accounting system. This gives construction managers and accountants access to data in near real-time, which dramatically improves decision-making.

Early portal solutions focused on singular tasks like entering labor hours from the field using a simple web interface. Today, full-featured mobile applications that operate on a PDA platform are in high demand, particularly in the construction service sector. Moving forward, advances in portal technology will give project managers and other field staff better access to core accounting functions, further streamlining the flow of information.

As a result, widespread benefits, such as lower administrative expenses, improved cash flow and reduced service billing times, can be realized. Aligning with a software provider that is actively developing portal solutions will undoubtedly give contractors a competitive edge—now and in the future.  

Herb Brownett 
SVP, Sales & Industry Solutions
Textura Corporation
Construction requires many unrelated organizations to come together for a common purpose on a onetime basis.

Contractors long ago implemented standalone internal IT applications to automate in-house activities. Now contractors are beginning to adopt collaborative processes that can reach beyond the four walls of an organization to automate their interactions with others on a project.

Construction companies adopting collaborative solutions are taking advantage of the next level of automation. Such solutions by definition are Internet-based and require web-enabled software, hosting by a Software as a Service (SaaS) company or a sponsoring entity, such as a government agency.

An increasing number of collaborative solutions are coming on the market. Many of them are specifically built for the construction industry. 

• Bidding—automated bid solution, bid workflow and bid analysis.
• Permitting—permitting, scheduling and inspections.
• Project Management—RFIs, transmittals, meeting minutes, daily reports, change orders, project scheduling.
• Billing and Payments—invoice preparation, lien waiver collection, compliance, electronic payments.
• Pre-Lien Qualification—gathering and distribution of pre-qualification documents and attachments.

The overall benefits of a collaborative web-based solution include dramatic efficiency improvements through financial integrity and visibility; improved communication and visibility; and being green.   

Jay Haladay  
Chief Executive Officer
Viewpoint Construction Software
Often the small things create major innovation. Consider the standardized shipping container. This simple item helped facilitate efficient just-in-time supply chains that speed goods from anywhere in the globe directly to jobsites or to the consumer.

Beneath some of the latest construction accounting software suites are similar building blocks provided by Microsoft and included in Microsoft’s .NET architecture. These integrated tools use a single database that serves the accounting, operations and project management needs of construction firms.

Contemporary integrated software suites have both deep construction-oriented functionality and easy-to-use designs that allow all construction users to understand and operate their software. Because these software suites are integrated, construction accountants are not saddled with transferring data (often through Excel) between non-integrated applications. The time savings, combined with the reduction in data errors through using a single data base, permits construction accounting professionals to focus on data analysis, and data mining and forward-looking financial planning. These proactive activities lower a construction firm’s risk because data is current and readily available.

Additionally, these new software suites form the integrated basis for the future construction trends: BIM, subcontractor/general contractor electronic data transfer mechanisms and the compliance required with new public-private financing partnerships.   

John Geffel  
Senior Vice President and General Manager
Sage Construction and Real Estate Group
Cloud computing, also known as web-based software as a service, is taking shape with real business plans that provide exceptional value to construction companies.

One area in which this is taking shape is communication between the field and the back office, which historically has been challenging. When integrated project management and accounting in a client-server environment was first introduced, customers saw immediate improvements in these communications. Work was reduced, re-keying errors were eliminated and tasks that were duplicated were streamlined.

Finding enough hours in the day still remains a big challenge for project managers and field staff. They need to manage a million details, make a million decisions and do it as the construction project moves forward. When they delay the flow of information, it impacts the construction accountant.

Cloud computing allows project managers to access a computer and easily continue vital tasks—such as capturing, reviewing and recording change orders; scoring progress; approving invoices; and entering labor hours anywhere—any time with a minimal amount of fuss. Entering this information when it is convenient means it’s more likely to get done. This will benefit everyone and improve contractors’ businesses.  


Donald Berry is the national sales manager for Construction Executive. For more information, email dberry@constructionexec.com.