Access to Reliable Information Increases Job Efficiency
Construction project managers make better decisions when they can easily get their hands on budgets, cost trends, backlog, overhead, equipment capacity, and other key reports. If they’re complaining about not being able to obtain meaningful information, chances are they’re keeping their own books (outside of the enterprise information system commonly called the “accounting software”).
“When accounting and project management processes aren’t integrated with technology, inefficiencies are compounded,” explains Bob Sniegowski, a construction and real estate principal with LarsonAllen.
Every organization has some sort of accounting system, but according to CFMA’s 2008 Information Technology Survey (an annual report published by the Construction Financial Management Association), less than 50 percent of construction companies with annual volume less than $25 million make online, real-time job cost reports available to project managers. This statistic increases to 75 percent in companies with annual revenue more than $25 million. Additionally, more than 45 percent of the survey respondents said they lack integration of project management and accounting processes.
Time for new mind sets and processes
“When employees can’t access reliable information, they come up with quick fixes. Unfortunately, those inefficient, spur-of-the-moment responses duplicate efforts of others in the organization and often turn into long-term solutions,” states Sniegowski. Information technology (IT) is meant to make data processing and information management more efficient. So construction leaders shouldn’t let certain attitudes and habits keep the company in the dark ages, he urges. If any of these scenarios sound familiar, it’s time for different thinking:
- The same data entered for payroll is being separately entered into job cost or production reports.
- Project managers don’t find job cost reports to be meaningful, so they create duplicative information by keeping their own spreadsheets.
- People won’t use information systems because they claim they have no use for technology.
- Due to inconsistent information and manual processes, forecasting cost at completion is considered a waste of time.
“If you are using spreadsheets to track business information and entering that same data into the enterprise’s information system, you may need to fully implement or upgrade the software,” says John Reed, a construction and real estate principal with LarsonAllen. And when evaluating construction IT, he says there are at least a dozen functions to consider before making an investment.
Evaluate your people, rules, and technology tools
People make up the personnel resources, business partners, and customers who touch the IT infrastructure daily. To be effective, they need to understand their roles and receive adequate training and support.
“People throughout the entire organization must take ownership for managing IT systems, including the timeliness and accuracy of the data and reports being produced,” explains Nancy Kaplan, a technology consultant with LarsonAllen.
Rules enforce the policies, processes, and work flows in place to ensure the integrity of maintained information, from quarterly job completion schedules to cash flow and financing.
“Rules provide the consistency necessary to take full advantage of technology’s processing power,” says Kaplan.
Technology tools include the hardware and software used when managing customer, business partner, and employee information. Construction-specific tools can provide:
- Integration of accounting and project management information
- Change order management
- Equipment cost control
- Automated billing
“When looking at areas to improve, company leaders are often surprised to find their technology is being improperly or under-utilized,” states Sniegowski.
According to “Software Implementation Best Practices,” an article published in the July/August issue of CFMA Building Profits, “Far too many software applications end up as ‘shelf-ware.’ After they are purchased, and the money is spent, they never achieve their stated objectives.”
How to effectively adopt and implement IT
“Implementing enhanced information technology or upgrading a software application is a process, not an event,” Sniegowski says. He recommends taking four steps to successfully manage
adopting and implementing information and technology systems throughout your construction company:
Step one: tone at the top
To realize a real return on investment and gain a competitive advantage, the adoption of IT management systems must be mandated and driven by those in charge. The president or owner should deliver a sincere message to communicate the organizational vision. Explain why change is critical and how buying into the new technology will affect the company’s future viability.
“Don’t just approve and support the integration of the accounting and information technology systems. Monitor how they are being used and hold people accountable for improving the efficiency, accuracy, and timeliness of information,” Sniegowski says.
Step two: strategize
Implement a
strategic IT plan that documents the technology initiatives necessary to support business goals for the next 12, 24, and 36 months. Doing so will prevent IT expenditures that do not support the delivery of your products and services.
Step three: assess the situation
Evaluate your
technology operations. Doing so could reveal that project managers don’t have access to timely job costing reports, because some time sheets necessary for payroll processing are not received until four days after the end of the pay period.
Step four: put continuous improvement in motion
Include action steps, a timetable, and the employee or group accountable for each task. Make expectations and goals clear and document timelines. For example, you could state, “By July 1, 2010, the field operations manager will consistently deliver all time sheets for the previous week to payroll by Tuesday at noon.” Certainly, the field operations manager has the flexibility to delegate, monitor, motivate, and discipline within his/her authority, but on July 1, management can easily determine whether the objective has been achieved.
Engage people from all functional areas of the company to commit to and participate in the development of consistent processes. Teams should involve accounting and administrative personnel, project managers, field supervisors, estimators, equipment managers, and IT support staff. Perspectives from those collecting or processing data or using the reports can provide new awareness about whether the accuracy and timeliness of tasks is important and everyone is in it together.
Measure and report progress toward the objectives you established or you won’t know if you are successful. Returning to the previous time sheet example, the field operations manager is expected to “deliver all time sheets for the previous week to payroll by Tuesday at noon.” To facilitate the process, the payroll clerk can track and record the date, time, and crew submitting any late time sheets. If there are employees who are not following the rules, the operations manager and company president can personally speak with those individuals. Hopefully, the number of those not meeting the deadline is reduced every week. If that is not the case, the operations manager can use his or her management skills and authority to change the behavior of the individuals who are preventing the objective from being met.
At scheduled intervals, preferably every quarter, those accountable should look at the “score card” and decide whether to affirm or revise the objectives and timeline. Ask these questions:
- Have we successfully accomplished our objectives?
- If we haven’t accomplished our goals, are we on schedule to do so?
- If behind, what are the impediments to success?
- Have other objectives been created as a result of the market conditions (e.g., personnel or customer changes)?
Revising plans is more important than getting everything precisely correct the first time around, because it demonstrates the organization’s commitment to continuous improvement.
How to get started
Implementing enhanced technology or upgrading a software application can be a complicated matter. We recommend seeking out professionals who specialize in serving the construction field—people with experience that mirrors your controller, project managers, equipment managers, field superintendents, and IT support staff. These specialists will provide an independent evaluation of your current situation and recommendations for improvement in the areas of greatest opportunity. Most importantly, an outside facilitator can gain consensus among your employees, and can help your organization set the priorities and identify the action steps necessary to achieve your goals.
For more information, contact R.J. (Bob) Sniegowski at rsniegowski@larsonallen.com or 612-376-4659 or John Reed at jreed@larsonallen.com or 239-226-9903 or a construction principal in your region.