Greg Peterson 2015-12-09 23:27:11
Leveraging your contracting business through systems "The lack of systems if the main reason why small businesses remain small," says Renovantage founder and president GREG PETERSON. Here, he reviews four major construction management systems. The number one reason to introduce systems into your renovating or custom home building business is to do ever more with ever less. Systemizing your business allows you to delegate tasks to lower level employees and ensures that work is done the same way every time, regardless of who does the work. Systems allow you to transfer your knowledge, skills, processes and procedures to others who can now do the work instead of you having to do everything. The lack of systems is the main reason why small businesses remain small. Without systems, your business will be ownercentric and everything will have to go through you. Therefore, your business will only be as good as you are. The lack of systems leads to mistakes. Here is an example of what can happen without systems. A little over five years ago I was renovating a townhouse in Oakville, Ontario. One day I met with the contractor, the plumber and the lead carpenter on the job site to go over the plans for the master bathroom. I gave the plumber and the lead carpenter the shower set I had purchased and we discussed that the shower was to have a toe tester and a 2-foot bar for a sliding handheld shower. The contractor told them how to prepare the shower wall with blocking for mounting the bar and where to put the plumbing. A week later I met the contractor back on the site after the job was mostly complete and the ceramic tile had been installed. Lo and behold, the toe tester was still sitting in the box and the plumber had not done the rough-in. He asked the lead carpenter about the blocking and was told that he had forgotten to put it in. How and why did it happen? Everybody understood what was to be done, but nobody wrote anything down. There was no system for the contractor to communicate with the trades in writing as to what work was to be done. There were no checklists for the plumber or carpenter to reference to make sure they did the work correctly. The contractor did not have a follow-up system to verify that the trades did the work correctly. They were all working from memory and “out of their heads.“ Research shows that correcting a mistake costs ten times as much as doing the work correctly in the first place. You don’t have to make many mistakes on a project before you’ve lost most or all of your profits. The lack of systems leads to low productivity, project delays, lost profits and dissatisfied customers. My experience in working with renovation contractors over the last 10-plus years is that most do not utilize automated systems to run their businesses. Some utilize spreadsheets for lead tracking and estimating. Some have manual forms that are used for processing paperwork. Very few have a well documented system that they can train others to implement. As a result, the business owner/contractor is “the centre of the universe” in his or her business and everything must flow through them. With a well documented system and a process for determining customer needs and note taking, the person who makes a sales call (typically the owner) must also prepare the estimate and proposal. After the sale has been made, if your business does not have a formal sales-to production turnover process, the person who made the initial sales call must also manage the entire production because that person was the only one with all of the information. At Renovantage, we believe that systems, employees and owners all have a specific role in operating the business. • Systems run the business • People run the systems • Owners lead people As a business owner, your role is to make sure that systems have been developed and implemented. In addition, your role is to ensure that employees are properly trained and that they follow the systems and procedures exactly as intended. If you don’t introduce a system, you are the system and you will never be able to delegate effectively. You will just keep doing, doing and doing and be constantly run off your feet. REVIEWING THE SYSTEMS I recently completed a review of automated software systems that were specifically designed for renovators and custom home builders. There are many different systems available on the market today, with a wide range of features and functionalities. I started with a high level specification that focused on the major problem areas that contractors experience in their operations. The biggest problem areas are: • Lead tracking and follow-up • Estimating • Project management • Client selections • Accounting and job costing • Employee time reporting for payroll and job costing The first step in the evaluation of the software programs was to compare their functionality to the high level specification. I initially evaluated 13 different software programs. The following systems were considered to be too complex for small contractors and were primarily targeted at large commercial, industrial or production builders: Constellation, Jonas, Dexter + Chaney, Sage 100/300, Procore and Viewpoint. Smart Contractor and RSU (a proprietary system) did not have sufficient functionality and did not make our short list. Our initial short list included BuilderTREND, Co-construct, UDA, Corecon and BuildTools. BuildTools was dropped from the short list because of a negative review from one of our users who found it difficult to use even though most of the functionality required was available. Following is my analysis of the four programs that made our short list. Each category was rated from 0-5 based on the functionality and features provided. Estimating, Project Management, Selections Management, Accounting Integration and Time Cards were considered to be the most important required functionality and received double the weighting and were rated 0-10. 1. Lead tracking and follow-up (CRM) Why it’s important. In my experience, a typical sales process consists of a telephone pre-qualification call, a site visit and measurement-taking with the prospect, and then the preparation of an estimate which is delivered via e-mail. After this, tyically the contractor waits and waits for a decision. The problem is that it takes at least seven or eight “touches” before the prospect is ready to sign a contract and write a cheque. Most contractors do not have the time or systems to stay in touch with the prospect during an elongated sales process. Required functionality. The minimum required functionality includes the ability to capture all prospect contact information such as the name, address, phone numbers, e-mail addresses, the source of the lead and the like. Once the contact information is captured, the CRM system should track follow-up dates and tasks, record lead status and define next steps. Ideally, the CRM system would include drip marketing functionality that would stay in contact with a prospect automatically during the sales process without any effort on the part of the contractor and his staff. In addition, research shows that 80 per cent of prospects who do not make a decision today will purchase from somebody within the next two years. Therefore, it is desirable that the software have mass marketing functionality to send information such as a monthly newsletter to all unconverted leads and past clients on an ongoing basis. Evaluation results. All four systems have the basic content management and lead tracking functionality required. Only BuilderTREND has the drip marketing and mass marketing functionality desired. Category winner: BuilderTREND 2. Estimating and proposal generation Why it’s important. As a contractor, you make your profit when you sell a job. You don’t make profit doing the work. You only lose profits during production. I rarely hear contractors tell me that their projects came in under budget and they made more money on a project than they had initially estimated. It almost always costs more. Therefore, detailed and accurate estimates are essential to running a profitable construction business. The average contractor only wins one job for every three or four proposals generated. The ability to generate estimates quickly will result in significant time savings. Required functionality. The minimum requirements for estimating include the ability to either import or create a cost book database of frequently used items. The estimating program should use standard accounting cost codes and integrate with the accounting system for tracking job costs and comparing budget to actual. Once the estimate is complete, the information should be transferred to a proposal and a contract for customer presentation and approval. It is also desirable to build templates that can be re-used to speed up estimating. Once a job has been awarded, the estimating system should generate a bill of materials for ordering. Advanced estimating systems will also allow for digital takeoffs and CAD integration, item assemblies and bid management in order to send request for quotations to suppliers and trades and then to evaluate those bids. Evaluation results. Both the Co-construct and BuilderTREND systems include basic estimating systems that do not include assemblies nor will they produce a bill of materials and purchase orders. They both function similarly to an Excel spreadsheet and allow you to input your cost items and to develop custom templates. Corecon and UDA both have robust estimating systems that are fully functional and allow you to import industry cost databases such as RS Means. You can also customize with your own costs. Category Winner: Corecon has the strongest system for estimating, with UDA a close second. 3. Project Management Why it’s important. Managing projects during construction is the most time-consuming aspect of contracting. It’s also where most of the mistakes are made and profits are lost. Without an efficient and effective project management system, the owner/contractor will spend most of their time managing the hundreds and thousands of details and will be unable to delegate tasks to others. The owner ends up spending all of their time managing the job instead of managing the business. Required functionality. The most important components of the project management system include scheduling, issuing purchase orders, processing change orders, job costing, task assignment/ follow-up and subcontractor and client communication. The client should be able to access the system via a portal to see the status of their project, the current schedule, and review and approve change orders and invoices. Evaluation results. This was an interesting category. All four systems were very strong and contained all of the required functionality. However, it was clear that each of the systems approached project management from a different perspective. For example, Co-construct places significant emphasis on client communications. Their system is very easy to use and assures that things don’t slip through the cracks. BuilderTREND comes at it from a project scheduling and resource allocation perspective. Corecon’s strength is in job costing and comparing actual to budget. UDA has a balanced approach and includes good functionality in each area. Category winner: Corecon narrowly edged out the other systems on the strength of their job costing and accounting components. 4. Selection management. Why it’s important. In my experience, the single biggest factor that results in delays and projects not being finished on time is the result of clients not making their selections in a timely manner. And when they make their choices at the last minute, it’s not unusual to find that products are out of stock or can’t be delivered in time for the scheduled installation. Sub-trades need to be rescheduled. By then they may have already started another job and won't be available for a week or two, resulting in further delays. Another important aspect concerning selections relates to costs relative to budget and the subsequent billing for changes and extras. Evaluation results. Corecon does not have selection management capabilities. The other three systems have similar functionality and capabilities. Category winner: BuilderTREND and UDA tied for first place in this category over Co-construct on the strength of their capability of sending reminders and automatic notifications to homeowners regarding selections that are required in the future or past due. 5. Time Cards Why it’s important. Tracking employee time and job cost information is critical to staying on budget. Getting accurate time card data is necessary for accurate payroll processing. Required functionality. We were specifically looking for mobile entry by employees of their time on the job and allocation of costs to the job function. Evaluation results. BuilderTREND and Co-construct have basic functionality that is somewhat manual in nature. Co-construct has just released new mobile functionality. Corecon and UDA have strong mobile systems that are easy to use. Category winner: Again Corecon narrowly edged out UDA on the strength of their job cost capabilities. 6. Accounting Interface Why it’s important. In order to have an efficient system that eliminates double entry, the software needs to integrate with the accounting and bookkeeping system. The elimination of double entry not only saves time but improves accuracy. Required functionality. Since QuickBooks is the most commonly used accounting software package, integration with QuickBooks is required. Evaluation Results. All four systems automatically integrate with QuickBooks online version. However, QuickBooks desktop is the most commonly used system. Only Corecon and UDA integrate automatically and seamlessly with QuickBooks desktop. Category winner: It’s a tie between Corecon and UDA. 7. Paperless office Why it’s important. Keeping track of numerous papers, notes, meeting minutes, e-mail correspondence, documents, blueprints and photos can be an impossible task for a contractor. Required functionality. The paperless office environment should have all documents and correspondence in one place where it can be accessed by the contractor, employees, trades and suppliers and clients. Evaluation Results. All four systems have the same functionality and excel in this category. Category winner: It’s a four way tie! 8. Customer service Why it’s important. After the job is complete there are always warranty requests and deficiencies to correct. Getting feedback on customer satisfaction is an important component for continually improving your business and receiving repeat business and referrals. Required Functionality. We were looking for the capability of receiving, documenting and managing warranty requests, assigning the tasks to the appropriate individual, sub-trade or supplier and then following up to ensure timely completion. It was optionally desirable to have the system send and score customer satisfaction surveys. Evaluation results. All four systems have excellent warranty administration and management functionality. Only BuilderTREND has built in customer satisfaction survey capabilities. Category winner: BuilderTREND 9. Custom branding Why it’s important. Since all of the systems have a customer portal, it’s desirable for the customer to access a system that is branded with the contractors name and logo. Required Functionality. Customer and sub-trade portals Evaluation results. All four systems have the ability to custom brand the customer and Sub-trade portals. BuilderTREND and Co-construct even go as far as creating custom branded sales literature and a sales video that helps the contractor explain the benefits of their project management system. Category winner. It’s a tie between Builder TREND and Co-construct. 10. Operating environment Why it’s important. It’s critical that the operating environment support multiple devices and operating systems and that the information be accessible both in the office and in the field by multiple users. Users should be able to bring their own device, eliminating the need for contractors to provide a standard device to all employees. A cloud based platform will allow access by anybody from anywhere with an internet connection. Required Functionality: A cloud based system that allows access from anywhere with an Internet connection. Support for all Apple and Android products required, with support for Windows phone and Blackberry desirable. Evaluation Results: All four systems are cloud based systems that allow multiuser access from the office and the field. All four support Android and Apple devices. UDA has a slightly different approach in that the basic system is desktop/server based with specific information pushed to the cloud for remote access. It’s a different design, but it works fine with little user involvement. BuilderTREND and Corecon integrate with Microsoft Office, which is a convenient feature. Category Winner: Corecon is the strongest, but all of the others are close behind and meet the functionality requirements. Conclusion Overall, it is our opinion that UDA offers the best overall feature content and meets all of the required functionality. It has a strong feature set in estimating, project management, selections management, time cards and accounting interface with QuickBooks desktop. If Corecon had a selection management component, it would have likely come out on top. Corecon has the strongest estimating and cost control components. Co-construct has the best client communications functionality, but its lack of an estimating system and inability to integrate with QuickBooks desktop lowered its overall rating. BuilderTREND also meets all of the required functionality. Its estimating system is not as robust as UDA and Corecon and its inability to integrate with QuickBooks desktop hurt its overall score. However, its drip marketing and mass marketing capabilities will be attractive to many contractors. Any renovation or custom home builder would benefit from implementing any of these programs. All of them have an excellent set of features and would significantly enhance the systemization of a contracting business. Depending on a contractor’s priorities, each product excels in a specific area that may be best suited to your needs. All of the products have won awards and have received excellent user reviews, which can be seen at www.softwareadvice.com/construction. Greg Peterson is Co-Founder and President of Renovantage Inc. Renovantage is Canada’s leading provider of support services and business coaching to renovators and custom home builders. For more information, you can reach him at firstname.lastname@example.org.
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