June 2015 Newsletter
What Will Finally Drive Construction Technology Spend?
Will cloud-based collaboration and standardized cost-codes push us from “dead last?”…Read more, below!
What We’re Talking About in June:
- ‘Lack of technology’ debt. Yup, it’s real!
- Spoiler alert: Sage CRE is releasing two VERY IMPORTANT collaboration products in July! Hints below.
- FI-NAL-LY. ‘Intelligence’ reporting for Sage 100 Construction!
- Separated at birth? Our newest hire and the LAI geek!
- hh2 Web Event for remote time entry and field reporting
- Tips and Tricks for Sage 100 CON, Sage 300 CRE and Sage Estimating
Can the Lack of Technology Hurt You?
The Cost of Being in Last Place
We often bemoan the technology ‘laggard’ reputation that the Construction industry suffers.
But did you know that it is DEAD LAST in IT spend? ENR.com published an article which quotes Gartner Research, who compared fourteen different industries for their investment in information technology (our bolded text):
For firms struggling through the construction recession, underspending on IT may be a shortsighted strategy. According to the Bureau of Labor Statistics, 70% of U.S. productivity growth comes from IT. So, underinvesting in IT for extended periods could put firms at a competitive disadvantage. Operating IT systems past their end-of-life also could increase risk. Further, Gartner reports that 30% of net income is affected by IT economies of scale, so technologies optimized across the workforce may also improve profitability.
Bill Kracunas penned an article for CFO magazine, in which he developed an actual formula for “technology debt.” He evaluated and weighted five criteria, below. (Use the link to score your technology debt.)
- Effectiveness of technology leadership
- Oversight of IT function
- Relevance of systems
- Appropriateness of spending
- Process chaos
After assessing your technology debt score, Kracunas recommends these steps:
- Assess your IT function. Take a detailed look at your IT department’s resources, structure, systems, projects, and budget. Baseline your current state, including IT spending for keeping things running and new projects, current projects and how are they managed, and outsourcing initiatives. Prioritize where potential changes could have the most meaningful impact.
- Institute standard reporting procedures. Month-end processes and standard IT reporting should highlight the current status and prioritization of IT initiatives, spending, key resource updates, environmental monitoring data, and key risk management issues. This information can help hold personnel accountable, while enabling management teams to understand the department’s status at any time. It can also be used to make project and funding decisions.
- Establish project governance. Adjust technology investments to align with your company’s organizational strategy through project governance. Reviewing your project priority list regularly ensures alignment of IT projects with the business strategy. Forming an IT steering committee or incorporating related responsibilities into an existing management-level decision-making team should suffice.
- Analyze and benchmark IT spend. Reductions in technology debt are often found by analyzing your existing IT spend. To help drive innovation and stay current, your spending model should at least equally allocate funds between the “keep it running” spending and new project-focused spending. An example of this shift is moving to an email provider rather than using a dedicated email server, then reallocating funds to a strategic project such as a mobile application.
Thank goodness for the need for mobile and cloud access – the two saving graces for construction technology adoption! The article continues:
Tablets will continue to be a big trend, thanks to specialized apps that give workers access to plans, punch-list tools, and safety checklists. New cloud-based collaboration tools facilitate increased productivity and faster construction cycles, especially in integrated project delivery. Many of these apps are longer-term investments whose returns will be difficult to measure until better industry benchmarks emerge.
The Tipping Point for Industry Adoption – Standardized Cost Codes
CFMA blogger Lee Clark points out that banks and bond companies are using ‘technology scorecards’ for evaluating a company, in addition to a company’s financials. Here are the components he lists of the scorecard for IT evaluation:
- Investments: How much is the company investing in technologies that improve its infrastructure, create new products, enhance the customer/employee experience, expand the customer base, lower labor costs, or increase production? To what extent does the company rely on its in-house technology organization versus outsourcing or the cloud?
- Competition: How do the company’s technology strategies compare with its peer group? What is the “collective intelligence” of the company’s team when it comes to technology and understanding the systems?
- Information: Is the company employing data mining and other analytics to tailor its marketing strategies? Does it have the systems and skill sets to compile and communicate valuable management information throughout the company? Does it possess sophisticated processes for managing its historical data for future costs analysis?
- Track Record: Does the company have a history of successfully implementing new technologies, such as adding software systems, introducing enhanced products? Is its corporate culture conducive to adaptation and continuous change? Has the company experienced material write-offs of technology assets?
- Security: Does the company have adequate safeguards to protect its sensitive and proprietary information, especially against cyber threats? Does it encrypt all personally identifiable information? Has the company been victim to a material data breach? Does it have robust contingency plans for potential incidents?
There is a silver lining proposed, however. Mr. Clark’s solution for a construction industry catch-up is summarized in one word – standardization!
Until a “cost code” is the same for everyone, the above deficiency elements will continue to plague our industry. All we have to do is look at manufacturing industry as a model of standardization. Until we measure production the profits required to catch up from the technology debt will not vaporize.
Clark calls upon Construction Industry associations to take up the cause: “We need CSI, CFMA, NCCER, ABC, AGC, and ASC to name a few, to create a combined committee to address this issue. They need to work with software companies to start making the necessary modifications to be able to process the new standards.”
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New Sage Mobile Solutions
According to a recent survey done by Sage, the top priority for construction businesses was “improving communication and collaboration between the main office, everybody out in the field, and all of the project stakeholders: vendors, subcontractors, architects, engineers, and owners.”
Industry studies show that companies who use a single system for managing a project show HUGE gains in productivity, on-time delivery, and budget. Mobile access for sharing and visibility into project documentation helps streamline processes throughout pre-construction and all phases of construction ensuring successful and profitable projects.
Manage the Entire Project Lifecycle
By adding these two new solutions, you can use the Sage suite from pre-qualification in the pre-construction stage to close out! There really is no other single system out there that can span the project lifecycle like Sage can.
Sneak Peeks – Shhhh!
These two solutions should be available in mid-June, but we wanted to give you a quick look. Pre-released at the TUG Event in Las Vegas last month, this 10 minute video gives a comprehensive preview of the two products. If you just want a screen snap explanation, check the graphics out below.
Sage Construction Project Center
Sage Construction Project Center (SCPC) will allow you to collaborate beyond just project documents – share ANY digital asset from the project. SCPC allows includes workflow management including routing, review, approval and full accountability.
Sage Bid Management
With Sage Bid Management (SBM) you can reach, qualify, share and track project information; it also gives you the power to update bids and award subcontractors.
Want a one-on-one presentation of these products? Send us an email for more information, or to set an appointment.
For Sage 100 Contractor Users – Intelligence Reporting
Connect to Sage 100 and other ODBC compliant databases, manage security and viewer/writer privileges and more. Customize and manipulate reports for full flexibility to match your business’s needs. Save TONS of time and money by automating the reports and eliminating spreadsheet chaos!
Get better data and make better decisions using Sage Intelligence. For more info, shoot Mark Jensen an email by clicking here.
Coincidence or Good Hiring?
Two things of note:
- LAI has recently expanded its Sage portfolio to include Sage CRM and ERP X3 solutions
- LAI launched a new website, with new a ‘Q & A character’ whom we fondly call the “Geek”
So, it may have come to our attention that LAI’s newest team member, J.R. Miller, (who will be the Solution Consultant for CRM and ERP X3), strikes an uncanny resemblance to a brother from another mother!
Coincidence or not? You decide!
Meet J.R. Miller
J.R. has a diverse background in IT Sales and Service. He is one of the rare breeds who can combine high tech capabilities with “soft” people skills. J.R. has worked with single individuals to 10,000+ employee organizations, both domestically and internationally.
J.R. was invited to join the LAI team to spearhead the CRM and ERP solutions that LAI is now offering. Part of his responsibilities will include installations, implementations and training. You can reach him at JR@LedgerwoodUSA.com.
Special Mobility Event: Time Entry and Field Reporting
Join LAI and hh2 | Web Services on June 24th at 10 am MST
Sign up here!
hh2 Remote Payroll
- Customizable Timecards for Web and Mobile
- Customizable Approval Paths
- Daily and Weekly Employee Time
- Equipment Time
- Easily Export to Excel for Reporting
- Sync Seamlessly with Sage 300 CRE and Sage 100 Contractor
hh2 Field Reports
- Collect and Organize Field Information with Ease
- Export to PDF or Excel
- Create Custom Forms
- Document Safety Concerns
- Attach Photos and Digital Voice Recordings
- Job Cost and Project Management Reports
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Upcoming LAI Online Training and Networking Events:
Don’t Forget Scheduling!
Submitted by Walt Mathieson, Certified Sage 100 Consultant
Ways to Never Miss the Incremental Costs of Field Labor
Smart contractors realize that projects that take too long to complete often experience cost slippage, where actual costs exceed the original planned cost. Cost slippage on fixed price jobs falls straight to the bottom line. Cost slippage and delays on time and materials billing jobs may not show up directly in financial performance, but can cause customer dissatisfaction which will erode reputation and have a negative effect on the bottom line over time.
A scheduling program can help orchestrate the intricate plan of an efficient project by identifying:
- The work or tasks required to complete a project, and estimating how many days it should take to perform the tasks
- The resources needed to complete those tasks, whether employees, equipment or subcontractors
- The ordering of materials, especially those that must be special ordered and may have long lead time
- The arranging for inspections required by building codes
- The timing of billings, especially those dependent upon specified milestones in the project’s completion
A schedule should take into account the order in which tasks must be performed, which tasks must be completed before the next can be started, and which tasks can be performed simultaneously. In some organizations, the availability of resources such as specific employees, subcontractors, or equipment may be limited, and if they are assigned to another project the schedule for this project may be affected as well, so resource planning and conflict identification can be important. Contractors that are consistent and effective schedulers find that their subcontractors and employees appreciate knowing when they are expected to perform tasks and how long they have to perform them. By periodically updating schedules, contractors can identify changes to the original schedule resulting from taking more or less time than planned for completed tasks and project new task starting times for subsequent tasks. Effective project managers can then promptly notify resources assigned to these subsequent tasks of these changes and help them adjust their own schedules.
I often find that managers of my clients are surprised to find that Sage 100 Contractor has had an effective scheduling module built in to the core system for many years! They are looking to acquire a scheduling program when they have had one in their office for as long as they’ve had Sage 100 Contractor and its predecessors.
Scheduling can be quite complex, between building task lists, estimating task durations, identifying and defining task predecessors, estimating lead and lag times and putting it all together into a coherent schedule. Scheduling is one of the many processes that usually isn’t perfect “out of the box” and benefits greatly from ongoing refinements gleaned from job autopsies.
Sage University has several online classes to help get started with scheduling, or you can contact your Sage 100 Contractor Certified Consultant for assistance and more information.
Current Version Information!
The latest version of Sage 100 Contractor is version 19.6.41, the release of which was announced on May 28, 2015.
Understanding Accounts Receivable Adjustment Types
Submitted by Kyle Zeigler, Sage Senior Certified Consultant
Cleaning up the Accounts Receivables aging in particular can be confusing and troublesome for Sage 300 CRE users, especially if this hasn’t been done in a while. Do you edit, void, or use an adjustment to make corrections to invoices, retention, or over/underpayments? For outstanding transactions in prior accounting periods, edits or voids are not likely the right choice, but then what adjustment type is going to produce the desired results? The good news is that the best resource available for selecting the proper adjustment type is right at your fingertips.
For immediate help with understanding AR adjustment types, go to the AR application and launch Help. On the index tab, enter the word “adjustment” and look for the “adjustment types” topic that will be included in the list of topics. Double-click to open this topic and you’re on your way.
The main rule for selecting an adjustment type is to first determine whether you want the adjustment to affect the customer only, accounts receivable only, or billed information in Contracts and Job Cost. That is, do you want the accumulated totals to be increased or decreased on the customer, contract or job, or do you just want the total accounts receivables to be increased or decreased without changing the total amount billed on the customer, contract or job? Other questions to ask might center on whether you are adjusting an invoice now on a contract or job that will be invoiced again in the future, or whether the contract or job is completed and you are now correcting overbillings or adjusting negotiated customer discounts or other such scenarios.
By reviewing the information in the “About adjustment types” Help topic prior to making an adjustment and understanding the effect of the adjustment on the customer, accounts receivable, contract and job cost billed totals, you can select the proper adjustment the first time avoid the frustration of trial and error and worrying about the results — a much cleaner approach to spring cleaning in Accounts Receivable.
Find Profit by Analyzing Your Corporate Leases
Submitted by Bryan Eto, CPA
If you negotiate your office rental agreement effectively, you’ll save the cost of relocating every time your company changes size or direction. For that matter, you can use your lease to generate extra income.
That’s why it’s a good idea to periodically audit all leases, including those of your company’s branches or divisions. Check for modifications you might need when it’s time to renew the contracts.
Here are some quick ideas:
- When you renew your lease, ask the landlord to provide extra improvements or several months free rent, in the same way a new tenant is provided with extra benefits. This makes good sense in markets where office space is plentiful.
- If your company is growing, calculate the growth rate, and then rent enough space to accommodate future expansion. Negotiate a clause that allows you to sublet the space you aren’t using yet or rent out space periodically for a one-time fee.
- For that matter, check your offices once a year for efficient use of space. For instance, you might be able to consolidate staff and equipment. Then you can allow your customers to use any space you have left over for seminars or employee training in return for a fee.
- Always measure your floor space to ensure that you’re getting the full amount of space provided by the contract.
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Power Up Estimating with Estimating Explorer and Database Editor!
Submitted by Jim Hoeppner, Sage Senior Enterprise Managing Consultant
Some users never discover that they have additional powerful tools aside from the main Estimating application. You can find additional options in the Windows 7 operating system when you go to All Programs>Sage>Sage 300 CRE.
In the Pervasive Estimating version, there is the Estimating Explorer. It has a small SQL database that allows it to pull key information from many different fields in Estimating from which it then tabulates and allows the user to create meaningful reports, comparing estimated work in dollars by estimator, status, by yearly quarter, etc. You can also export estimates into Excel with a great macro that creates pie charts grouped by the chosen sequence of the estimate tabs.
Aside from that, there is Database Editor(DB). Whereas Estimating Explorer gives you the big picture on estimates and bidding, DB allows you to get into the detail of the database. Instead of having to look at each item record, you are able to see all line items in an Excel like format, line per line. This is a much more efficient manner to work on the database, making global changes to pricing, productivity, WBS groupings, etc., and very quick and easy.
In the newer SQL version, DB is available. Estimating Explorer has been discontinued since Estimating has its own SQL source. The user can still easily group by fields, an important benefit of an SQL program, but the Estimating SQL version does not have the structured reports nor macro export of the Pervasive Estimating Explorer.
Would you like a copy of our newsletter in PDF format? Email Joanie@ledgerwoodassociatesusa.com and we will email it to you!