May 2014 Newsletter
“It’s Inside EVERY Box of Sage 100 and Sage 300 CRE!”
Are you looking for a LEAN Construction software solution? Do you know that both Sage 100 Contractor (MasterBuilder) and Sage 300 CRE (Timberline) can help your LEAN management practices? Read more of this month’s LAI newsletter and learn how technology and processes can increase profits and eliminate waste!
Want to know how Sage 100 and 300 can help with Lean Management? LAI has not one, but TWO experts on staff! Mark Jensen has been a technology/processes geek for decades and knows how to make Sage 100 perform to Lean Principles. Email Mark at Mark@LedgerwoodAssociatesUSA.com. If you want Sage 300 Lean processes, Tony Merry worked in Construction at Skyline Steel, Klondyke and Yellowstone Electric. He’s been in that pickup! Email Tony at Tony@LedgerwoodAssociatesUSA.com. Call either at 480-423-8300.
Construction Versus Productivity/Manufacturing
Why is the construction industry such a technology laggard, continually generates time and cost overruns, and yet is one of the largest segments contributing to a nation’s GDP? Or, why is construction a leading indicator of recession/recovery, when its overall financial stability is hardly indicative across all employment sectors…?
With research exposing staggering statistics like, “70% and 90% of projects exceed the original planned cost and that the overrun commonly varies between 50% and 100% of budget” — one would think with other sectors’ adoption, deployment of, and success with Lean and/or Agile Methods, that the construction industry would jump on the efficiency bandwagon!
Compared to any other industry, productivity in construction is abysmal. The United States Bureau of Labor Statistics published data showing that in the last 40 years, while non-farm productivity has increased by over 200 percent, productivity in the construction industry has actually declined. Succinctly put by the Ennova blog, “This is creating a crisis for the construction industry given the global demand for construction and the typical size of financial commitment and therefore risk involved.” (Source: http://ennova.com.au/blog/2011/09/agile-lean-compared-applied-construction) That would mean Surety Bond companies are driving the Risk market – making the expense of construction escalate even more!
Further research reveals that non-valued activities in Construction are adversely affecting productivity, as compared to Manufacturing. Extenuating factors causing changes, i.e., material, quality, environmental or weather conditions also drive a higher non-productive ratio.
This begs the question, “If the construction industry is AWARE of these trends and discrepancies, why don’t they change?”
The answer to that question is the only thing NOT measured, analyzed, reported and documented. Are we too old? Too busy? Too cheap? With BIM and altered reality, mobilization, cloud access, 3D printing you would think construction would be at forefront of embracing innovation! The Construction Users Roundtable AEC Productivity Subcommittee published their recommendations (note: OVER TEN YEARS AGO!!):
- Leadership from owners needed to increase
- Integrated project structures should be implemented
- Participants need to engage in open information sharing
- Virtual building models should be employed in projects
See, not much has changed! OK, maybe BIM is more prevalent now (bullet #4), but the CULTURE has not kept pace with any other sector.
Perhaps it’s a romantic choice? Do you think that the industry prefers the notion of riding in a pickup with a thermos of coffee, a dog, a set of plans, and signing a contract with a handshake is the superior way of doing business? I don’t disagree. I would just rather telecommute, view BIM plans via the cloud, review the workflow and process documents online, and echo-sign the contract. At Starbucks, with my dog and my pickup.
The 7 or 8, (or 27 ?) Areas of Waste in Lean Construction
The Lean Construction Institute (LCI) developed the original seven basic types of waste. Since then, SMEs have been refining the concept, occasionally adding additional dimensions (a la BIM!). One of the easiest to remember may be the acronym “DOWNTIME” found in a presentation by LCI and Mortenson Construction published online (http://www.leanconstruction.org/media/docs/chapterpdf/chicago/6-LCI-Chicago-Presentation-Reduced.pdf).
Think of the above as general placeholders for an actual detailed accounting for waste. A survey of 60 companies conducted of the Abu Dhabi construction industry practices identified 27 areas of waste!
What’s interesting about this analysis is, that they were able to (a) relate all 27 down to the seven original categories, and (b) identify the causes.
Also interesting – the first four causes of waste, (which represent 38% of ALL causes), were located ONSITE: material shortage, unskilled labor, poor supervision, and bad storage (below).
With all of this (and much more, read the entire paper here), how did it end for the Abu Dhabi industry as a whole? Employing Lean Construction principles and KPIs – here’s the conclusion:
“Analysis of of AD construction industry revealed 27 types of construction wastes. These wastes were categorized into the commonly used seven types of wastes in lean production. Defects (errors and corrections) are found to be the most common type of construction waste in the surveyed companies. This called for the integration of a structured and data-driven quality improvement method (namely, Six Sigma) into the lean construction framework. The second common types of wastes are over-processing and delays. The majority of surveyed companies confirmed the existence of these wastes in their construction projects and acknowledged their impacts on projects cost, quality, and speed.
As only 32% of the surveyed companies were found to be familiar with and using lean techniques, the majority emphasized the need for a practical framework for adopting lean techniques. To help the industry in the further establishment of lean practices, the study addressed 18 main causes of construction wastes, analyzed the extent and impacts of 23 lean techniques, and discussed the practical aspects of adopting a framework for lean construction in AD construction industry. The paper also recommended the assessment of a set of LC-KPIs to measure and guide improvement (in terms of project quality, cost, speed, value and waste) at the end of each “look-ahead” planning period. Worker incentives in a reward system are also recommended to achieve lean construction objectives. The results of the study will be shared with the AD construction industry to get feedback and provide the industry with a starting point for further adoption of lean construction practices.
Directions for future research include addressing the identified causes of wastes and tracking their root causes to existing business practices in scoping, planning, and decision making as well as to the labor issues such as training, language barriers, and cultural aspects. Future research could also focus on providing guidelines for construction managers for addressing quality concerns, enhancing and testing the assessed LC-KPIs including the addition of a safety indicator, and quantifying the costs and gains of adopting the lean construction framework.”
Upcoming Skill Savor Lunch, June 19th – “Digging in the Data”
Everyone wants great reports, right? And that sometimes means getting your Sage data into Excel so you can slice and dice the way you want. We get that! Join LAI’s Sage Certified Consultants and staff for a FREE, hot lunch at our Scottsdale Headquarters as we discuss how to Dig for that Data! Topics include:
- SQL Gateway/Interface
- Open Database Connectivity (ODBC)
- Office Connector
Upcoming IPM Global Seminar – May 22nd at 2pm
Reef Fielding, Founder of IPM Global, is here from Australia to host a LIVE Seminar ! If you’re looking for a Project Management solution that is easy, flexible, and customizable by the end user – IPM Global is that solution.
IPM Project Management has a unique environment for managing the day to day operations of project staff. Presented through Outlook, but managed in a MS.SQL database, IPM is able to create, store and track all project communications, RFI’s, drawings and revisions, meeting minutes, change requests, subcontracts and purchase orders to provide a simple but sophisticated project management toolset.
Developed within current Microsoft technology, the IPM range provides users with a user interface that is familiar and easy to use. Operating from within Outlook © and with the ability to seamlessly integrate into Microsoft and other ERP applications, we believe that IPM provides a software solution that understands the needs and habits of today’s project management team.
Reserve your seat now!
Ledgerwood Associates’ Customer Care Coordinator is none other than Carolyn Carter – truly an alliterative calling! Carolyn takes a personal interest in helping clients with everything from system emergencies, to help tickets, to training opportunities and more!
You may have noticed Carolyn’s warm Texas hospitality if you have ever spoken with her. She hails originally from Dallas, but has lived in Washington, DC, Philadelphia, PA, and then in Rochester, NY, – and now resides happily in Phoenix, AZ.
Before coming to LAI, Carolyn was formerly the Executive Assistant to the County Manager at First American Title Insurance Company.
Upcoming LAI Online Training and Networking Events:
Estimating Buyout Webinar
Sage is excited to announce “Buyout for SQL Estimating.”
See how the new Buyout module works allowing you to “buyout” your estimate to different vendors and then create Purchase Orders and Subcontracts for those items.
The construction season is fast approaching!
Join us for this informative presentation and learn how you can gain greater control over your projects, better communication between the field and office and higher confidence from your Surety by creating integrated project cost forecasting that backs up your Work in Progress reporting using Sage Office Connector.
Use Templates to Reduce Repetitive Data Entry
The ability to create data entry templates has been available in the program for many years, yet I often find that users are not using templates because they were unaware of them or forgot that they existed!
Templates help by reducing the amount of repetitive data that must be entered in a screen. Take a look at data entry where you find yourself entering same or similar data over and over again, or a type of transaction that you enter repeatedly. Enter the repetitive data for a type of transaction and save it as a template in the “File>Save as Template” dropdown menu. Then, when beginning a repetitive transaction, go to “File>Load/Delete Template” and select the type of template you want to start entering. You will see all the repetitive fields already completed, and all you must then do is enter the non-repetitive data, review it and save it.
Templates in Sage 100 Contractor are found in most data entry screens, including
• 1-3 Journal Transactions
• 3-2 Receivable Invoices/Credits
• 3-5 Jobs (Accounts Receivable)
• 3-6 Receivable Clients
• 3-7 Progress Billings
• 3-8 Loan Draw Requests
• 3-9 Unitary Billing
• 3-10-1 T&M Billing Setup
• 4-2 Payable Invoices/Credits
• 4-4 Vendors (Accounts Payable)
• 4-7-3 Enter Credit Card Receipts
• 5-2-1 Employees
• 5-2-2 Payroll Records
• 5-5-1 Daily Payroll Entry
• 6-4-1 Change Orders
• 6-6-1 Purchase Orders
• 6-7-1 Subcontracts
• 6-11-1 Requests for Proposal
• 6-11-2 Requests for Information
• 6-11-3 Transmittals
• 6-11-4 Submittals
• 6-11-5 Plan Records
• 6-11-6 Daily Field Reports
• 6-11-7 Punch Lists
• 6-11-8 Correspondence
• 8-3 Equipment
• 9-2 Parts
• 9-3 Assemblies
• 11-2 Work Orders/Invoices/Credits
• 12-2 Inventory Allocation
For assistance in the creation and use of templates, contact your Certified Consultant. Next month, I’ll take a look at several other options for using template like devices to ease data entry and solve other problems.
Submitted by Walt Mathieson, email@example.com, Ledgerwood Sage 100 Consultant
Sage 300 ODBC
The Sage 300 Construction and Real Estate database stores huge amounts of information in hundreds of tables and records, depending on which modules your organization uses. Having all of this information in one place means that with the proper security rights, users can access the information they need across the various modules fairly easily and quickly using the reports, inquiries and other features built into the system. However, Sage 300 CRE is also a very flexible accounting solution, and it can be configured and customized such that one organization may be using aspects of the software in completely different ways than another organization. In some cases, the system-provided reports and inquiries may not always accommodate a company’s unique reporting and data analysis requirements. ODBC can be used expand the reporting and data analysis capabilities of the Sage 300 CRE product.
ODBC, or Open Database Connectivity, was developed by Microsoft for accessing data from software applications. ODBC is an application programming interface (middleware) that inserts a driver between the application and the database management system. The driver acts as a translator between Sage 300 CRE and other 3rd party or Sage interfacing software applications. The ODBC driver “links” your powerful Sage 300 CRE database to applications such as Microsoft Excel, Access, or Word, Crystal Reports, and Sage Office Connector, allowing customized extraction of data to these programs to support tailored reporting capabilities.
Being able to pull information out of the database for reporting and analysis purposes is only one side of the data flow, however. ODBC is also be used to transfer data from other applications to populate or update certain Sage 300 CRE database tables, helping to streamline processes and expedite data entry. In fact, with Office Connector in particular, the ODBC driver is automatically created when the software is installed. Data can be transferred from applications such as Excel and Access also.
ODBC for Sage 300 CRE requires use of the 32-bit administrator—the 64-bit version won’t work. Also, ODBC respects the Sage 300 CRE security settings, effectively limiting the application tables a user can access based on their security rights.
For more information on using ODBC, attend our June 19th Skill Savor Luncheon!
Submitted by Kyle Zeigler, Sage Certified Consultant
Job costs are the lifeblood of your construction business and accurately estimating them will determine if a project will make money. Managing job costs across the life of the project will ensure that your company stays on top of project and enables you to react quickly if problems arise.
Despite this, some people within management don’t take job costs seriously. Some see tracking those costs as more trouble than it is worth, while others think that the costs are so obvious that tracking them seems like extra, unnecessary work. Neither is true and both can limit your company’s profitability. Here are some tips that can make job cost tracking easier:
Tracking job costs is a process that involves every level of your organization. All of your valued employees intuitively know the value of tracking costs by job. So get them involved and assign responsibility.
Set Up Solid Communication Between the Field and the Office
Cost tracking starts in the field, where the materials are delivered and the purchase decisions are made. Project managers know which costs go with the jobs. The trick is making it easy for them to flag the job name or number so that the person entering the invoice, credit card or debit card charge into the computerized accounting system can follow the process of assigning the proper cost code.
Provide Information to Accounting Staff
The accounting staff may be tempted to let it go when the job information isn’t available, promising to assign the proper job number later. This is the common source of errors. Making job information readily available to the accounting staff is the best way to counteract this tendency for misinformation to cloud your reports.
Require Purchase Orders
Purchase orders are a good way to ensure the success of your job cost system, so have your accounting, finance or tax professional help you develop a good system. Purchase order systems work when the office must issue a unique order and all supplies must get purchase order numbers from the field before providing materials to any job. An effective system helps ensure that no invoice will come to your office without a job identified on it.
Clearly Separate Costs
Job costs differ from office and overhead costs by getting a job number that is distinct from the general ledger account number. The chart of accounts or general ledger can be a help or a hindrance depending on the skill of your accounting staff.
For example, general ledger direct cost expense codes typically start with the 5000 series of account numbers. Job cost tracking then becomes easier for everyone if they are coded with 5000 series numbers, which allocated costs are coded with 6000 series numbers and office and overhead costs get 7000 series account numbers.
If the chart of accounts and job cost ledger are set up correctly, cost allocations will become easier and more accurate and job cost reports will be more accurate and useful.
This will help make your life easier down the road as well as more profitable.
Submitted by Bryan Eto – CPA, CCIFP, Shareholder Accounting and Assurance Services Beto@beachfleischman.com
Would you like a copy of our newsletter in PDF format? Email Joanie@ledgerwoodassociatesusa.com and we will email it to you!