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No. 5: Improve Communication Between Office and Field
CAN YOU HEAR ME NOW?
Editor’s Note: Following is part five of our eight part series called “Better Next Year,”
by Fred Ode, CEO, chairman and founder of Foundation Software.
Like the cell phone user in
the well-known (and overplayed)
TV commercial,
wouldn’t it be nice if your
contracting firm could
stay so well-connected? Okay, maybe
the hovering helicopters are a bit
extreme. But surely everyone in construction
understands the value that
comes from two-way communication
between the back office and the field.
Or do we?
In the busy world of construction,
it’s easy to see how “one-sided” or "misguided”
communication can become
the norm. “Joe” the project manager,
for instance, isn’t thrilled about
taking time from his busy workday to
gather timesheets, track equipment
usage and chase down change orders.
After all, how important are these
tasks to the job at hand? “Judy” the
accounting manager, meanwhile, is
busy preparing financial statements,
surety bond documents and regulatory
forms, among other things. But
when it comes to relaying job cost
accounting data to field employees,
she often doesn’t find the time. After
all, how much detailed accounting
information does the field staff need
to perform their jobs?
For construction owners to manage
costs—and their company—they need to have a sound financial management system in
place. They also need to understand cash flow, overhead
expenses and which jobs are making or losing money…
and why. Equally important, they need to communicate
their plans and procedures to the entire organization to
ensure that the business side of the business never takes
a back seat to individual jobs. Everyone—from receptionist
and payroll clerk to estimator and project supervisor—
needs to understand the “big picture” and their role in
it.
Like a jigsaw puzzle, the “big picture” in construction
comes together only with the collection of data pieces
from individual jobs, past and present. The job costing
component of a contractor’s accounting system is the
framework for managing job data, but it relies on accurate
and up-to-date data from the field. Unfortunately, many
construction companies use their accounting system primarily
as a bookkeeping tool for writing checks, invoicing
vendors and printing the occasional financial report.
With no job costing system in place, the back office and
the field often operate independently from one another.
And with no sharing of job cost data, no one (from the
owner to project managers) has access to the kind of
information necessary for informed decision making.
Project-Based Contracting Relies on
Communication
Contractors live in a project-based world, and therefore,
must keep accurate costs, not just for the entire project
but for each component of that project. Because each
project differs in terms of location, labor, equipment and
material, contractors must understand the costs of each
component in order to stay on budget and bid jobs accurately.
Throughout the life of the project, the contractors’
project control procedures and record-keeping methods
become essential tools for management. It is important to
create efficient and cost-effective methods for gathering
information on actual costs and project accomplishments
(such as labor hours by cost code, quantities complete,
change orders and so on).
Communicating the Need for Jobsite
Accounting
Establishing methods and procedures for gathering
accounting and project management data will work better if it’s not a directive coming from the
back office. Owners should recognize
that project managers can be a source
for great ideas on time-saving and
efficient record-gathering methods
because they are most knowledgeable
about labor, equipment and supply
costs. What’s more, employees who
are involved in the process and whose
expertise is acknowledged will cooperate
more easily.
Many contractors today are turning
to new technology solutions in the
field for faster, more reliable communication
between mobile jobsites and
the office. A company that once used
paper timesheets and reported on a
weekly basis, for example, now tracks
labor hours to jobs and activities using
an automated time-clock system.
Payroll data is downloaded daily
and sent to the company’s accounting
system via the web, resulting in
less work for field staff and less data
entry back at the office.
Plan to Communicate
The best way to ensure that two-way
communication happens at your construction
company is to plan for it.
Arrange for times when the back office
and field staff can meet without distraction.
Discuss the value of tracking
costs and evaluating historical
job data. And brainstorm for more
efficient ways of gathering information,
keeping records and sharing
data quickly.
Communication between management
and field staff is essential within
the mobile construction environment.
But in order to become better next
year, contractors need to take it a step
or two further. Prosperous business
owners are choosing construction
accounting systems that work the
way their business works, and they
are finding ways to automate the flow
of information between the field and
office. Along with streamlining their
business operations, these businesses
reap the benefits of having accurate,
reliable and timely data available to
all decision makers.
Fred Ode is the CEO/chairman of
Foundation Software, developer of construction
job cost accounting software
called FOUNDATION for Windows. For
further information on FOUNDATION
for Windows, visit www.foundationsoft.com. Fred Ode can be reached directly
by phone at 800.246.0800 or e-mail
fred@foundationsoft.com.
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