Does the new era of design/build mea you need a massive library of software to stay competitive? Some people say yes. The truth? All you need is a handful of packages to compete.
To be a serious player (to get the profitable work and do it profitably) you must automate with software. The right software can turbocharge your whole business, design/build or not. But, how can you avoid getting a program that's too generic to be any good or too specific to fit your business needs? We're going to look at five major types of software. You can use Fig. 1 (original article) to determine what software user category you fall into.
In any computer store, you'll see accounting packages that say they're for businesses as well as consumer-grade CAD programs. Beware: These don't have the features you need, and are no bargain.
You may think of accounting as that pesky task that doesn't make you any money. Don't! Instead, think of it as the business practice that tracks your money, incoming and outgoing. Using "one-size-fits-all" accounting software can automate a bad process. On the other hand, software tailored to your type of business can relieve you of needing to know the "ins" and "outs" of accounting. This leaves you time to do what you do best. Accurate tracking of job costs, work orders, and purchasing can make the difference between profit and loss. Let's detail each performance requirement.
Job tracking. Since you require up-to-date information to keep jobs on track, your accounting software should project costs at completion and manage the Work-In-Progress (WIP) schedule. It should produce flexible, accurate job cost reports. You should be able to review individual job-related transactions quickly and easily. If the package doesn't allow you to do this, don't buy it.
Work order. Consider quick turnaround time and material jobs that last a few days or less. The key to making money from these is your ability to process billings for labor and materials quickly. Thus, your accounting software should capture and price both labor and materials quickly and easily. What you don't want is to have to sift through 118 layers of menusand 43 different files at 4 p.m. on Friday afternoon. The work order system shou ld provide reporting features that allow you to review profitability of work orders by customer, technician, or the type of work performed. It should integrate to your inventory, purchasing, general ledger, job cost, payroll, and equipment modules.
Purchasing. You probably buy large volumes of materials-both in terms of individual units and dollars. Consequently, such things as ordering, costing, invoicing, and tracking are critical. In older software setups, those tasks involve many steps that mix manual and computerized processes. You don't have to suffer that way. You can buy off-the-shelf software that allows you to computerize the operation. See "What Purchasing Software Should Do" (Sidebar).
Inventory control. What about stocked items that "leak out" to jobs without being billed to the job or customer? Your software can "plug" those leaks. It can maintain records on warehouse purchases and record withdrawal from inventory for jobs. It can record the return of materials from jobs to stock. It should process and job-cost inventory transactions quickly, so they are up to date.
Time & material billing. Much of your revenue probably comes from labor billing. If so, your software must handle two common issues. The first: billing for labor that you haven't processed yet. The second: ensuring you haven't missed any work from the last billing. It should handle both of these without requiring additional clerical time. It should produce a detailed billing in formats that meet the specific needs of your individual customers. Your accounting software should create pricing structures that meet your needs, from a variety of options.
The software must present billing information in a manner that appeals to your individual customer. One customer might want billing totaled by cost type (labor, materials, etc.). Another might want billing totaled by job-cost phase (rough-in fixtures etc.) and with varying levels of detail.
Use bidding/estimating software to produce accurate estimates in an efficient manner. This allows you to meet customer expectations, while keeping costs down. Estimating often requires hundreds of calculations. Let the program do the grunt work, so you can devote your attention to more profitable activities.
* A good program should allow you to evaluate adjustments to a bid. The software can test each "what if" scenario instantly, and show you what happens to your bottom line. You do hundreds of these by hand, right? Of course not. However, the program can, and this gives you a tremendous business edge. * The software should provide job information using any combination of labor and pricing levels for any imaginable grouping for the job or jobs. * It must allow the estimator to combine quantity and labor hour information for scheduling and accounting. It also must be able to break out that same information with different price and labor levels for negotiation purposes. Good software can handle such complexities quickly, with simple instructions from you. * The software should have user-defined fields and formulas. These reduce the need to reinvest in estimating software as changes in technology occur. Individual estimators should be able to change items and assemblies "on the fly" without having to leave the takeoff screen. * It should organize material lists on the screen to speed up finding specific items and enhancing takeoff speed. * Your software should support vendor-specific price updates. Look for a package that can interface with national pricing services. Who wants to spend hours on end contacting vendors or reviewing price lists? * Your system should define multiple labor rates. Depending on the scope of your operations, you may need multi-union and multi-state rates as well as differing rates for the same individual on one job. * Your system should be capable of accepting multiple pricing levels that you define. This will enhance your ability to handle negotiated work and change orders, among other things.
Don't view your estimating software as a stand-alone entity. Instead, consider it as a critical part of your productivity system. Your estimating software should interface easily with other software like accounting, scheduling, spreadsheets, and databases. Doing so eliminates multiple entry of the same data-and the inevitable errors.
* Your package should create purchase orders in your accounting software from the estimate detail. You should be able to set up the job quickly, and the purchase order should automatically enter information into the other system entities. For example, it should be able to create commitments in job cost. * Your estimating software should help define a project schedule and budget. * It should prepare initial purchase orders when it's time to buy-out the project.
It's an electronic world out there, and your customers expect electronic submissions. It's rare that you can end an industrial job with no electronic documents. Customers want "source drawings" so they can update them later. Most facilities change and upgrade often. Many facility managers want drawings to import into their building management systems, and they often need them in the *.dwg format.
Customers expect a professional look. You can't afford the inherent sloppiness of the past. Margins are thinner than ever. You satisfy the customer's needs, or you battle with your competitors for the less profitable work. So, what are you supposed to do?
Set up a CAD system, that's what. First, select the hardware and software. Many engineering firms follow the "N-1" philosophy. They see what is the hottest processor around, and buy one level down. Then they stuff their motherboard with as much RAM (random access memory) as it will hold.
Most serious workstations run either UNIX or Windows NT. NT costs about $100 more than Windows 95. On the other hand, you don't have to buy $200 worth of utilities to make it run right, either. Invest $35 in a book about NT, and you'll see why NT is so popular for engineering workstations. But use caution before deciding on NT. If you have old hardware, NT could be your Waterloo. Consider a hardware upgrade if performance, stability (rare crashes), and security are critical. The U.S. Navy runs its nuclear aircraft carriers on Windows NT. If you want to go with an even stronger operating system, look into one of the many flavors of UNIX or another operating system in that performance range.
Here are some tips on CAD usage and upgrades. * Upgrading in large steps means fewer upgrades over time. If you upgrade annually, this point is moot. If you want to minimize upgrading costs, don't buy entry-level hardware. Fig. 2 (above) shows you the upgrade "sweet spot." * RAM is cheap. Too little RAM will cause premature hard drive failure. Not only that, too little RAM just slows everything down. Make sure you have enough RAM so that you can run your applications entirely in RAM. This will eliminate many hours of "hourglass time," as well as make your machine last longer between visits to the computer doctor. Unless you're doing photo-editing or other intense graphics work, you should be happy with somewhere between 64MB and 80MB of RAM. If you do 3D rendering, don't settle for less than 128 MB. If you have an older computer, the BIOS may recognize only a certain amount of RAM-which may be less than the amount you have on your system. * Hire or train people to do CAD correctly-a "wing-it" approach will be expensive. Make sure your CAD people understand drafting. A bad drawing, even automated, is still a bad drawing. * Know engineering CAD standards, if you want drawings that work electronically. For example, suppose a CAD jockey draws a plant off-grid, and passes the drawing to an electrical engineer. The engineer opens the drawing and finds he or she can't place conduit precisely, because the building is not where it should be. Further, the layer names follow odd conventions. (When naming layers, put the noun first or suffer endless confusion.) This electrical engineer has no choice but to print out the drawing and redo it from scratch. Then you'll be wondering why the electrical portion took so long. * Designate an administrator. This person must set the standards. If you have a CAD administrator who names your shapes, blocks, and layers, then you can save everyone much grief. This person should have formal drafting education-available at your local community college.
To avoid the high cost of a bad CAD system, make sure you follow these guidelines. * Unless you're doing architectural work, you need only a standard CAD program. You probably don't need full-blown 3D and rendering. But be careful; if you buy a consumer-level program, your drawings will show it. And, if you cut corners with your CAD selection, you increase your chance of poor work in the field. You don't need the loss of business, increased liability, and increased costs this would bring you. * Make sure you get a program that writes to industry-standard file formats. This allows you to coordinate drawings with other people and other programs.
Document management can prevent your document and software collection from growing to an unmanageable size. The problem is you have related documents that end up buried behind their native applications, instead of allowing you to leverage inherent relationships. Thus, for Carrie in sales to call up a drawing, she has to ask Bill over in engineering where the drawing is. Bill then has to call Linda in project management to know which design used fewer labor hours. And so on. Document management programs fix these broken connections.
The programs tie files from your various applications into a common interface. Suppose a customer asks your sales rep, "By the way, Fred, how much would it cost to install a standard 2000A switchgear in the corner over there?" Fred goes to the document management program and finds a similar job. He pulls up the drawing, and shows it to the customer. The smiling customer says that's exactly what he wants. A few keystrokes later, Fred has a bid, based on this previous job. He alters a few particulars, then prints out the bid and the drawing. He hands them to the customer and says, "If you'll wait just a second, I'll pull up the letter their engineer wrote us about what a good job we did."
Create purchase orders easily. Look for quick entry, standard item codes, and note-taking capability. Look for on-the-fly entry of vendors, jobs, phases, and stock/non-stock items.
Create purchase order proposals/ templates that contain standard lists of frequently purchased items. You should be able to change quantities, vendors, and prices for each buy. The system should create POs automatically upon proposal confirmation.
Immediately create committed cost entries in job cost. This enables the project manager to determine where material costs are going without having to wait for a processed invoice.
Integrate purchase orders and invoicing. Why reenter details or go to a file to find the original purchase order? Let the software do that for you.
Import new items and prices from services that provide price updates on the many products that you use. Reference current prices as you do your purchasing.
Good accounting and estimating programs can develop detailed bills of material from the information in CAD drawings. This practice heralds back to the day when a draftsman physically counted the fittings, feet of wire, and other items represented in the drawing. When the draftsman did this, he or she would take information directly off the drawing. Thus, the phrase "take off."