Trends in Electronic Document Imaging

Chances are you probably didn't get into the electrical contracting business to constantly shuffle paperwork. Yet, it often feels that way. Paper is everywhere. Frequently, the documentation seems as important as the field work in the overall success of your business. Maybe you've been in a negotiation with an owner or general contractor (GC) where you didn't have all of the relevant drawings, requests

Chances are you probably didn't get into the electrical contracting business to constantly shuffle paperwork. Yet, it often feels that way. Paper is everywhere. Frequently, the documentation seems as important as the field work in the overall success of your business. Maybe you've been in a negotiation with an owner or general contractor (GC) where you didn't have all of the relevant drawings, requests for information (RFIs), e-mails, and other documents you needed to prove your case. Although you had performed the work — and were fully entitled to be compensated for the contract changes — you couldn't back everything up with the appropriate paperwork.

Until a few years ago, computer software often made this type of paperwork problem worse. Computer printers spewed out reports on “green-bar” paper, which stacked up on desks and in storage rooms. Sifting through the pile some days or weeks later just wasn't efficient. Today, however, computer systems can — and should — help you reduce paper clutter and better organize your company's documents.

It's easier than you think

Document imaging software allows you to turn paper documents into computer files and then view, print, and store these files in a database for easy access when you need them. Until a few years ago, purchasing document imaging software was difficult. Expensive, specialized equipment was often required. Normal servers did not have adequate disk storage space to handle a high volume of scanned image files. Unless you were a large bank or insurance company, scanning and managing your documents electronically probably was not economically feasible.

Today, this is no longer the case. Many construction management software companies offer document imaging as part of their standalone and integrated software solutions. This can make implementing document imaging much easier, because you don't need to learn a whole new application and set up an entirely separate database. Your computer network server probably has more than enough storage capacity to store several years' worth of invoices, time cards, contracts, RFIs, and other critical documents. As an added benefit, disk storage prices continue to decrease, and high-speed scanners are more affordable than ever. For example, small desktop units, costing around $500, offer “duplex” (i.e., front and back in one pass) scan capability at 30-plus pages per minute.

Google your filing cabinets

You've probably used Google recently to search for something on the Internet. In the blink of an eye, millions of Web pages are searched for any combination of words you key in. What you might not know is you can do the same type of search on all of the documents in your filing cabinets and storage boxes — if these documents are stored electronically.

For example, have you ever needed to find a document where all you knew was that it had some text on it (e.g., “city library remodel overrun” or “Smith Company building #3 annex revised lighting plan”)? Two technologies bundled inside your document imaging software — optical character recognition (OCR) and full-text searching — now make this type of search function possible.

This wasn't always the case. Historically, one of the limitations of scanned documents has been that they are “pictures” of documents stored in a graphic format. Unlike a word-processing or spreadsheet file, where the words and numbers are stored as text that the computer can “read,” the computer only recognizes a scanned image as a picture. It could be a $10 million contract document or your pet dog Wilbur. The computer lets you view and print these documents, but it really doesn't know anything about their contents.

OCR has changed that. This technology allows the computer to “look inside” each document, figure out which parts are text, and create a text file of the document's contents (i.e., as if you had read the document and typed its text into a word processor). Now, in addition to having a picture of the document, the computer can extract and save the document's text. However, for thousands or even millions of documents, that's a lot of text! What can you do with it?

The same type of powerful full-text searching capability that Google uses is now available in many standard commercial databases, such as Microsoft SQL Server and Oracle. So, if you use OCR to create a large text database of the contents of your scanned documents, you now have the ability to Google all of the documents in your file cabinets.

A proactive approach

One problem with managing a paper process is the amount of time it eats up. Consider the typical situation you face paying accounts payable invoices. Invoices arrive in the mail. Copies are made for filing by vendor and by job — and who knows what else. If everyone is in the same office, a copy might be routed to the project manager, superintendent, or company owner. If these people are at job sites, copies might be faxed to them. At some point, the invoice is entered into the accounts payable system. Somehow, word eventually reaches the accounts payable department that an invoice is or isn't ready to be paid.

You don't need a Ph.D. in management to see that this process is slow and fraught with problems. If an invoice gets stuck on someone's desk, there is no way to track where it is. Paper easily gets lost or misfiled. Some companies find this process so inefficient that they don't route copies of the invoice unless there is a problem or it is very large. However, in that case, they are less likely to find unfavorable invoicing errors.

A computer-based workflow system can make a dramatic improvement in this process. When the mail is opened, the invoice is immediately scanned into the document imaging system and routed electronically to the people who need to see it, perhaps depending on the job and invoice amount. Each person on the approval routing list can view all of the invoices they need to approve, right on their PC. If necessary, they can make annotations on the electronic documents, such as adding electronic sticky notes or other comments, and then either approve it or reject it. At any point in the process, managers can see all of the invoices in the approval pipeline and view performance reports about how long people are taking to get invoices approved. Once scanned in the system, invoices can no longer be lost on someone's desk.

One important benefit of this process is that more project managers and superintendents actually look at original invoices for their jobs. This can help you find billing errors that might have been missed when everyone was “too busy” to actually look at the paper invoices.

Can you use more profits?

Historically, construction management software could help you be more productive, thereby saving you money, but it didn't necessarily help you make money. What's different today?

Let's examine one area of great profit and loss potential for electrical contractors — change orders. You know when you are negotiating contract changes that the party with the facts and documentation to back up those facts is normally in the position of strength. The problem is that superintendents and project managers are incredibly busy and don't have time to maintain perfect filing systems for the hundreds or thousands of job-related documents they handle.

Enter project administration software coupled with electronic document imaging. Project administration software allows your project managers and superintendents to keep track of RFIs, submittals, transmittals, memos, meeting notes, e-mails, drawings, change requests, and all of the other documents related to the job. Document imaging software adds the ability to quickly scan paper documents from outside the company, such as letters, notes, sketches, and photographs, and automatically file these documents electronically. It also allows you to attach other computer documents, such as spreadsheets, e-mails, PDFs, and CAD files.

Imaging integrated with project administration software gives your project management team the tools to quickly find and assemble any job-related documents you need — for example, all of the documents for a contract change — while at the same time reducing the amount of time spent on the onerous task of copying and filing. What is the end result? In the meeting with the owner and the GC, you are the one with the detailed documentation covering the contract change, from the initial RFI all the way through to the change request and change order. And that means a better chance at recovering the true cost of the change.

Feeling the difference

Your staff probably enjoys an audit about as much as a root canal. You face potential audits from a myriad of sources, including government agencies, state and federal tax authorities, unions, owners, and GCs. Sarbanes-Oxley, affectionately known as Sox, has raised the bar for internal controls for all public companies, and the effects have also been felt by privately held contractors.

Electronic document imaging can vastly reduce the amount of work your staff spends during a typical audit. Imagine the following scenario. A state revenue auditor shows up to audit your company's sales tax compliance for the past three years. Instead of having one or more staff members pull invoices and other documents from your files (and perhaps from boxes in the storage room), you hand the auditor a DVD that contains all of the invoices and related documents for the three-year period. The DVD also contains copies of the related reports from your accounting software, and maybe your tax returns as well. Not only does your staff save time, but the audit also goes more smoothly because the auditor has everything he or she needs at his or her fingertips.

What about customers? Have you ever had a time-and-materials contract where the GC or owner needed to see all of the backup documents (invoices, timecards, etc.) for each bill? What if you could replace the paper backup for the bill with a CD or DVD? What impression would that make on the customer regarding your company's professionalism and technical prowess?

We've discussed how easy it is to purchase and implement document imaging systems today, how OCR and full-text search can let you basically do a Google search on any document anywhere in your company's files, how incorporating document imaging into your invoice approval process can help boost productivity, how you can make more money from change orders with improved record keeping, and how you can use electronic documents to impress customers and reduce audit headaches. All of these document imaging techniques, offered by multiple construction-oriented software vendors, are in use today at hundreds of electrical contracting firms around the country. Maybe it's time you take a closer look at document imaging software for your company.

Dexter is vice president and co-founder of Dexter + Chaney, Seattle.

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