One way or another, electrical contractors have to embrace technology. In the end, you will either be the one to drive change or be left riding the bus. If you choose to be a bus rider, control of your business will quickly pass to those in the driver's seat. But before taking steps to automate your business practices and gain control of your destiny, you must face some of the factors head on that typically decrease operational efficiency in an electrical contracting firm.
EC self evaluation.
Project owners have grown increasingly intolerant of the inefficient and antiquated processes still employed by many electrical contractors. Too often, capturing the data from a project is a haphazard, disorganized, and duplicated process featuring a mess of approaches — from punch cards for timekeeping to paper-based purchase orders, delivery slips, and receipts. Some job-site information is recorded and then re-recorded as often as five times before it reaches home base to be entered into an accounting system. Administrative staff who usually can't be billed to a project have to be hired and housed in the field just to direct this flood of data, while even more staff must be hired in the back office to re-key it into accounting systems. Within this scenario, errors are inevitable, as the same information is entered and re-entered. As a result, delays become unavoidable, as paper-based records get lost or simply held up on their way between the field office and home base.
As a service contractor, consider the situation from the project owner's perspective. Within this deluge of information, it's difficult — at best — to track the costs and status of a given project with any kind of real-time accuracy and provide the granular intelligence that can tell a project owner how a variable (such as weather) is affecting the budget. Is it delaying the arrival of materials on-site? Is it too severe for workers to step out the door? Are time and resources being lost to repairs and maintenance? These are the questions a project owner and electrical contractor must be able to quickly answer to take the action necessary to minimize project disruption.
These days, project owners are demanding greater transparency. They want to tender a contract confident that the winning bidder has the internal processes in place to deliver the project with minimal variance. They expect a budget that makes the most efficient use possible of labor, materials, and equipment — with accurate and up-to-date status reports along the way. Old-school thinking that relies on general accounting software, spreadsheets, and paper-based data collection from the field simply does not provide you with the insight and understanding necessary to meet these reporting requirements. An untarnished safety record and a guaranteed work schedule are no longer enough to win a contract bid.
To remain competitive in this environment, the onus is on you as the electrical contractor to take a hard look at your current model and acknowledge where you can make improvements to business processes. Fortunately, there are many enterprise-level workflow and data-collection software solutions on the market today that can help you deliver the kind of accuracy and accountability project owners have come to demand.
Back-office-out vs. field-in strategies.
These software solutions fall into two general categories: back-office-out or field-in.
With back-office-out solutions, the flow of data is two-directional. The request for information goes out to the field from the back office, and then the requested data is pushed back. While this push and pull can be quick when done electronically, it's not as efficient and cost effective as its field-in counterpart.
Field-in solutions rely on pushing the data in from the field in a one-way flow of information that requires fewer administrative staff in the back office. This means that as business grows, you are only adding revenue generators. Conversely, when the cycle moves downward, you're not stuck with too many administrative staff who must either be laid off or carried on a monthly basis.
When deciding what software approach is right for your business, remember that not all field-in solutions are created equal. A number of field-data-capture solutions push raw data in from the field, but lack the features and sophistication to also process this data and smoothly integrate it into your existing back office accounting and reporting software to provide accurate labor/materials management and timely purchasing/invoicing. Solutions that only capture and push raw data lack the seamless integration with back office systems crucial to making life easier for staff and the business as a whole operate more efficiently.
What should you look for in a field-in solution? You should only have to enter a piece of data into the system once, to reduce labor costs and the likelihood of human error that arises when data must be keyed in several times. This means staff in the field must be equipped with a handheld device or laptop computer that relays the data back to head office — or collects it for later download from locations where a wireless connection isn't possible.
Once that piece of data is in the system, an automated process should distribute it wherever it must go. There should be no manual re-keying of data or need for human intervention to import data between systems, processes, or software applications. The flow and management of data should be centralized and standardized to reduce administrative errors and improve productivity for all aspects of a project.
For example, the procurement team may have to check inventory, purchase materials, and ship the material to the job site or have it available in the shop or warehouse for pickup. These are functions that have always been carried out, but they should now be executed without having to re-key data. The procurement team simply chooses vendors, prices the material on the purchase order with the vendor, and orders it.
The next step is receiving the materials in the warehouse or on-site. Materials can also be received at the distributor's location. Again, it's a matter of clicking a button and indicating what quantities have been received. The final step in this integrated process is the accounting team matching an invoice to approved purchase orders that have been fully received. If they have not been fully received, a backorder is automatically generated.
Using this high standard of efficiency and functionality will allow you to quickly identify the select solutions that are ideal for an electrical contracting business and provide the level of accuracy and accountability that project owners have come to demand.
It's not just the flow of data that should move in one direction from the field into the office, but the entire strategy behind the development and implementation of the new IT solution. For a new IT system to succeed, contracting firms must see that starting in the field, where most of their significant inefficiencies lie, will result in a far more productive end-point — with happier field staff and an IT infrastructure that supports and drives their business. However, too often when electrical contractors consider an IT implementation, it begins in the corner office. The company's management in the field has little or no idea about the existence of the new system until it has already been implemented.
This can leave field staff frustrated because the new system fails to address the administrative headaches they deal with on a daily basis. Company executives may be pleased with the final outputs generated from the new system, but they may not realize the whole process is far from optimized — and that their final data is still the product of a series of time-consuming and error-strewn manual processes.
Survival of the fittest.
The writing is on the wall for contractors facing a recession. Those that cling to archaic business processes will find themselves outpaced by competitors who have taken advantage of technology solutions that allow them to be more responsive to customers. History has demonstrated companies that take steps to improve the efficiency of their operations during a downturn are the ones that continue to win business and end up in a far stronger position when the market recovers. Electrical contractors that fail to adopt technology solutions that can improve their business processes and make them more accountable to the project owner will be the ones most likely to fold.
More efficient management of materials and resources in the field — and the collection and interpretation of that data to better manage a project — can improve a firm's reputation as a reliable and trusted partner as well. This will draw new business and skilled labor. Most importantly, it will make for a leaner, more efficient shop capable of enduring a downturn where others will fail.
Hilsenteger is CEO of Singletouch Corp., Goodyear, Ariz. He can be reached at [email protected]
Sidebar: Challenged by Growth
One electrical contractor that quickly saw the value of using technology to improve its business processes and level of service is NorCan Electric, Inc., Fort McMurray, Alberta, Canada. Founded in 2005 by Cameron Cassels and Marcel Andre, the company enjoyed rampant growth over the next few years in Alberta's oil sands.
In its first year of operation alone, NorCan grew from two to 200 staff as it rode the oil sands boom, creating significant project-management headaches for its founders. With much of its work coming from the Major Products Group of Suncor Energy, which focuses on capital projects in excess of $20 million, NorCan had a critical challenge managing such rapid growth.
“We would touch data so many times, it was absolutely killing us,” says Cassels, who admits the firm pushed its use of spreadsheets to the maximum and found such office software woefully inadequate. Significant pressure was put on staff, creating stress that impacted performance and morale.
This was painfully evident in the collection and processing of time sheets. After time sheets were collected from field personnel, the site foremen would take them back to the office where a payroll clerk would enter the information into a Microsoft Excel spreadsheet, summarize it, and then enter the information again into NorCan's payroll software.
This manual process was slow to provide the updated payroll data needed for accurate job costing. It was vulnerable to human error because data was being recorded by hand, then entered and re-entered. Different customers also had different information reporting requirements, which forced office staff to devote even more time to manipulating the data. To manage and interpret this flood of information as best they could, management was stuck working 12- and 14-hr days.
Desperate to adopt a more accurate and efficient alternative, NorCan turned to enterprise workflow software tailored to the electrical contracting industry that pushed data in from the field and required it to be entered only once.
With this solution in place, foremen now use a handheld device to scan employees in and out of the job site. The data on this device is downloaded at the end of the day to the company server, where the information flows into NorCan's existing back-office accounting and reporting software. NorCan can quickly and easily print daily and weekly time sheets and bundle them with invoices.
Implementing this solution dramatically reduced the workload on office staff, allowed for accurate tracking of labor costs in real time, and enabled NorCan to be much more accountable to the project owners. Best of all, deploying this solution allowed NorCan to do more with less at a time when qualified labor was in short supply. In the end, the benefits have extended beyond tracking labor costs to include materials, subsistence, and all the other aspects of a large remote job site.
“It took away a tremendous amount of frustration,” says Cassels. “We can now react far more quickly when our clients request a current view of the cost of a project. Our general and administrative costs have been slashed, and fewer office staff is required to support our workers in the field.”
The insights provided by this solution even helped NorCan identify an error in its mass of spreadsheets that had led it to undercharge a client by $300,000.
Now that the oil sands is facing a construction slump, Cassels is confident that adopting these kinds of business-process improvements has left the firm in an excellent position to weather a downturn, thanks to the leanness of its operations.