What every Contractor should know before buying Software or other Technology
There’s a lot to consider when preparing to invest in software and technology for your construction company, including admitting you don’t know what you don’t know.
That’s not a knock on you.
You’re a contractor. You are an expert at building things. You don’t need to be an expert in software and technology.
But what happens if these investments don’t bring about the desired results, or worse, they rollout poorly and never fully implement or succeed? Or even worse, you begin to question your judgment about the choices you made.
The truth is, you cannot afford to allow this to happen.
Consider the following a guide for helping you find your way through the construction software and technology maze, and for making better and more informed decisions about what is necessary to run your business, especially early on.
Where do I start?
Often the best place to start is by asking yourself two simple questions:
As in “Why am I buying this?” and “What should I buy?”
The “Why” question is a critical one, because at every stage of owning a construction business the needs change. A start-up doesn’t typically need what a more mature or established company does. A general contractor's needs are different from a trade’s subcontractor. A subcontractor working on $1-$5 million dollar jobs is very different from a General Contractor bidding on $50-$100 million dollar jobs.
So back to the question “Why am I buying this?”
With all the available and emerging technology for contractors to choose from, including back office systems and leading edge drones and wearables, it should always come back to the “Why."
More importantly, how is this going to help you make money?
While it may look great to have drones flying over your job site, do they make you money?
While you might look really cool in your augmented reality glasses, do they make you money?
While you may have world-class estimating and project management software, is it making you money?
Notice each of these ends with the question “does it make you money?”
Smaller and/or start-up contractors should focus on finding and purchasing good construction accounting software or construction management software; this is the software that manages the entire business, from the back office to the job site.
The focus should be on managing and tracking your Accounting, Contracts, Committed Costs, and Change Orders; all the other aspects and “fancy” technology can be incorporated when it is appropriate, and when they will make (or save) you money.
Regardless of the type of software or technology you consider, there is a three step process for making the best decision and it’s always the same:
Often the first critical step is overlooked as you jump right into reviewing software, test-driving, being mesmerized by all the bells and whistles, and then rushing to purchase. Having skipped the discovery phase, you arrive at the implementation phase without the blueprint for a successful rollout. This is a formula for failure that can be avoided by taking a deep breath and returning to your “Why”.
A successful discovery consists of the following:
Assembling the right people.
Asking the right questions.
Listening for resistance or “we’ve always done it this way” responses.
Creating a “go live” blueprint built on a solid foundation
Assembling the Right People
Too many times, when software and technology projects have not gone well or as expected, I’ve heard things like “no one asked me for my opinion,” or “I wasn’t involved,” or “this will not work for us.”
Part of this stems from a “we’ve always done it this way” mindset, which often comes from not assembling the right people in the Discovery Process. Or understanding your “Why”.
Your “stakeholders” are your key system users; the company owners and leadership (decision-makers), your CPA, CFO, your Bookkeeping and Accounting staff, and Project staff.
Asking the Right Questions
Once your stakeholders have been assembled, the next step is to understand the systems and processes they are using today to manage and carry out their job functions. This might include:
How do you currently track:
Bids & Contracts
What’s done manually?
In Excel, or Word
Using pen and paper
What’s working? What's not?
What could be improved and how?
What is the core of the functionality you need? These are your must-haves, and why you need them.
Your “Why” from above
The answers to these questions serve two purposes:
The first pertains to the kind of system(s) that would best serve the company:
Accounting with job costing only
Accounting (with job costing) and with integrated payroll processing or in combination with a payroll service
Accounting (with job costing) and with integrated project management or a separate project management system
Other functionality that would serve the company ( that align with your Why”):
Routed approval processes
Field workforce management such as electronic time collection and field reports, etc.
The second is related to how all of the above gets done and what processes can perhaps be improved to help cure the “we’ve always done it this way” resistance and thoughts.
Listening for Resistance and “We’ve Always Done It This Way” Responses
Taking the time to improve the way things are currently done protects your investment. You can design and deploy a system that serves your future needs. You are building towards growth, moving towards how you would like your company to function, instead of allowing it to stagnate. This will not only move you towards growth, it will bring in bigger projects and attracting better clients, whether they are developers, general contractors or homeowners.
Consider why the windshield in your car is so large, but your rear view mirror is so much smaller.
Resistance to change is common, and especially common when tasks and processes have been accomplished manually for long periods of time.
When the answers or solutions to everyday occurrences live inside someone’s head, trying to follow a systematic approach can take longer (especially at first when learning and training is happening) and may cause some individuals to say and think things like
“Why would we do it this way”
“I don’t need this, I know what I’m doing”
“It was easier before”
“Why did we do this”
It’s important for the business owners and leaders to remember their “Why” during these times of uncertainty, and to be a role model for their team as related to accepting and adopting change.
Creating a “Go Live” Blueprint Built on a Solid Foundation
Following and carrying out the process discussed above will give you and your company the best chance of creating a blueprint for a successful software conversion, and a “go live” blueprint that includes processes and reports that best serve you and your company going forward.
Creating a “go live” blueprint is another commonly overlooked piece of the puzzle. Often, it’s as simple as a short list of things you need to happen the moment the switch is flipped and you are conducting business in your new system. These could include:
Payroll: Payroll time is no longer accepted on paper, via email, or via text, and is collected and processed automatically and electronically, reducing the total time (and cost) to process payroll..
Job Costs: Have payroll instantly added to your job cost so you have a clearer picture of your jobs sooner.
Contracts, Change Orders, Purchase Orders: contract changes and committed costs are accounted for, processed, and reflected in accounting at the time of creation, reducing the risk of them being overlooked and not being accounted for.
Reporting: Financial reports that you or your CPA need to help steer your company toward where you are going (back to your “Why”) are being generated.
Then, with a solid foundation in place, you can then consider what other technology can best serve you and your company’s future (and your future “Why”?).
Follow this process, and your investments will pay you and your company dividends for years.
Chuck has consulted with General Contractors, Specialty Subcontractors, and the construction divisions of national companies on identifying, selecting, and implementing construction accounting, construction management, and project management software and systems. Other industries Chuck has consulted with include Not-for-Profit and Legal.