The E-Construction Era - Step I

An analysis of back-end applications - top to bottom

By By Todd M. Shraiberg, Project & Development Manager

April 30, 2000

Todd Shraiberg's Editorial Archives

The last few columns I’ve written have covered the basics of what builders should be doing to compete and thrive in the e-construction era. As promised, I will now delve into each of the seven basic steps of creating an online hub for your company. For a review of these steps, read my April 5 column, "Hubs for Dummies."

The first of the seven steps is to review the back-end of your company. Whether you are a small volume builder, a conglomerate building firm, or a ma and pop type remodeler, you already have some sort of back-end to your business. Simply put, the back-end consists of your business components that occur behind the scenes of a job-site. The back-end of a company consists of applications such as accounting software (I am assuming that you are using software and not a ledger), estimating tools, job costing, payroll, inventory, marketing, purchase orders, project management, service management, and design tools.

Accounting, Estimating, Job-Costing, and General Ledger

Whether you use an off-the-shelf accounting program or purchased a customized application, your accounting and job-costing software need to be able to handle the following.

Use numerous jobs / case studies from your company’s history to create budgets for upcoming jobs

Generate accurate reports and balance sheets on demand

Record all entries and action in a general ledger with time stamps

Maintain a paper trail for audits

Handle payroll including flexible taxing options, automated overtime calculations, benefits (including 401K, IRA plans and health insurance), and all other relevant employee information. All payroll information should integrate into job-costing and general ledger.

Accounts Payable should manage all purchase orders and subcontractor bills. Many applications offer the option to write checks, warn against a break from budget, verify prices and bills with purchase orders, and run 1099’s.

Accounts Receivable should track invoices, statements, overdue bills, invoice aging, generate receipts, and manage client lists.

What to do now

Before you jump to any conclusions about the state of affairs inside your office, thoroughly analyze what your back-end system currently does and does not do. Do you already have good records? Is payroll a breeze? Could you audit your last 3 quarters today if you had to? What are your data requirements? What is the sophistication level of your staff? Remember, just because some things are possible, does not necessarily mean they are necessary, especially if it can’t be implemented both horizontally and vertically into your day to day operations.

What's under your hood?

Let us know what's going on in your office. Send the HousingZone staff an email with any comments or questions you may have. Did you just make a big purchase? New inventory system a blessing? A curse? Get burned by a cost estimator? Let us know.

If you come to the conclusion that your company needs a new accounting and estimating system, make sure you put as much research into the specific programs available as you do with your companies’ own goals and desires. Make sure that you choose a reputable vendor with a secure future. The last thing you need is to invest thousands of dollars into a new office solution only to find that the company who created it declares bankruptcy and closes shop. Make sure that the customer services offered are as dependable and thorough as the person that sold you on the product initially appears. Take a look at product demos, check out their customer lists, and look for as many reviews and reports on the company and product as possible. Talk to your friends and acquaintances in the industry and see what their experiences have been like.

If you need help, it might be in your best interest to go out and pay for it. It’s OK to admit that technology has left you feeling a little overwhelmed. A good consultant will help to ensure that you don’t overlook the little things that are so crucial to successfully implementing any new technology in the work place. Heed my words, if you do this wrong, you may find yourself out of business.

You need to take into account how all of the ledgers and reports will be written. Ease of use and data conversion are crucial elements to successfully implementing a new system. Make sure you fully understand how you will be able to integrate your current records into the new system. Furthermore, depending on your role in the company, make sure you fully communicate with the other relevant sectors of the company. Do you know where you’ll need this new system to be in the coming years? While it is important not to buy anything that you don’t necessarily need, you may require some functionality in 2 to 3 years that needs to be dealt with now.

Implementing a new back-end system is a serious matter. Not only do you have to make sure that you are implementing the best possible program for your business, but you also have to manage the waves caused by changing the daily routine of everybody in your office. Here at Cahners, we implemented a new "Media Bank" for all of the print publications last year, and although on the whole this new content management system was both necessary and an improvement, it was met with apprehension. It took a few months to get the bugs out, but the lesson to be learned from what occurred here was that massive change required gradual and scheduled implementation from book to book, month to month. Consultants were brought in and slowly but surely the users took hold of the new system and ran with it.

Perhaps the best analogy I can give to simplify the whole back-end scenario is to look at a car. A car is the sum of its parts. From the beauty of the exterior, to the plush leather seats, to the engine and down to the shocks and struts, a car is a complex machine working in unison to carry you from one place to the next. If one part fails, the whole thing can spin out of control causing massive damage to the car, you, and anyone in and around it. The back-end of a building company is crucial to succeeding in the e-construction era, so before you buy any hot-rods or jalopies, make sure you know what you are getting into.

Todd Shraiberg is the Project & Development Manager for HousingZone.com. Please email him with any comments or questions regarding his column.

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