Understanding How to Use Construction Software
I am questioned repeatedly, regarding my opinion of construction software programs. My answer is always based on the user’s understanding of what services they actually require, to perform the proper management, and supervision on a construction project. What tools are necessary in your particular discipline, to properly and professionally manage and control your own work? Obviously if you are a general contractor, the requirements for management control, includes every facet of construction management. If you are a specialty contractor, then the requirements may not be quite as broad as that of a general contractor, but may include some specific information and data, customized to your own business model. The proper selection of construction software must be based upon the specific needs and data collection requirements of your particular construction discipline.
I immediately instruct individuals to think back, regarding where in the construction cycle did you either fail, or your business became compromised and challenged. Was the basis of your issues, financial, scheduling, management, procurement, completion of the project, or some other aspect of the industry? The best method of selecting the construction software that will be the most successful, is to first associate the application to a tool that will streamline your management of a particular item, which has caused you negative issues in the past. If your first software selection convinces you of the benefits of the use of construction software within your industry, then the succession of additional selections and purchases, will simply build upon themselves. It will be a simple addition of construction software applications that will allow additional positive results to occur. It is essential to be motivated and psychologically convinced, that this new tool is helping your business, and not simply adding another stress level, to an already stressful environment. Computer software is meant to assist you in the success of your business, and not introduce additional difficulties or conflicts.
An important aspect of understanding what construction software is designed and created to perform, is the acknowledgement that this software will assist you in the proper management and control of your particular industry. It is not intended to create the business, solve business problems, or actually perform the work required to properly and professionally run your own business. This is a mis-understanding, that I feel many less experienced and naïve individuals in construction have. There is a popular opinion, by many, that relates the ability to use construction software, as the ultimate identification of knowing how to build or manage a project. This is not the case, and I encounter this misunderstanding, as well as the total lack of acceptance of this truth, insisting that to understand a computer program and all of its idiosyncrasies, makes someone a professional builder. To understand the mechanisms of a computer program designed to enhance the performance of construction management and data collection does NOT make you a builder! A computer is another tool used in the construction process only, similar to the use of a skill-saw by a skilled carpenter.
This understanding of construction computer software does not make you a master builder.
So what should I expect from my construction software?
- Financial control / the obvious and most frequently used software in the construction industry is financial software that easily keeps record of all transactions, both in debits and credits. I can remember my original use of any software, and it was for financial reasons. Financial control software is capable of the following:
a.) Accounting of requisitions and invoices inclusive of trade payment breakdowns, and the value of each.
b.) Time data, on all billing, whether debits or credits / instant identification of delinquent bills and more importantly payments.
c.) Payment data on all billing, including days pending, overdue billing, interest accounting, etc.
d.) Repeated and consistent billing, based upon any scheduling required by the individual project as well as management of different, allowed billing cycles and payment dates.
e.) Tax accounting / Federal, State, City, etc
f.) Sales tax accounting / based upon specific State requirements, as well as labor and material breakouts
g.) Certified or special payroll procedures and requirements, inclusive of special issuance of certified payroll reporting and certification the proper governmental agency.
h.) Payroll services, with all of the bells and whistles of correct taxes, burden applications for vacation, health insurance, pensions, etc.
In most cases, this financial module, is a part of a larger total construction management software program, all offered by numerous industry leading software manufactures. The choice of a specific manufacturer or software supplier is your choice. This webpage is meant to provide a general summary of the construction software abilities and accommodations, and is not attempting to promote one, or the other, in terms of software suppliers.
- Contract control /Once the financial management and accounting software was introduced and became popular, the development of a method of contract, purchase order, material orders, material receipts, etc. management, was added to the financial packages. The contract control portion of construction software program is capable of the following;
a.) Contract management, identifying all parties involved in the contract and any alternate identification information required.
b.) Financial interaction and coordination. The contract management software will link to your financial management software, to clearly and efficiently manage all of the interfaces between the contract module and the financial module.
c.) Ability to manage and schedule all financial requirements, certification of warranties and guarantees, sales tax management, delivery charges, and all of the specific issues involved in contract management.
d.) Data accumulation of all payments and charges incurred for each contract, purchase order, material purchase, etc.
e.) Management of returned, damaged and incorrectly shipped material, and any other service provided by the contract.
f.) Proper notification management of late charges, incorrect billing, improper sales tax or delivery charges.
- Procurement control / as has been repeatedly identified within this website, as a very important aspect of any construction management process, the procurement control is extremely important and critical to t he proper management of any construction project. The procurement control portion of construction software programs are capable of the following;
a.) Scheduling coordination for all procurement items, such as shop documents, deliveries, long lead items, etc.
b.) Interaction with the primary construction scheduling module to ensure that all of the aspects of scheduling are properly coordinated between the construction schedule and the procurement schedule.
c.) Notifications as well as the ability to set time alarms, to ensure that all procurement and long lead items are not forgotten or overlooked.
d.) Management of all procurement receipts, promises, shipment dates, procurement requirements, anything that involves information on the procurement of any products, services, shop drawings, etc. on the construction project.
e.) The ability to coordinate and interact with all other construction modules in relation to the particular construction software you have chosen.
- Shop drawing control / Like the procurement control abilities, the shop drawing control process will clearly and professionally coordinate the shop drawing requirements on the project, with the other scheduled requirements involved in the construction project. The shop drawing control portion of construction software programs are capable of the following;
a.) Identification of shop drawing requirements in accordance with each specific division of the project specifications.
b.) Management of the timing of the each specific shop drawing requirement.
c.) Identification of the action by each engineer, architect or other entity that reviews the shop drawings.
d.) Management of the actions required, at each level of approval regarding shop drawings.
e.) Final shop drawing processes and management control, including who and when the shop drawings have been issued to.
f.) Management of shop drawings within the final documentation packages normally required to complete the project, from architectural and engineer requirements, as well as certificate of occupancy requirements.
- Change Order control / Change orders on every construction project is always a management challenge. The ability to properly and accurately coordinate and manage the change order control process is critical to the proper management of the entire project. The change order control portion of construction software programs are capable of the following;
a.) Identification of the initial observation, description, requirement, or whatever vehicle of notification that has been the catalyst of a change order issue.
b.) Management of all of the dates and data required to properly identify, and coordinate all change orders on the project.
c.) Documentation of all quotations issued, changes and modifications required, as well as final values for all change orders.
d.) Finalization and approval or disapproval of all change orders, identifying the party making the final determination.
e.) Coordination of all notifications, sub contract change orders, material purchases, or any other entity associated with the specific change order.
- Scheduling management / A successful construction project is totally and completely dependent upon the successful and proper management of timing or scheduling on the project. One of the initial construction software modules, like the financial module, was the scheduling module. The scheduling management portion of construction software programs are capable of the following;
a.) Accurate and precise identification of every element necessary to properly manage the construction project.
b.) Accurate and properly managed time periods, required for each activity.
c.) Predetermined early start, late start and float times allowed for each scheduling activity.
d.) Critical path identification of construction activities, as well as simple bar chart identification of the sequencing required to properly schedule each activity.
e.) Ability to manage all construction activities, time values, float times, and all aspects of interaction between scheduling activities.
f.) Distribution capabilities, to all parties inclusive of subcontractors, material suppliers, architects, engineers, etc.
g.) Coordination capabilities that manage and allow detailed scheduling analysis with interaction between all of the construction activities.
- Requisition and billing management / Coupled with the financial, change order, procurement and scheduling module, is the capabilities for total and complete requisition, invoice, payment and debit control. The ability of all of the programs to interact with one another, and allow users to control all aspects of the project in terms of billing is invaluable. The requisition and billing management portion of construction software programs, together with the financial module are capable of the following;
a.) Complete monitoring of all invoices and requisitions, in regard to timely submission dates and payment sequencing.
b.) Identification of interest on late payments, accumulation of past due invoices and requisitions, as well as automatic reminders to all parties, regarding delayed requisitions and invoices.
c.) Clear and precise accounting of all payments to subcontractors, material vendors or other entities requiring payment and financial management.
d.) Record keeping, throughout the project, of payment and billing status.
e.) Archival data that is accumulated as the project advances, allowing historical demonstration of payment activity or past due accounts.
- Completion management / Every construction project hopefully ends in completion. Completion management is the most important aspect of any construction project in terms of obtaining the final payment. It is essential that all aspects of completion requirements occur in the proper sequence, to ensure that every T is crossed, and I dotted. The completion management portion of construction software programs, together with the financial module are capable of the following;
a.) Identification of required as-built documentation required to obtain final certificate of occupancy on the project.
b.) Management of all warranty and guarantee information required to obtain final payment from the owner.
c.) Interaction and coordination of all aspects of the construction management cycle, to ensure that all of the primary aspects of project closeout are professionally scheduled and accomplished.
d.) Coordination of all subcontractors, material and equipment vendors, as well as all required paperwork, certifications, etc. that are required to properly and completely close out the project to ensure final payment.
e.) Completion means final payment; this is why the proper management of all close out documents to allow proper completion is essential to the success of every construction project.
- Lien waiver management / Proper, coordinated lien waiver management is essential to the financial success and completion of all construction projects. It is essential that the lien waiver process be managed successfully and accurately as the project advances through every aspect of the construction cycle. The lack of proper lien waiver acceptance and management will cause financial issues at the end. This is not when the problems need to occur. The lien waiver management portion of construction software programs together with the financial and billing aspects of the program are capable of the following;
a.) Identification of the timing requirements of lien waivers and payments
b.) Insurance that payments are not made without the proper lien waiver requirements.
c,) Management and coordination of all aspects of secondary and third tier lien waiver requirements and the acknowledgement of proper lien waiver procedures throughout the entire aspect of the construction process.
d.) Management of the final lien waiver process, assuring that the general contractor does not mistakenly sign a final lien waiver if they have not received the proper and complete assurance by all subcontractors, material vendors, etc. that the final waivers have been signed.
- Punchlist management / The management of the punchlist is critical to the completion of every project! I have indicated within this website the need to continuously manage and monitor the punchlist as the project advances. It is better to end the project, with no items of incompletion for the architect or owner to list, than to allow them to make a list of indeterminate and ever increasing disasters on the project, when the end is near. The punchlist management portion of construction software programs are capable of the following;
a.) Management of all unfinished or construction activities that require correction.
b.) Interaction with the scheduling module on the project to ensure that there are preliminary punchlist that occur on the job at specific points in the schedule.
c.) Ability to closely monitor the efforts of punchlist completion on the project to ensure that the incomplete items are completed on a timely basis, prior to the application of other construction activities that may hide or cover in completed and punchlist work.
d.) Management tools that allow the acceptance of the punchlist items as completed by the architect, and ensure that this approval is formally acknowledged and documented.
e.) Ability to distribute the punchlist to all responsible parties and the formal documentation of all responses and exceptions to the punchlist.
f.) Professional and document supported ability to respond to final architectural, engineering or other punchlist documented and presented by any responsible party on the project.
- Management of final project completion / As I have noted in the past, this is the Holy Grail of the construction project. The final and properly, professionally, managed end of the job. The use of a full and complete construction software program to properly manage and formally address all aspects of the project, is essential to the final completion of the project, and YES Final payment!
Unfortunately, I have witnessed in the construction industry the attitude of many individuals that the ability to properly use and maneuver around the numerous software construction programs is the identification of a builder. Although, I am sure that there will be push back, this is not the case. The understanding of construction is essential to the proper use and understanding of all construction software programs. You have to understand construction to adequately use the full potential of construction software.
Not to reiterate my history or my age in this construction industry, I can remember no fax machines, no cell phones and no computer programs. We used to actually make designated phone calls, mail letters and type change orders. On one project I managed in Bridgeport, Ct. I had over 1600 separate manila folders, each assigned to a separate change order event on the project. You had to accumulate all of the physical data in the form of invoices, delivery tickets, labor timesheets, etc. in a manila folder, and then recreate the change order all by hand, adding the charges with an adding machine.
The manual handling of invoices and subcontractor requisitions was performed by the accounting departments as they accumulated the monthly bills and invoices. This paperwork was handed to the designated project manager every two weeks, for their input regarding the status of the invoice and the cost code that it should be coded to. This individual billing folder would then be returned to accounting for input into the monthly job ledger for payment. The required retainage, or other types of financial withholding, was literally written on the separate invoice or billing by the project manager, and the accounting department would comply with the written instructions.
Any type of financial control on the project was performed on a ledger pad or on the inside of the subcontractors manila contract file. I had a procedure where I created a separate manila folder for each subcontractor or material supplier. The inside cover of the folder would start with the original purchase order of contract value. Each time there was an additional charge, change order, backcharge, etc. that would occur regarding that individual contractor or supplier, I would, by hand, add or subtract the value of the change. This value would be updated each time there was a change in the financial aspect of the individual sub or supplier on the project. In this manner I would understand where the vendor stood, financially, at any given time in the construction process.
Scheduling was performed by hand on long ledger paper. I can still remember developing a construction schedule for the Stamford Water Treatment facility, a large, over 50 million dollar project to filter the drinking water from the reservoirs, to the City of Stamford Connecticut. The schedule had hundreds of items on the construction activity list and they all needed to be scheduled. There was no ability to introduce a changed early start or late start, or change the duration of the activity, other than by hand with a pencil and paper.
The point I am attempting to make, regarding the use and selection of construction software, is that it is a tool. It is critical that the entity deciding on the specific program is knowledgeable, regarding what the various modules are capable of performing based upon a need. It is essential that the definition of a change order, a backcharge, an invoice, sales tax, etc. are clearly and accurately known. To purchase a construction software program to perform activities, that the individual has no foundation of knowledge, endangers the success of any construction company.
Construction software is essential to the proper management of any construction company. It is a tool that has advanced the ability to formally and precisely manage all aspects of the construction project. However, it is not the solution, it is only a tool. It is essential that the solution be in the understanding of the construction process, the importance of accurate financial information, the proper and timely submittals of change orders, the proper execution of lien waivers, etc. The skills go on and on, the software does not have the skills, it has the analytical capability to organize and manage the facts and the analytical figures. It is essential that the operator of the software has the skills!
Construction software is not a shortcut around the experience and knowledge necessary to properly and professionally manage a construction project.