What Homebuilders Should Know Before Buying ERP

Residential construction companies and home builders depend upon having accurate information on current material pricing and billing schedules, convenient access to sub-contractor agreements, and detailed job site reports to optimize their cash flow and manage retainage schedules effectively, as well as to deter possible complications on the project by analyzing costs throughout the length of job.

Consequently, the solutions provided with homebuilding accounting software are rapidly becoming an accepted means of streamlining these tasks. However, before you jump in and purchase just any ERP software, there are a few things you, as a residential contractor should know about homebuilding accounting software to ensure that you get the most for your money.

The Nature of ERP (Enterprise Resource Planning)

Originally developed as a manufacturing tool for controlling inventory, procurement, and distribution processes with superior efficiency results, ERP software programs have been adapted for the benefit of additional industries, including construction.

Essentially creating a homebuilding accounting software program that not only incorporates the material purchases, labor expenditures, and retainage schedules for each specific project, but also provides detailed budgeted, verses actual costs comparisons, real time updates, while instantly directing accounts receivable information to the appropriate personnel for approval.

What It Means for Your Company

What these software solutions mean for your company is what makes it such a value added product. The advantages produced include, in addition to less harassed, over-worked project managers and office staff, more accurate materials and labor cost controls, simplified change of work orders, easier marketing techniques that allow your customer to design their dream home and you to build it accordingly without miscommunication, and streamlined billing procedures with paperless transactions, trade portals, and immediate assignations.

Knowing what to look for before buying your new ERP, or homebuilding accounting software will give you a definitive advantage in finding the right software solutions for your business.

 

 

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Compliance Solutions for Controlling Construction Costs

Operating a business in the construction industry today is fraught with numerous challenges. Fluctuating materials costs, a sluggish economy, and regulatory issues can stifle your profitability and have you seeing red. With tracking the wage law requirements, handling yearly worker’s compensation audits, and insurance compliance paperwork, the amount of time consumed by your administrative staff preparing materials, can be staggering, even if you contract with an outside accounting professional to perform these tasks. Moreover, it detracts their attention from current projects and other profitable areas of operation.

Yet, there are compliance solution techniques available for construction industry professionals, in the form of innovative software programs, designed to simplify your regulatory requirements, while saving you time and money.

Worker’s Compensation

Worker’s compensation insurance rates are based on specific activities, and the hours, namely the payroll associated with the task. For instance, the percentage rate for concrete flatwork is significantly less than work performed from a scaffold, even eight feet high, or carpentry trim work. Therefore, because so many different actions a subject to different rates, to ensure that you do not overpay, listing the payroll hours according to the appropriate code can decrease your yearly Worker’s compensation expenses.

Payroll Solutions

These new software programs instantly and effortlessly transfer weekly payroll information, and categorize it not only by the job, but also by insurance classification codes. When your yearly audit is performed, the data is easy to compile, and submit, which saves you time. In addition, instead of spending money on overnight mailings, the cloud based applications allow your field site superintendents to easily upload weekly payroll reports, pick tickets, and even first reports of injury.

These construction industry solutions offer workable, real-time solutions for maintaining regulatory compliance, and include effective techniques for organizing subcontractor certifications as well, and combine the added benefit of controlling your construction costs, increasing your margin of profit per job. For more information on construction project costing, view this On-Demand Webinar or contact SBS Group today.

Tricks to Managing Change Orders

In a perfect world, contracts are the perfect resource of responsibility – all details, regardless of significance, would be squared away and everyone would have a perfect understanding of what exactly is expected in their role. Unfortunately, this is not the case, and modifications are frequent. Modifications, technically known as change orders, are a common occurrence in the contract world, especially when things are being built. Despite going over all the details before signing, there will be at least one specification that needs to be added or modified.

The fact is that change orders happen regularly, and often represent a cost variation of at least 10 percent. They can result from someone forgetting a piece of information, undesired/unexpected results, or from new decisions made after the project has started. Most contract managers don’t try to avoid these issues; instead they plan for them and build in contingencies, where possible, to limit their negative effects on the completion of a project.

Contingency Planning

Particularly in construction projects there are going to be what are known as concealed situations. These situations involve factors that were not known at the time of the contract drafting, but have to be dealt with to allow the project to finish. These items aren’t any particular party’s fault; they exist and adjustments have to be made. To anticipate these problems, many smart contract writers will build in a clause for dealing with unforeseen issues that could occur. This provides a pre-determined plan on approaching these concealed situations, should they occur.

Providing Options

Detailing alternatives for solution approaches can be another form of contingency planning. Rather than waiting for a problem to occur and then trying to figure out a plan, a contract with proactive options could have a detailed alternative approach already built in. When the catalyst occurs, the parties know how to respond and the costs are already agreed to.

Allowances

Allowances to budget contract costs and expectations provide a third method of contingency planning. Under this approach no specific details are planned ahead of time. Instead, the contract deadlines, funding and deliverables are adjusted to allow for changes to occur and still stay within the scope of the contract. Some contracts assume issues will happen and instead provide bonuses if the agreement is completed earlier than anticipated. This approach is common in municipal projects, such as bridge or highway building.

Accounting Monitoring

Change orders can also be controlled by improved accounting systems that track overruns under project control monitoring. This approach, combined with allowances, can help avoid formal change orders and keep a project within overall scope and delivery.

 

Using Trade Portals to Streamline Construction Operations

Recent advancements in technology have provided business owners with new resources for tracking expenses and monitoring operations. New software programs, designed for various manufacturing and distribution industries, ease the planning, ordering, and receiving procedures necessary for streamlined operations.

Moreover, specific, web-based programs have been created to offer construction industry professionals advanced monitoring and communication tools, which allow them to reduce the costs associated with requesting bids, organizing proposals, and scheduling procedures, along with the payment requirements, PO’s, and important notifications to, and from the sub-contractors, vendors, and employees connected with the project.
Commonly known as trade portals, these systems allow builders to communicate with subs, managers, and suppliers in real-time, improving and streamlining construction operations.

 

Requisitions, Purchase Orders, and Contracts

Procuring materials and services in the construction industry is mainly conducted using manpower, a lengthy process of transferring data from one system to another, or by inserting information into formula sheets by hand. However, innovative, web-based portals allow the builder access real-time job site information, combined with the categorized tracking and routing of purchase orders, requisitions, contract commitments, and item requests, which speeds processing times, to the appropriate personnel for approval.
The secure dashboard views provide project managers and other administrators with the crucial data they need to make informed decisions concerning disbursements, changes to orders and sub-contractor management, while simultaneously incorporating that same information for detailed project analysis.

Financial Tracking

Trade portals also offer incredible solutions for tracking job expenditures. While integrating the actual expenses as they occur, these systems use that information to perform comparisons throughout the length of the project with the budgeted amounts. The result is that project managers are able to effortlessly track and monitor material, labor, and sub-contracting costs, and consequently make decisions based on current performances, optimizing company cash flow and project profitability.

Improved Communication Procedures

Trade portals offer construction industry professionals superior communication methods by eliminating costly missed e-mails, faxes, and phone calls, either with outside resources, or inter-office transfers. The internet based system provides for immediate notifications to be sent to suppliers and subs, without requiring numerous, time-consuming individual calls, texts, and e-mails.
Applying new techniques that streamline operations in the construction industry is simply a matter of implementing technological solutions and software programs that feature trade portals, which generate the ability to reduce overall costs, and provide labor, procurement, and billing management solutions for any contractor.

Homebuyers are Back! What that means for your company?

Weathering the economic climate of the past few years has been especially difficult for homebuilders. Although foreclosure properties still dominate the real estate market, consumers are slowly overcoming their hesitancy to invest in bricks and mortar, with recent trends indicating a demand for new residential construction. Moreover, rather than purchasing a house with “history”, more consumers are contracting with homebuilders to create their own personal idea of the American dream. Therefore, discovering what this means for your specific homebuilding company and uncovering ways to capitalize on consumer buying tendencies can offer tangible dividends in the form of increased business and profitable, expanded operations.

Proposals That Educate

Homebuyers want the best house that their money can buy, but unfortunately don’t often understand the differences in contractor pricing. By utilizing innovative software to generate proposals that are attractive, detailed, and informative, homebuilders can educate and warn prospective clients about competitors who may attempt to undercut their bid with lower standards.Adjusting to Meet Demand Homebuilders understand that orchestrating a careful balance between procuring the lowest priced materials and sub-contractor services, with reliable performances and superior craftsmanship takes elbow grease, oversight, and tenacity. Fortunately, new computerized programs are available that seamlessly coordinate payroll requirements, accounting procedures, and sub-contractor information with job-site schedules, reducing the administrative hours necessary, saving you money.Marketing Superior Services

These programs also provide contractors with simplified solutions for effortlessly tackling project changes. Clients feel more confident if they understand that their homebuilder is able to quickly estimate the cost of any alterations they may require, and can provide quality assurances on labor and materials. Therefore, marketing your customization services and reputation as a scrupulous builder can have a significant impact on customer persuasion.

It is possible to benefit from the current surge in home buying. Whether your company constructs a limited number of opulent estates, or sub-divides multiple development tracks per year, as a homebuilder, you can increase efficiency and maintain targeted completion schedules with the help of a homebuilding software solution.

To learn more about SBS Group’s Homebuilding Solutions, you can view this 30 Minute On-Demand Webinar- “Hire Your Website” or check back here for more homebuilding industry blogs.