In this down market, executives mustfind every way possible to reduceoverhead. “Internal operations in just about every company are coming under increasedscrutiny,” says Tom Cofer, vice presidentof Sales for the Construction and RealEstate Division at MIS Group. “Forward-thinking leaders want to slash costswithin their organizations, but they wantto do it in a way that makes sense.”
Smart Business recently spoke withCofer about how integrated systemsallow his customers to manage overheadand increase profits by working smarter,not harder.
How can executives in other industrieslearn from what’s happening in construction?
Technology is being used in ingeniousways within the construction industry tostreamline internal processes and bumpup profits without adding staff. Whileconstruction may not be your niche, theaverage building project involves somany people and variables that it offersa great mini-lesson on how the integration of technology can give your company a lot more bang for the buck.
Talk about what’s going on in the construction industry today.
It’s no secret that times are tough. Ourcustomers must reduce overhead. Toaccomplish this, they’ve got to employfewer people either in the office or out inthe field (or both), and they’ve got to doit without falling behind on current projects. So it’s critical for them to automatetheir internal processes. These executives have to figure out how to maximizethe flow of information and remove thebottlenecks that obstruct cash flow.
How can they achieve these objectives?
Within the construction arena, therehave traditionally been three main areasof operation: estimating, project management and accounting. Within eachunit is a repository of critical data, datathe other units need to make sound decisions. But because data has not beenshared, each department has unwittinglyheld the others ‘hostage.’ The projectmanager couldn’t get the report he needed until the accounting clerk had time topull it for him. The accounting clerkcouldn’t get the time sheets she neededuntil the project manager brought themin from the job site. Every delay costsmy customers money. By automatingand integrating processes, critical databecomes available to all appropriateteam members in real time.
Can you give a few practical examples ofthis type of integration?
Payroll processing has traditionallybeen costly and labor intensive for construction companies. The work force isscattered; employees often move fromjob to job throughout the day or theweek. Collecting time sheets, runningpayroll at the office, and going back tovarious job sites to disburse checksrequires huge chunks of employee time.But with integrated applications, costsare greatly reduced. Time card information can be entered by a project manager directly from the field via PDA, phoneor laptop. Payroll can be quicklyprocessed and funds directly deposited,allowing employees to access funds via apay card that functions like a debit card.
Another place we’ve seen technologyeffectively used in a down market iswith regard to estimating. In order toincrease profits and maximize profitmargins, the commercial contractormust bid more work and bid it moreaccurately. That’s where integrated systems come in. The traditional method ofestimating involves one guy sittingdown with an Excel spreadsheet withhis colored pencils, rulers and currentfigures to compile an estimate. Donethis way, an estimate might take a fewweeks to complete.
Now, estimators can use database-driven applications that give them access toup-to-the-minute cost data. If a change ismade, new cost projections can beinstantly tallied. Dimensions can bepulled from a set of plans automatically.Clients receive and approve their bid in afraction of the time it used to take. Thistype of technology streamlines the estimating process so much that one of ourcustomers saw profits jump from $15million to $30 million in just two years.That revenue increase happened eventhough they didn’t add a single memberto the estimating team.
Every department wins with data integration. Estimators have insight intoaccounting data. Project managers canget approvals instantly, and accountingpersonnel can process information in atimely manner. Cash flow improves dramatically under such scenarios.
Every company needs this type of integration because executives must be ableto make decisions not based on yesterday’s news but based on today’s relevantfacts and figures. In this challengingeconomy, integrated technology allowsus to grow a company without addingpersonnel.
TOM COFER is the vice president of CRE Sales for MIS Group. Reach him at (866) 467-4181 or [email protected].
