Posts tagged planning
Features to Look For in Estimating Software

ConstructionIf you are shopping for estimating software for you construction business, you may feel overwhelmed by the number of choices and options available to you. Like any other software purchase, we recommend that you spend time determining your company specific needs before you begin looking for solutions. Once you have determined your business needs, you can begin exploring specific features and solutions that will meet those needs. To help you get started, here are some of the typical feature sets that you will find in commercial estimating software solutions.

Core Functionality

Estimating software designed for construction companies will typically have these three sets of core functionality:

  • Takeoff software or systems- help measure plans and blueprints to estimate the amount of materials and labor needed to complete a project by helping you “take off” the quantities of items needed. These systems may work with paper and/or electronic plans.
  • Cost databases - Stores materials and labor costs to reference when creating an estimate. This reference cost data may be your own or may come from a commercial source.
  • Estimating worksheets - these are the “spreadsheets” where the calculations that make up your estimates take place

In addition to the three core elements mentioned above, you will also want to look for other features that will help streamline your process for creating and managing bids. Here are some other features you can expect to find in a commercial estimating software solution:

  • Item List or Activity List - A main project view that outlines the various items and/or activities required to complete your project. This view provides a convenient way to navigate the items in your project. Some solutions will allow you to organize your activities by tasks and  sub-tasks. , or sub-levels.
  • Item Detail or Activity Detail – The supporting list of  of  resources needed (along with their costs) to complete each activity.
  • Resource Costs: Views and reports of costs related to labor (wages, benefits, burden, and workers compensation, etc.), equipment, materials, subcontractors, and any other cost detail items.
  • Markups – In addition to storing standard costs, most programs will allow you to store cost mark-ups. Typically you can store flat, overall mark-ups that can be applied to a variety of costs, as well as resource-specific mark-ups.
  • Overhead – Most construction companies will also want features related to the storing and applying of indirect costs including fees, permits, etc.
  • Reporting – is an important area that is often overlooked. Make sure you will be able to get the information you need to manage your estimates and projects out of your system. Estimating software typically include standard reports such as proposals, activity reports, and cost breakdowns. Some include “ad-hoc” report writers that allow you to design and run custom reports.
  • Integration or Exporting: For a complete solution, you will want to look for estimating software that integrates with your accounting and project management software. Integration is preferred, but a second, less desirable option, is to select a solution that allows you to export the data for use in other applications, such as spreadsheets.
  • Job History – Typically a standard feature, this allows you to store the information from past projects for review and use in estimating similar projects in the future.

Depending on the nature of your business, you may also want to look for estimating software that has been created specifically for your vertical..

External forces Affecting Construction Companies

Building FutureMost construction companies have started (if not completed) working on their strategic plans for 2014.  These plans typically include different types of forecasts. A common practice is to include a contingency plan in order to be prepared if results fall below projections. Project forecasts are also a staple of the planning process. Construction companies live and die by their ability to forecast and manage their project portfolio.

There is a third area of strategic planning and forecasting that is all too often overlooked by construction companies. That area has to do with planning for the impact external forces.

Forecasting External Forces

As we all know, there are also things that happen outside of our business, outside of our control, that can have significant impact on our business. While these forces are outside of your control, it’s still important to consider how external factors will impact your organization.

Many construction business owners find it helpful to group external forces into 5 buckets, or categories, during their strategic planning and forecasting process. The common buckets we see are:

  1. Economic factors – Is the current economic climate expected to change? If in a recession, do we expect it to continue throughout the year? If we are in growth mode, do we expect that growth to continue, increase, or slow down?
  2. Political / regulatory factors - What new regulations are on the horizon? Are taxes expected to increase or decrease? Is there new legislation (i.e. the Affordable Care Act) that will impact our business? Will new work be available due to government programs?
  3. Social factors – Is our business affected by the aging of the population? Are there social trends that will increase or decrease demand for the services we offer?
  4. Technological factors – Will changes in technology influence our ability to compete? What are the risks and rewards of adopting new technologies like cloud computing and mobile devices?
  5. Environmental facts – What are the global and local environmental issues that will impact the industry (or your customers’ industry)? What is the next “green” movement on the horizon?

As part of the process of reviewing these external factors, you will want to create plans to help you prepare for what might happen. After reviewing the types of external factors that can have an impact on your business. This is often referred to as scenario planning. According to the Journal of Accountancy, scenario planning is focused on answering three questions:

  1. What could happen?
  2. What would be the impact on our strategies, plans, and budgets if it did happen?
  3. How should we respond if it does happen?

You may not be able to create a detailed plan for each of these external forces, but by identifying the threats and opportunities that exist and regularly discussing them with your staff, you are more likely to identify them sooner and be better prepared to avoid, or take advantage of them when they arise.