Automate Your Subcontractors Processes

With construction markets tightening across the country, builders everywhere are looking for ways to better their bottom line. One increasingly popular way to do this is through automating their construction management processes.

By using a computer to track things such as subcontractor submittals, purchase orders, change orders, job progress and invoices, builders can build more houses and make more money.

“The biggest advantage to proper utilization of construction management software is the possibility of reduced cycle times,” says Maggie Geoffroy, president of software provider Construction Data Control Inc. “The increase they could see in their profits is substantial.”

Software such as that provided by CDCI, Accu-Tech Systems, Tractivity and BuilderBuddy can do some or all of the following: set up work orders with clear scopes of work for every trade, automatically create schedules off purchase orders, update and e-mail or fax schedules to trades weekly, and once your superintendent or field manager notes that work is done, the work orders become invoices with payment automatically sent to trades within days.

What It Can Do For You
Cypress Homes, a small-production homebuilder in Southwestern Florida, took on an automation project just over two years ago, and COO Brad Ervans has nothing but rave reviews thus far. “We had a lot of redundancy issues before we automated,” Ervans says. “We were fielding numerous calls from our field people and crew concerning the same schedules and purchase and change orders. Now every time one of those is entered, it goes to everyone at once. We now have a single point of entry and error, which cuts time and mistakes drastically.”

Ervans says that the company's software platform (provided by CDCI) has streamlined its construction process so much that cycle time has been reduced to 110 to 125 days per house, and gross profits have gone from around 19 to 27 percent. An added benefit to this streamlined process is that schedules now are so organized that it can work with their trades and vendors to buy out materials and labor far in advance at locked-in prices. These fixed-priced buyouts usually save builders a lot of money.

According to Geoffroy, systems such as these don’t require more staffing, in fact it may reduce your labor overhead. “You can either eliminate an unnecessary office position or have that person spend their time on more important things that you may have had to hire someone else to do,” Geoffroy says.

What You Have To Do
Whether you choose a simple automated payroll program or a completely integrated software platform for your business, the process will take some work on your part. First, Ervans recommends that you look at a lot of different technologies so you don’t get too little or too much. “We did a lot of investigating before we found the right platform that wouldn’t be obsolete in a few years and that we could expand as our needs expanded,” he explains.

Once you’ve narrowed down your choices to a select few, you‘ll need to call in not only your own employees for their input, but your trades and possibly your vendors as well. You may encounter some resistance at first, as Ervans says his company did, because people tend to see new technology as more work for them. But both he and Geoffroy say that if you bring them into the process early on and show them the time saving aspects, they quickly buy into it.

“It seems too daunting for many subs who never use computers in their business,” Geoffroy says. “But by talking them through the process and getting their input, and then by explaining that they’ll get paid faster without having to send you an invoice, then they feel much more comfortable.”

And your subs may not even have to have their own computer. Most software systems don’t need a high-powered computer and a high-speed Internet connection. Trade contractors can enter data into a superintendent’s or field manager’s laptop and send it over a wireless or even dial-up connection.

The Process
Don’t expect your automated system to be up and running overnight, but don’t fear a long and arduous learning curve, either. Geoffroy says that depending upon your business needs and how good your processes currently are, you can purchase a system for anywhere between $10,000 and $60,000 or more, including support with implementation.

“It can take as little as two to six months to really get things flowing with all parties involved,” Geoffroy says.

Ervans says that Cypress Homes spent quite a bit more and it took about 14 months to get to a comfortable point, but they have a functioning system that is scalable and growing with the business, and planned on investing heavily from the start.

“We’ve spent more than $320,000, including all the preliminary research and subsequent consultants we hired, but it’s been well worth it from the start,” he says. “It’s vital to our growth. Last year we closed 42 homes and this year we expect to close more than 70—and with higher margins.”