More About Our Job Costing Program . . .

“Job Costing is the analysis of a contractor's actual cost of a project before, during and after completion of the job. Many modern contractors rely on their accounting programs to perform this task. While inexpensive and perhaps convenient, this method does not allow for cross checking and verification of your actual costs to your estimate. Thus unknown estimating mistakes may never be detected and are often repeated lowering profitability and creating difficult customer relationships.”

Hello! My name is Tom Persha and I am the president of BCC, Inc. I made the comments above at a recent conference held for mechanical contractors in my state but it applies equally well to many other types of contractors include general contractors throughout the country. I would like to tell you a little bit about myself and my company as well as introduce you to a software program that I think could help solve that problem of low profitability and poor customer relations.

I have been in business since 1976 selling job costing programs to Contractors and some Manufactures. My programs have been installed in about 500 locations nationwide with the greatest concentration in Southeastern Michigan. Not a lot of installations you might say and I would agree. I have never been one to pursue volume. Instead of volume I am looking for the long-term client. Most of my clients have been with me for over 20 years! Some of them have been using BCC programs since the beginning in 1976.

During a recent survey, our clients were asked, "Which feature of your computer system is most important to you?" Ninety percent of them responded that JOB MANAGER was easy to use. Repeatedly we heard that it was simple to understand and that it could be used with minimum training. The structure of JOB MANAGER fit exactly within the operation of their current procedural systems and that allowed them to “effectively control the cost of each job”!

By utilizing a proven job costing program on every one of their projects, my clients are able to see the inside working of each job and subsequently their company. This indispensable tool permits them to make confident decisions that will have a positive effect on their company, their profits, and perhaps more importantly their customers

Why Job Costing? If you do not cost your projects, you are doing only half of the work.

Only a few accounting programs offer what I would call a true job costing. In most cases, liabilities such as overhead, union costs, workmen’s compensation costs, direct and indirect material costs and fixed asset costs are not considered by the accounting program job costing module. This can leave a very serious hole in the actual cost of a job. For instance your $100,000 project costs out to $90,000 on your computer accounting program showing that you made $10,000. However, at the end of your accounting period your accountant calculates that all of the liabilities mentioned above for that period of work were 9% of the job. This total cost reduces your profit to a shaky $1,000 or less than 1% of the estimate.

This is where job costing could have helped identify the problem BEFORE it occurred!

If you have knowledge of a pending problem before it occurs, you can take steps to avoid or change the outcome. In the example above had you known the true cost of your liabilities during the construction phase perhaps you could have changed who was working on the job or the suppliers in order to improve profitability. Something as simple as better onsite management of how labor is being applied can have dramatic effects on profitability when the contractors knows before hand that a problem is occurring.

The contractor benefits from job costing in many other ways as well. Job costing provides a means of financial satisfaction to know that a profit was made on the project. In addition, information can be gained through loss observed on the job resulting in decisions that can be made to avoid those losses. One of the more obvious benefits is saving time. Unfortunately, there are only 24 hours in a day and the successful contractor needs 30 to 55 hours each day.

Job costing can reveal all types of discrepancies from material cost to theft.

By continually comparing your actual costs to your estimate, the job costing program can detect supplier discrepancies in quoted materials, as well as catching an unethical supplier. This happened in one of my clients just recently when a supplier attempted to overcharged by almost $15,000. My client was using our Purchase Order program in tandem with the Job Costing system. A internal purchase order was issued for the total amount of the bided item being supplied. The actual costs as well as the anticipated cost in the form of this and other purchase orders were tracked by the costing system when the attempted overcharge occurred. The problem was quickly noted and just a quickly repaired.

In some severe cases, an audit of costs may be warranted. A good job costing program is by itself auditable which means that all transactions that flow though your office end up, sooner or later, being posted to your job costing system. Thus other discrepancies which can involve theft, management errors, production shortages, estimating mistakes, installation issues, labor theft and others appear immediately in these auditable reports.

Job costing allows the contractor to identify employee productivity and crew productivity. Job costing can identify job skill levels of crews based on job types and number of hours to complete. Job to job comparisons can be made. Crew to crew comparisons can be made. Job costing can provide the contractor with the information needed to identify crew levels for all of his work. Crews can also be used to adjust labor during the bidding process and could be the critical element to secure the next project profitably.

If there is one thing you must get right to make money it’s proper job costing. Despite this fact, most companies don’t do it! Are you capturing all of the costs you should in the price of your services? Labor costs, operating expenses, depreciation amounts and desired profit are all part of your true cost of doing business and should be factored into the pricing structure for your products and services. These number should be part of your job cost!

Job costing in your company is important! Please read on to find out why it’s not as difficult as it appears and why it can help you breath easy when it comes to your end of the month financial review with your accountant.

So tell me, are you really capturing all of the costs you should in the pricing of your services or the estimating of your jobs? Labor costs, operating expenses, depreciation amounts and desired profit are all part of your true cost of doing business and should be factored into the pricing structure for your products and services. Job cost accounting is fundamental to any business.

Say you are an architect. You have a project to design a house. You draw out the plans, have it approved; you set about putting the design in place. Your customer has a budget. But you have just discovered that your design for the house far exceeds that budget and you have bought much of the material upfront in anticipation of getting the work. Before you know it you've spent more on a project that you've made. Your business is going to lose money on this project, and if yours is a small business, it could well be the end. That is why job cost accounting is so critical. You need software that is fast and reliable at calculating how much it is going to cost you to do the work if you're going to make money from this project at all. The efficiency of your job cost analysis could be the difference between success and failure.

Job cost software can improve your business. If you can track your job cost accurately and without time and effort, you are more likely to prove efficient latter on. Doing the work you are good at is only possible if you have managed to keep a handle on the resources that you need. Job costing can help you do this in as little time as possible, so that when it is time for you to set to work and impress your client, you can. And impressing your client or customer is what it is all about – is it not? This is as good a time as any to ask the following question:

Are you irritated with low profits from your jobs but don’t know how to improve them?

Your job Costing system should allow you to track detail customer information including specific site drawings, record and schedule customer service calls, enter and track service quotes, maintain detailed customer proposals, build and post project files. It should have some form of an integrated calendar that makes it very easy to establish and maintain schedules for each of your project managers and customer work requests. At least is should have some form of a Project Manager Report

Quickly enhance the profitability of your company by improving the productivity of your job managers and sales team. Do this by recording all important sales and project information, including preplans and site specific drawings, in a central database that can be easily managed to improve turn around time on service quotes, project proposals and other job specific needs. Tracking of projects by manager and quotes by sales personnel enable you to monitor what is going on in these critical money making endeavors.

Often times we forget why we are in business – To Make Money! But to make money requires satisfied customers and demands that we exercise proper management of our business. Without satisfied customers or proper management too often we hear the following:

Ø My customer refuses to pay our billings!

Ø I don’t know how I missed that deadline!

Ø Can Change Orders can really create profits?

Let me tell you some things that are important about JOB MANAGER!

ITS CONSISTENT

Consistent is not normally used to describe software today. Words like Video Clip, Mission-Critical, Desktop Interoperability (?), and Heterogeneous Database come and go so fast that you need a dictionary and an encyclopedia to read a software sales brochure! The menus and programs are consistent. Each one looks like all the others with the maintenance, entry and print commands all appearing in the same order and, whenever possible, meaning the same thing. Many of my clients tell me that after learning one system all the others seem to come up almost without training.

ITS LINKED TOGETHER

Many software vendors will tell you that their systems are linked together. That entries made to Job Costing (if they have it) will eventually find their way into your General Ledger - maybe. With JOB MANAGER the words "linked together" really take on a whole new meaning. Entries made to Job Costing make their way into your General Ledger, Payroll or Accounts Payable immediately. Our programs are linked together. Linked from the beginning and designed to work that way in a multiple user setting as well. Two people entering Accounts Payable at the same time will find their entries posted to Job Cost and General Ledger the moment they complete the transaction!

IT INCORPORATES THE KNOWLEDGE OF OTHERS

When you buy a software program, you should be buying the knowledge and training of others. I would think that the last thing that you would want to do is to "Design your own menus, reports or screens". What value is there to buying a computer program for thousand of dollars when that program forces you or your staff to become programmers. Their job has nothing to do with programming. Unfortunately in today’s computer world, "Completely customizable screens" has become the current chant of software engineers everywhere. The programs that I would like to sell you have been in use for almost 20 years. Yes I upgrade my programs, usually once a year. But in all that time, I have tried to preserve the knowledge of the past. Accounting systems have not changed much in the last 20 years why should your programs change daily?

ITS FAST!

Speed plays an important role in our lives whether we like it or not. Being able to respond to a client or a customer when there is a question can make the difference between having the sale or losing it. This is really true when it comes to your computer. A fast program can mean the difference between seeing your customers face to face for that next sale or spending the entire evening trying to get out tomorrows payroll or customer statements. BCC programs are FAST. They run without the overhead that is attached to the more picture perfect programs that you see today. No overhead means leaner programs. No fancy graphics means no late night gymnastics to meet missed deadlines. Entries that require updates to multiple files such as Accounts Payable checks happen in the blink of an eye even on older computers. In our opinion, the speed at which these programs operate is their strongest feature.

Do you feel as if you have lost control of your costs?

Consider these 11 reasons why your current system may be responsible for that.

Ø NO JOB COST AUDIT ABILITY

Ø A USELESS PAYROLL SYSTEM NOT INTEGRATED WITH JOB COST

Ø INADEQUATE GENERAL LEDGER REPORTING

Ø TRANSACTIONS THAT CAN BE CHANGED (or worse)

Ø DELETED (Can you believe that?)

Ø NO WAY TO TRACK JOB COST HOURS

Ø NO CUSTOMER TRACKING OR SUPPORT SERVICES

Ø REPORTS THAT HAVE TO BE PROGRAMMED BEFORE THEY WORK

Ø NO WAY TO PRODUCE AIA BILLINGS

Ø NO WAY TO CONTROL MATERIAL DELIVERED TO THE JOB SITE

Ø UNABLE TO GET SPECIAL REPORTING REQUIREMENTS SATISFIED

I trust that it seems obvious to you at this point that I have a solution for all of these problems. JOB MANAGER resolves each and every one of these concerns through a variety of systems and computer procedures. But perhaps most important of all, BCC can address the last item in force! Special Reporting and Changes ….

Are you unable to get special reporting or changes to your software?

Custom Programming. No one wants it or needs it these days – Right? If you have some special reporting requirement either for your sales crew or the Bank just turn to one of the many programmable database reporting systems available. After all you are a programmer correct? You make your company far more profitable sitting in front of your computer screen designing and implementing new reports or procedures that are required by your Bank, CPA, IRS or one of your office staff. Perhaps instead of you doing the work yourself, you have hired someone full time to do this. Or perhaps the need just never arrives because your current system has absolutely NO need to be improved. Your current system requires NO maintenance. You never have data problems or new reporting requirements because your current system is so good.

But just in case you do have requirements such as these, maybe I can be of help. I can and have programmed in almost 50 different computer languages including Cobal, Assembler, Fortran, Basic, HTML, Java, C … you name it! I can and have created EXCEL, WORD and ACCESS processing macros for quick estimating systems and special reporting requirements.

I can and have interfaced external hardware systems such as recording devices, time keeping systems, remote processing centers, bar code readers, scanners, inventory control mechanisms and point of sale terminals.

Thinking about installing barcode readers on your field trucks in order to better control inventory? Are you considering some form of hours reporting that your current programs fail to provide? Perhaps you would like your WIP report to look different, total other numbers or provide exception reporting. I can do this because I have done this for my clients in the past. Custom Programming is not a four letter word. It should be considered an aid to get what you want without having a full time employee to do it!

Do you need an IT manager? Someone to review your current hardware and software systems to see it they represent the best fit. Are you getting your monies worth out of your current system? Using all of the reports, entering all of the data efficiently, if not maybe I can help. For a number of my clients I operate in this manner. Once a week or maybe just twice a month I can be on site to review and monitor your current system, suggest changes and make sure backups are being made and tested for accuracy. Why pay for an IT manager when in effect you could rent one!

What does all of this mean to you?

If you are looking to buy a software program that has an integrated job-costing feature and comes with full telephone and/or onsite support consider using JOB MANAGER. This system comes complete with General Ledger, Payables, Receivables, Invoicing, Inventory, Purchase Orders and Order Entry but its real purpose is Job Costing. And it does this in either single user or multiple user configurations.

If you are looking for someone to review your current system and suggest changes that may not necessarily involve JOB MANAGER consider calling me.

If you are looking for a special report or two or perhaps an entire secondary system that lends support to your existing program consider calling me.

If you are looking for an IT manager but do not want one full time consider calling me.

Finally if you have any questions or would simply like a quote call me on 248-214-7258. That’s my cell phone and between the hours of 9am and 5pm you can call me at anytime.