Real Costs Vs. Budgeted Costs
Better Roads Staff
By Daniel C. Brown, Contributing Editor
An Iowa-based contractor has won 80 percent of the available bonus payments on a successful 18-mile, two-lane asphalt paving project near Grinnell, Iowa.
Contractors today can compare real daily job costs to estimated budgets and determine whether or not they actually made or lost money on a given day. It wasn’t always so.
Historically, contractors used their accounting system, which had a job cost module, to do cost reporting. You could compare actual costs to budgeted costs on a monthly basis out of your accounting system. To work with accurate data, the accounting system needs to be current with all the bills, and all the time sheets, and the entire payroll, in order to produce a comprehensive cost report.
“That’s the way it was from the dawn of time,” says Christian Burger, an IT consultant to the construction industry and a frequent speaker at meetings of the Associated General Contractors of America (AGC). “Then what happened was that the systems that were producing the estimates – those from HCSS, Hard Dollar and Bid2Win (now B2W) – said that the contractor doesn’t want to wait a month to get actual costs.
“Contractors said, ‘We’ve got this estimated data here,we can make these comparisons,’” says Burger. So now what has emerged is a field-cost tracking system from HCSS, Hard Dollar and Bid2Win. You put your labor hours and your equipment hours into their system and it uses standard costs and compares that to the budget that the estimating system originally set for that activity – paving or grading, or whatever.
“It gives you a report of how many dollars you either made or lost on an activity that day.”
– Adam Kuyt, risk control and contract manager, Flatiron
“But not all of the costs on the job are coming through that mechanism,” says Burger. “To get a comprehensive cost, you still need your accounting system. But to get immediate productivity and manpower – probably the most variable things on the job – contractors are starting to use HCSS, Bid2Win and Hard Dollar because they have these field-based reporting packages.
For several months, Flatiron Corp., a large heavy/highway contractor based in Colorado, has been using Heavy Job from HCSS to compare real-time production data with estimates. “There are multiple reports that are available from the system, hard-coded basic reports from the Heavy Job system that tell you what your production is today relative to your estimated or your original budget that you uploaded into the system,” says Adam Kuyt, risk control and contract manager for Flatiron. “It does the comparison calculations, and it tells you whether or not the unit cost of the work that you performed today was in line with the budget, or over budget, or under budget. And it gives you a report of how many dollars you either made or lost on an activity that day.”
Flatiron is also starting to implement Heavy Job on a mobile application – with iPads. “We’ve been testing that in the field,” says Kuyt. “The field foremen can have an iPad to do timecards.” Before, foremen used a laptop computer or a PC that had to be connected to the Internet. With an iPad, a foreman can simply store the timecard information. When he gets to a place with an Internet connection, he can download his timecard onto Flatiron’s enterprise server. “He just sends his timecard up, kind of like an email,” says Kuyt.
“We’re going toward the goal of not having paper timecards any longer,” says Kuyt. “And the guys aren’t required to keep a paper diary that tells what they did that day. The diary can be done on the iPad, and then he hits a button to send his timecard up and can send the diary notes at the same time. And all of that data is now stored on a server where the data is backed up. You’re not going to lose anything. Gone are the days of looking for a field notebook two years after the job is complete.”
Does Heavy Job help Flatiron make money?
“That’s exactly our reason for adapting Heavy Job,” says Kuyt. “We wanted to make sure that our foreman in the field, who is performing the work, knows whether or not he was profitable on the units that he produced that day. I think that feedback loop will encourage foremen to be thinking about improving productivity on every single shift because they know what they did yesterday.” Kuyt says it’s still too early to tell if the company is actually accomplishing that, but that’s the goal.
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