Estimating, Project Budgets, Change Orders and Subcontracts

Several Master Builder customers have recently asked me to help them with a comprehensive system for estimating, budgeting and using all of the project management tools in MB. In working with these customers, I’ve found that there are a number of areas which need to be addressed. This is a general overview of some of the features and their uses.

One area which needs clarification is that the Budget (screen 6-2) is the estimate for all intents and purposes. When a person uses the Takeoff screen (9-5), they almost always export the result to a budget in screen 6-2. The Budget screen is a summarized version of the Takeoff by Cost Code. As you know, cost codes are the backbone of MB, in that job costing cannot be done without them.

If you have a budget for a project in MB, you can use several reports to compare actual costs versus your estimated costs, use the Over/Under Billings report and the Bonding report, use the Cost to Complete module, and the Committed Costs report. Without a budget, none of these standard items in MB are useful.

A phenomenon I’ve noticed often is that a new Master Builder customer will buy the Estimating module, but then rarely or never use it. One main reason is that it is not easy to learn. It takes many hours to learn the procedures, build a database one is comfortable with, create assemblies and templates for re-use and develop speed in using these tools.

Another reason is that people don’t know how powerful it can be. For instance, did you know (if you have put together a small database) you can easily estimate and export Change Orders in the Estimating module? Did you know that you do not need to build an elaborate database, that you can create parts and assemblies while you are estimating? Did you know that with a little customization, you can print the bid right from the Takeoff screen? In a future newsletter, I’ll explore the Takeoff screen in more detail, but for now, we’ll talk about project management.

Whether or not you use the Master Builder estimating module, it’s a really good idea to at least enter a budget in screen 6-2 by Cost Code and Cost Type. You can estimate your costs using a yellow pad and a calculator, an Excel spreadsheet or a different estimating program, but entering a budget is the beginning of project management and accounting if you want to get full use from Master Builder.

Change Orders on jobs are almost inevitable. Many contractors welcome them, since they can be more profitable than the original bid. Most of the time, a change order to the client (positive or negative) results in a change to your estimated costs. Therefore, using the Budget and Sub Change Details tab in the Change Order screen (6-4-1) is important. When a change order is marked with the status approved in this screen, if a budget change order has been entered on the Budget and Sub Change Details tab, all job reports which involve the budget also reflect this change. This also creates a trail of any changes to the budget, and in MB, the person who entered it is logged at the bottom of the screen.

Many MB customers use subcontracts. These days, many subcontractors will subcontract out work if it’s to their benefit. If you have a change to a subcontract, using the Budget and Sub Change Details tab in the Change Order screen will link the change to the subcontract in MB (if the subcontract has been entered). You can even pause at the Change Order screen (6-4-1) and enter the original subcontract in screen 6-7-1 before finalizing the change.

Changes are also reflected in the Subcontract Audit (6-7-4). Using the Subcontract Audit is a potential time and money saving device, since it enables you to see all subcontracts and there statuses regarding invoicing and payment. You can filter is by a sub for many jobs, or many subs on one job or any combination desired. You can produce a full legal document for signature (with some customization), or use the subcontract module to produce only placeholders to activate the functionality of the Subcontract Audit.

In future newsletters, I’ll describe the benefits and some common pitfalls of using these screens, as well as best practices within the modules. For the purposes of this newsletter, I’ve elected to keep things high level, so that you can view the various screens if you haven’t already started using them, and develop questions. Please e-mail me at service@missiondevelopment.com if you have any questions.

Andy King
T: 805-771-8400
service@missiondevelopment.com