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Articles:Entering Fixed Assets as Journal Entries Estimating, Project Management Overview Paying Liabilities and Transfers Between Accounts Profits - Strategies to Improve |
Training Saves MoneyHow Does Training Help To Save Money?How useful is Master Builder?
One of the main reasons people buy Master Builder is to get accurate and timely job cost reports. A very useful report which many owners, estimators and project managers look at first is the 6-1-4-21 Job Cost Summary. In this report, one can see the original budget by cost code, change order amounts to the budget by cost code, the revised budget (budget + changes) by cost code, the actual job costs by cost code and the variance between the revised budget and actual job costs.
This report is a summary of the job and is very useful in most circumstances. However, many companies cannot use the report for a very simple reason: the personnel responsible for creating the budget (entering the estimated costs) and/or the personnel responsible for entering the actual job costs are not trained to enter the estimated costs or the actual costs with the correct cost code.
The report may indicate that certain cost codes for which there is a budgeted amount do not contain actual costs, or even more likely, certain cost codes contain actual costs for which there is no budget. At the end of the job, the total costs might be less than the budgeted costs, but the report is meaningless, because it doesn’t tell the estimator or management how to better estimate costs in specific areas of the job.
An Example
A typical scenario in a construction company might be: the estimator creates an estimate in the screen 9-5 Takeoffs and exports it to a budget in screen 6-2 Budgets. The estimator attaches a cost code to each item in 9-5, and the export process summarizes the item costs by cost code in 6-2. So far, so good (maybe – we’ll look at this below).
Then when actual costs are created for the job via Payable Invoices (screen 4-2) and Payroll Records (5-2-2), a project manager or supervisor codes the costs with cost codes and passes the paperwork along to a person who enters the invoices and/or timecards by cost code. This is also simple, correct?
A few exceptions I’ve seen repeatedly are: the person coding the actual costs decides that the budget cost codes are wrong and codes the actual costs “accurately”. This could be corrected easily if that person wrote a change order to the budget, removing the estimated costs from one code and placing them in another. But the project manager doesn’t realize how easy it is to do this, doesn’t do it, and the report becomes inaccurate. If a budget change order had been written, not only would the estimated costs have been distributed to the areas in which actual costs are being distributed, but there would be a clear trail as to how and why the change was made. Management would be reading accurate reports and the estimator would be gaining greater understanding of what is happening in the field. It’s a win-win situation.
Communication
Another main reason why people use Master Builder is to get easy and accurate feedback from completed jobs in order to better estimate new jobs. The illustration above shows how the estimator can benefit from actual costs being coded correctly. When the estimator is fully involved in the process from the estimate to the summarized budget, through and including the actual costs being reported, the feedback loop is completed. Communication between the field and the estimator at the time of any changes to the budget is essential to this process.
How does training help to save money?
In the example above, if the estimator, the field supervision personnel and the accounting staff had all been trained by an experienced Master Builder trainer who knows the entire flow of the program, most of the problems illustrated would have been avoided. If the consultant/trainer had a chance to review the company jobs and reports in detail at intervals of 3, 6, and 9 months with the relevant personnel, a real and accurate process would be put in place.
Many companies experience staff turnover. When new personnel are hired, the kind of training in Master Builder they receive might be to take a few online classes and learn procedures from other company employees. From what I’ve seen in the last six years, this “method” has the same effect as folklore. New employees bring their experiences and prejudices with them, and often make assumptions about Master Builder which aren’t true. The most common one is that the program will not do what they want it to do. A good Master Builder trainer can find solutions for new employees, and help them understand not only the big picture and general program flow, but the specific details of running the program in order to save time.
Here are some typical numbers:
Master Builder consultant at $100.00 per hour;
20 hours of initial training: 2,000.00 10 hours of periodic review: 1,000.00 10 hours of new employee training: 1,000.00
Staff of 4 at $150.00 (combined, including burden);
Time saved by staff due to initial training @ 10 hours 1,500.00 Time saved by staff as a result of reviews @ 5 hours 500.00 Time saved by staff when new employee hired @ 10 hours 1,500.00 Time saved by management in entire process @ 10 hours 1,000.00 Estimated dollars saved on 6 jobs over the one year period 20,000.00 (due to accurate estimating on newer jobs) Satisfaction of management due to lower stress _________ (you fill in the blank)
Please contact me if you would like to learn more about instituting a comprehensive training process. Thank you.
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