Flexible working

The use of computers in m&e contracting has come a long way since the first computerised estimating systems were introduced in the early 1980s. The pace of change has been most marked in the last few years as software has developed to handle the changes in the way that contracting businesses are run.

For example, it is becoming increasingly common for major clients to demand a more transparent contract, with open book accounting that shows exactly what the contractor is paying for materials and labour, as well as the margins that are being applied. Quite a culture shock for some, but a transition that needs to be made to win the high-value projects.

It is not just the company culture that's in for a shock; open book projects can also be a shock to the system – in this case the back office system installed in the contractor's business. With the potential for third parties to be sharing the information in your system, you need to ensure that all of the information is accurate, right through from the estimate to the final accounting.

Sharing information also necessitates the generation of more reports, a task that can be time-consuming and daunting if your systems aren't set up to handle these ever changing demands quickly and efficiently. For instance, when claims for payment are made, the information needs to be clear and visible to the client as well as within the contractor's business.

The British Airports Authority (BAA) has been one of the pioneers of open accounting in the Heathrow Terminal 5 project and its wider-ranging framework agreement.

Across these projects, contractors such as Crown House, Amec Building Services, N G Bailey and Balfour Kilpatrick are all making effective use of software to meet the needs of their client. Indeed, without the software it's unlikely that the needs of this sort of contract could be met profitably.

These benefits are not confined to contractors working on open book contracts – heightened efficiency is a boon to any business. Cutting out duplication of effort and sharing accurate, consistent data throughout the business is one of the most significant improvements to productivity that a contractor can make. Information that is generated in the estimate is also valuable for procurement, contract management, job costing and accounting.

This isn't a new idea; Microsoft was probably one of the first companies to come up with the concept of an integrated suite of software with Microsoft Office – where you can buy individual, powerful modules like Word or Excel or the full suite – whatever suits your business needs at the time. Either way, the modules offer top performance in their own genre and are able to exchange information with each other, so it isn't necessary to re-enter the information time and again for different areas of the business.

Integrated, modular software suites for contractors offer benefits in terms of productivity and controlling the business

Integrated, modular software suites for contractors offer the same benefits in terms of productivity and controlling the business. For instance, figures derived from the operational side of the business (estimating, project management and engineering) can also be used in job costing software to track the financial performance of each project, as well as flowing through to the accounting ledgers.

To take a concrete example, contract costing is an area where many contractors could make better use of the information that is already available to them from the engineering side of the business. Contract costing software tracks committed costs and actual costs, and continually compares them with the budgets from estimating to provide a realistic picture of the job performance throughout its life and after completion. As such, it enables informed decisions to be made as the job proceeds.

Comprehensive 'drill down' reporting allows you to report quickly and easily on any contract or range of contracts, either at summary level for a snapshot view or right the way down to individual transactions where preferred. Combine that with full transaction source tracking and it's easy to see how the costs have accumulated on each job.

As a result, you're in control. Every material and subcontract purchase, including committed costs, is recorded against the contract as a by-product of procurement. In the same way, labour costs are recorded as you process time sheets – and applications for payment, certificates and payments are processed as the job proceeds, along with CIS information and statutory returns.

Integration with accounts modules also ensures that each piece of information need only be posted once. Each purchase order, time sheet, material and sub-contract invoice is automatically posted onto the relevant contract as a by-product of processing the payroll, purchase ledger and subcontract ledger – along with applications for payment and sales invoices – and updates the ledgers in accounts. As a result, you have instant access to meaningful, up-to-date information about the performance and profitability of each job, plus the confidence that your accounts reflect an accurate picture of the financial health of your company.

As much of this information is generated by the original estimate it's important to get the pricing information right. Returning to the Microsoft analogy, if you run a mail merge from an Access database or an Excel spreadsheet to generate mailing labels in Word, the number of undelivered items returned to you will be directly proportional to the quality of your mailing database. If the data is rubbish, the labels will be inaccurate and this will have a knock-on effect on your ability to communicate effectively with the people and organisations on your database.

Similarly, if your materials pricing data is out of date or has a cumbersome design that is difficult to use, this has implications for all of the information you are using in the business. Using up-to-date materials pricing data with realistic labour times is essential for accurate estimating. If it's ready to use with built-in product groups and cost heads so there are no lengthy set up procedures, it will save you time. Just as important, if you can trust its accuracy, you can trust the information that is derived from it and use it to full effect in the ways we have described above.