Whilst there is no single answer, one of the front-runners is to make better use of information technology throughout the business. And the last few years have seen particularly significant developments in the way that information can now be allowed to go with the flow; from the estimate throughout the engineering and accounting areas of the business.

When each software package (estimating, costing, accounts, procurement etc.) was a separate island of data, information had to be re-entered into each package. Not only is this time consuming, it also increases the risk of typing errors and working with inaccurate information.

With a fully integrated system the information from the estimate simply flows through to the other areas of the business with no need for re-typing, saving time and minimising errors.

Clearly the estimate is the starting point and estimating systems have long been seen as the mainstay of computerised systems for contractors – but they’ve come a long way from being just a faster pricing tool. An estimating system that incorporates the latest technologies, for example, will include tools for managing suppliers’ and sub-contractors’ quotations and re-engineering an estimate to reflect the way the job will be run.

They may also include tools for carrying out ‘what if’ comparisons such as the effect on the final price of replacing steel conduit with plastic conduit, or copper pipe with plastic pipe. Armed with this sort of tool it is now very easy to offer your customer choices, ones that are specification compliant and ones that offer alternatives, with a clear indication of the price implications.

Another big change is the way that pricing data can now be given intelligence so it works in harmony with the software with minimal set up time. Built-in cost heads and powerful search tools make the data work harder, while you have less to do; and with the latest live update technology the data can be updated every time you connect to the Internet.

As noted earlier, once all of the information has been generated in the estimating system, it’s no longer acceptable for it to just sit there in splendid isolation. It needs to be made to work harder for its living. Procurement, contract management, contract costing, accounts and service and maintenance management can all share this information without the need to re-enter it into each program.

For instance, figures derived from the operational side of the business (estimating, project management, engineering and service & maintenance) can also be used in contract costing software to track the financial performance of each job, as well as flowing through to the accounting ledgers.

To put this into the context of a real-life 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, as well as 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 a result, you’re in control. Every material and sub-contract 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 certificates and payments are processed as the job proceeds, along with CIS information and statutory returns. From 6 April, approved software can be used to automatically submit the new CIS returns.

Integration with accounts modules also ensures that 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 sub-contract ledger (along with Applications for Payment and sales invoices) and this updates the ledgers in accounts. As a result, you have up to date information about the performance and profitability of each job, and an accurate picture of the financial health of your company.

Similarly, once the information is in the system, it can flow in all sorts of directions – it doesn’t just have to be from estimating to another package. Feeding information about variations and labour costs through to contract costing, for instance, helps to ensure that applications for payment are accurate and your view of the performance of each project is up-to-date and meaningful.

It is a fact of life that very few jobs actually turn out the way they were originally envisaged when the estimate was produced – and any such changes will have a bearing on financial performance of the project. For example, if the client decides to move a radiator from one side of the room to the other there may well be a requirement for extra pipework and fittings.

Consequently, these changes need to be reflected in the contract costing software by sharing the information with the variations software. So, when changes are priced in the variations software, it needs to automatically identify the associated material and labour costs and post these figures to contract costing to update the budgets, as well as any change to the contract sales value. Without this integration of information, it’s all too easy for variations not to be reflected in the costing software, leading to falsely inflated impressions of the financial health of the project.

When trying to ensure that contracts deliver the expected profit margins, keeping track and control of labour costs is frequently identified as one of the most important challenges faced by contractors. For example, if your operatives submit weekly timesheets that identify which areas of the job they have worked on and the associated hours, this information can serve two purposes. Firstly, the timesheets can be entered to generate the weekly or monthly payroll. At the same time, the hours and cost of labour can be posted directly to the relevant jobs, without any extra administrative time or effort.

By adopting this approach, you keep an up-to-date breakdown of labour expenditure on the contract in costing. As a result, just as you can do with material purchases, you can see at a glance how your labour costs compare with anticipated costs.

Furthermore, this information can be as simple or as detailed as you need. From a broad overview right down to the level of determining the actual labour costs for moving the radiator to the other side of the room that was priced as a variation. In this way, you can use the system to highlight any potential problem areas, drill down into the detail to locate the exact cause of the problem and take corrective action before it is too late.

These are just a few examples of the ability of integration to save substantial amounts of time and money, as well as improving accuracy and reducing errors, all without any extra work on your part. These benefits are only available, however, if you ensure that the software you are working with has been specifically developed for use by M&E contractors and provides the functionality to let information flow through every area of the business.

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