Burger Consulting Project: Heavy/Highway Contractor
Coordinate client’s implementation team and vendor’s consulting team to execute the implementation plan within the designated time and budget. Identify implementation obstacles and work with management to overcome them. Where necessary, facilitate workshops to resolve complex implementation issues such as chart of accounts design, cost code structuring, or forecasting methodology. Provide necessary project management and administration throughout the implementation.
This company is a $50 million highway and precast concrete contractor. Though all operations were conducted from a common facility, the two divisions operated quite independently, resulting in unique accounting and job cost challenges.
Although not planning significant growth, the company was looking for stability and the potential that growth could be accommodated without again replacing the software. The company had older customized accounting software running on proprietary hardware that had limited functionality. The two divisions had each resorted to various procedures to accommodate missing features in the existing software. There was no consensus on the capabilities that were needed in the new software. The two divisions were convinced they needed two different systems to meet their needs. Compounding matters, the estimating software was internally developed and ran on the same proprietary hardware as the accounting system.
Since many of the processes had been off line and ill defined, it was necessary to reconcile the needs of the two divisions while developing the software requirements. Since estimating software also needed to be replaced, two software selection initiatives needed to be conducted simultaneously.
BCG guided the client through two system selections, one for estimating and one for accounting software. During the process, it was discovered that two departments used different methods to accomplish the same task. BCG also helped the client build consensus around a purchasing process that was more efficient than their existing off-line process. The situation involved resolving purchasing differences between their two business units so that both could use the same software without drastically compromising the needs of either. A decision was made to acquire a new Unix based accounting and job cost system along with a Windows based estimating system.
Through the BCG system selection and implementation planning, procedural differences were resolved and the systems were effectively implemented. The Unix based core accounting system has been tied into the existing PC network. New estimating software has also been implemented and linked to the job cost accounting system. New procedures have improved the purchasing and invoice processing. Other manual procedures have been replaced with the new software.
- Each operating division’s unique requirements must be considered carefully.
- Management should stay in touch with the selection and implementation process to ensure full organizational participation.
A medium-sized highway contractor based in Iowa with seven remote asphalt and concrete plants located in a three-state area. The company, a well-run organization, was growing and profitable.
The company’s information system was based on a software product from a small software company that was gradually getting out of the business. Early on, the developer had done a considerable amount of custom work for each client, so the system met everyone’s needs. But as their client base grew and technology advanced, the software developer could not keep up. Consequently, the contractor found they were no longer getting good support and had no growth path. The product was also built on a proprietary language and database, so no one else but this developer could access the programs or database, which meant any change no matter how small had to scheduled, programmed, and paid for.
The equipment manager had gotten accustomed to a stand-alone equipment management package that included a hand-held bar code scanner. He used this scanner to control their parts inventory. While the software package the company had identified looked good in many other respects, it did not have any form of bar-code reader for inventory.
The company selected a software product that was very functional and was dedicated to the heavy-highway industry sector. It had a scale ticket interface that allowed the company’s scale ticketing products (e.g. WEM and Cardinal) to send electronic files to the system at the end of the day. BCG also identified a company that sold bar code readers for $2,500 and had a simple program built that interfaced the scanner with the Inventory Equipment application.
The company today is far more efficient in the business processes and the project managers have on-line access to their job cost information, which they did not have before. The equipment manager embraced the equipment solution because he did not feel like he was giving anything up. In fact, he gained some efficiency because the inventory was now integrated with the central system where before it was a manual posting from one system to the other.
- Operations must be involved in the decision-making, implementation planning, and implementation if you expect them to use the system.
- Sometimes challenges simply push us to find better solutions that we would not have otherwise identified.
- Anytime you have two software companies working together on a project, make absolutely sure each party understands their scope, responsibility, and schedule right down to testing and documentation.
This large civil contractor based in Northern California also has a related company that rents equipment to their own projects and also to third-party companies. The company has two offices located approximately 30 miles from each other with the contracting operations based in one office, and the equipment rental and maintenance shop based in the other. The company performs large earthwork projects for the states of California and Nevada, as well as for other private and public customers.
The company’s information system, bought many years ago, was falling further and further behind the company’s requirements. The equipment department was operating completely autonomously with a series of stand-alone spreadsheets and databases. Both the accounting functions and the rental functions were extremely inefficient.
A few people within the organization liked things the way they worked and saw no reason to change. Further, accounting was rather isolated and viewed as a mere bookkeeping service. With that kind of division within the organization, finding a single solution was going to be difficult, and getting it implemented would be even more of a challenge. Senior management in this organization was not well versed in the management of information systems and would provide little help in resolving these conflicts.
BCG facilitated a software selection process for this company with input from personnel at both offices. Through this process the client evaluated, purchased, and implemented a software product specifically designed for the construction industry and one that is fairly structured in its operation. This was desirable as the company did not have, nor did they want to develop, a larger and more sophisticated staff.
The product chosen also had a unit-price estimating product available with an innovative interface to the Job Cost, Billing, Purchasing, and Subcontract Management applications. The company found this to be a significant advantage over some of the nonintegrated packages they were considering.
The company now runs both offices on one system, which means everyone has access to the information they need. Duplicate entry has been nearly eliminated and the timeliness and accuracy of the information is much better. The Vice President in charge of Equipment as well as the president are much happier with the equipment system both from a repair history and preventive maintenance-scheduling standpoint.
- Review the resumes of any consulting or training staff that will be involved in the implementation.
- If multiple people from a single vendor are going to be involved in the implementation, make sure they have a channel of communication in place that works.
A Canadian highway contractor and aggregate producer in a central province generating approximately $20 million USD per year in revenues. They have a centralized equipment fleet and two primary asphalt plants. They also perform jobs for the Government of Canada or Provincial Government where aggregate materials are quarried from “Crown” owned land and put in place.
The company was using an older integrated accounting system that was no longer supported by the vendor. They also lacked a number of the applications that have recently been developed specially for highway contractors like Equipment Maintenance, Trucker Payables, a Scale Ticket Interface, and an Inventory application.
While there are several software products available in the United States specially designed for highway contractors and aggregate producers, they do not handle Canadian payroll or GST and PST particularly well. The products available to the Canadian market that include Canadian Payroll, GST and PST are not as mature or lack some of the sophisticated features highway contractors need.
The other challenge for this company was their lack of a network. Everyone operated on stand-alone PCs while the accounting department worked from a System 36 and dumb terminals.
BCG led the company through a standard selection process. BCG issued a Request for Proposal (RFP) to several vendors that specialized in highway contractors and material producers, including one that did not have a Canadian Payroll package. This company ended up meeting all the other business requirements quite well and agreed to develop the Canadian payroll application and GST and PST processing for them. The cost of this custom development was split between the contractor and the developer as the developer wanted to move into the Canadian market and clearly needed these functions.
While this was being performed, BCG also helped the company evaluate local network service providers. Locating the network provider was a relatively easy matter; and after several design revisions, a comprehensive network, workstation, training, and support contract was signed.
The company now has an office-wide LAN with Pentium workstations, which also have access to the integrated accounting system. The accounting system they selected handles their Canadian payroll, GST and PST, and integrates with their scale ticketing software. The office is far more efficient in its operations, and information is far more accessible.
- Software vendors are sometimes willing to share development costs with a contractor.
- Sometimes you have to look for unconventional solutions and mitigate the risks associated with them.
- Make sure to include an escape clause in the contract should the custom programming not meet expectations.
- Finding local network service providers is not difficult and is preferable to a national company.
A highway and paving contractor performing in excess of $150 million has divisions performing many small jobs as well as some performing large complex projects. Material production and sales is also part of the business mix. A large equipment fleet and sophisticated approach to equipment management along with crew scheduling for the small jobs were important requirements for this company.
The company had an old custom system. In addition, many side systems had been developed that were not integrated into the core system. A recent system crash had lost much of the historic data in the equipment maintenance system. Several processes were off line and were being performed manually. There was no integration with estimating or equipment management and accounting. Also, there was no integration between the small job T&M billing system and the core accounting system.
The equipment maintenance managers had definite ideas about how they wanted to manage the equipment department. This resulted in requirements that were beyond the norm for construction software. Also, the custom software either had to be replicated or integrated to eliminate some of the manual efforts. Some of the accounting people liked the old custom system so well that they were looking for a replacement system to work just like the old one.
BCG worked with the various departments to develop requirements very carefully to ensure that each group would be represented in the Request for Proposal (RFP). A fully integrated solution was selected that was highly tailorable. Though the implementation was arduous, the system was able to be adapted to meet the needs of each of the groups. Result After a somewhat lengthy implementation, with substantial data conversion and software tailoring, the company has moved from its core accounting and several of the side systems to the new software. Data redundancies have been substantially eliminated and the new software has been successfully implemented.
- Tailorable software is valuable when a company’s needs are very diverse.
- Implementing tailorable software can be a difficult process but worth it if the need is there.
Large highway contractor and aggregate producer, performing over $150 million in revenues in a family-owned business. The first generation founders are still active in the business and the second-generation members are being groomed to eventually take over.
The contractor started with a vendor supplied core accounting system and had modified it significantly over the years so that it bore no resemblance to the core system, and all maintenance of the system was done by internal staff. Many separate systems were in use, none connected to the core system. Data was being entered redundantly in several different systems and no attempt was being made to tie them all together. Programming backlogs were severe.
The company was in need of a complete replacement system but pride of authorship made it difficult to walk away from those systems that were working. Notwithstanding that some of the software worked adequately, the lack of integration and myriad of missing elements made the operation inefficient. The vested interest of a few key people meant that changes were difficult and had to be handled delicately.
BCG conducted a series of workshops and interviews that resulted in a set of strategic initiatives. The company computer committee prioritized the initiatives and BCG helped guide them through the process of budgeting and developing realistic plans so they could gauge their progress. BCG also educated them on the state of existing software compared to their own so they would be able to keep the alternatives clearly in mind as they moved forward.
The client is proceeding to implement the initiatives and is moving forward on the strategic plan. Further IT expenditures will be made with a knowledge of the marketplace and with clear targets and budgets.
- Developing software in house is a significant effort if it is done properly.
- In-house development does not ensure that the user community will be any happier than they will be with a system purchased from an outside source.
- Development in house should be approached like a business, not as someone’s hobby.