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Accounting Industry Insight

How to create time and materials billing for construction projects

A calculator close to glasses and a pen.

There are different types of billing methods in the construction industry. One of them is time and materials billing. Some general contractors prefer this procedure, as it shifts most of the risks onto their customers. Any costs incurred come out of the customer’s pocket, not the contractor’s.

T&M billing allows them to focus on their profits and concern themselves less with the unpredictable nature of contracting. While the agreements are straightforward, the act of putting together a bill can be daunting because it is necessary to collect all receipts throughout the project and any supporting documentation.

Factor in time for manual data entry (and the mistakes that tend to come along with it), and the process gets even more convoluted. Thankfully, there is time and material billing software that quickly and easily generates accurate, professional invoices. Learn how to use this method below!

What is time and materials billing?

The time and materials billing format involves the contractor charging the customer for, quite literally, time and materials. The contractor bills for every man-hour spent on the project, as well as any materials purchased for that job. Labor rates are typically outlined in a simple format in the contract, though these rates can vary depending on the tradesperson working on the project.

On top of the labor rates and materials costs, some contracts allow the contractor to mark up the cost of the materials a bit. Again, this is something the contract will clearly outline, but it does help the contractor maintain a healthier profit margin. Should the customer decide to use high-end materials, the contractor’s profit will grow accordingly.

To calculate the time and materials invoice, a contract needs to multiply the man-hours by the agreed-upon rate for each trade and add it to the materials costs (plus the markup, if contractually allowed). This is a very transparent billing format where the customer is aware of everything other than the hourly rate paid to the crew.

Time and materials contracts are most suitable for projects where the scope isn’t crystal clear. If the customer is undecided or the project is ripe for unforeseen costs, it helps to keep the contractor and customer on the same page. It also does away with pinpoint estimating, allowing contractors to get to work right away.

This billing format does have a few disadvantages. Contractors have to be meticulous with record-keeping, from receipts to man-hours. One missed expense, and the profit margin shrinks. Also, the costs to get the project off the ground are on the contractor’s shoulders, making timely billing a sink-or-swim proposition.

Man using the computer.

How to calculate time and materials billing

The first step for a contractor to be successful in time and materials billing is meticulously detailed record-keeping. This includes documenting labor, equipment rentals or purchases, and materials.

Contractors need to log each of those costs into the construction software’s accounting system to ensure they can charge when it’s time to bill. They also need to consolidate any separate ledgers, time logs, or job cost entries with the job. Any cost accidentally left out or forgotten comes directly out of the contractor’s profit.

Creating the bill is easy! While in the time and materials billing module, simply select and add the costs and labor hours. You can set each cost to bill with the current invoice, save them for later, or mark them as never billed.

Once you select all the costs and their billing designations, our software will automatically calculate the T&M invoice and determine the appropriate rate for each man-hour by the labor code. If the contract allows, you can set the time and materials billing module to add set percentages for materials markups.

After reviewing the invoice, our system will send the bill automatically via email to your customer. It is possible to open the document from any internet-enabled device, drastically reducing the amount of time it takes to get paid.

What documents should be included in time and materials billing?

Each project has different billing requirements, including what supporting documents the customer wants with the invoice. Premier Construction Software document management system makes it easy. Most time and material billings will include the following backup.

Invoice

The invoice should provide a summary of the amount, including the number of man-hours, the labor rate, material expenses, and the overall markup.

Transaction list

Include a detailed report of the labor hours and costs for which you’re billing. The customer will want to review this list for accuracy and use it for reporting purposes.

Copies of invoices and receipts

Most customers will want copies of your accounts payable invoices and store receipts for smaller purchases that are being used to determine the invoice amount. You can avoid spending hours on this by using a document management tool to automatically add copies of pertinent invoices to the email.

Copies of timesheets or certified payroll reports

Customers may also want to review copies of your employee timesheets showing the hours worked. If the project is prevailing wage, you may also have to provide certified payroll reports, that list all the employees on the project, the hours they worked each week, and certify that they were paid the correct wages and benefits.

Lien releases or waivers

Some customers may require copies of lien releases or waivers from your vendors and subcontractors as proof that they have been paid.

Time and material billing don’t have to be a waste of time!

Time and materials billing for construction projects requires a keen eye for detail. Being able to put your finger, or mouse, on every receipt and timesheet that applies to a project will ensure you aren’t leaving money on the table. The faster and more accurate this process is, the better.

Using Premier’s document management system with the time and materials billing module will help streamline this process. You’ll be able to create accurate invoices instantly, free from missed line items or forgotten costs. With electronic signatures, you’ll even reduce the amount of time it takes to get paid.

If your team struggles with assembling time and material billings, let us show you a simpler and easier way. Book a demo today to see it live and gain financial control and clarity of your projects!

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Tips & Advice Company News Industry Insight Resources Ultimate Guide

The Importance of Employee Training for Construction Software

Software training is key during new software implementation. For workers, it helps them learn the software’s workflow, allows them to test drive the solution, ask specific questions and get more help when needed. For companies, it reduces the transition time, improves morale, and improves efficiency. For more on these benefits and some additional ones, see the list below.

Employee Benefits

1. Learn the software’s workflow

One of the reasons many companies upgrade their software is to gain efficiencies. If you use the same process or workflow in new software, you won’t gain anything. However, through training, you’ll learn how the new software handles data entry, processing, and reporting. Without training, you may spend more time trying to make it do something the way you want it to work, and this wastes time, and money, and reduces your ROI.

2. Concentrate on learning

If you’re trying to implement new software while keeping up with your other duties, it can get stressful fast. The strain of juggling your existing work can make it more difficult for you to learn how to use the new system. By setting aside training time, you can fully concentrate on learning new processes and workflows without the added stress of your other duties.

3. Test drive the software

Training gives you the time to work with real-world examples in the new system. During training, you’ll enter transactions, process data, and run reports, just as you would in your daily work. By “test driving” the software with real data you get a chance to not only see how the software works, but also learn by actively performing the work. Once you go live, you’ll have the data you worked with during training to remind you how each process is performed.

4. Ask specific questions

Every company has situations that are handled differently in that company, and training gives you a chance to ask questions about these situations and work out what needs to be done with an instructor. In addition, you’ll get a chance to learn from questions that others ask during the training, and you’ll receive direct feedback from the instructor.

5. Get added help when needed

Your training time is the time to ask for help. If you’re having difficulty performing a process or knowing what to do next, it’s time to ask for and get the added assistance you need so you can be fully confident using the software. Don’t be afraid to ask for help, whether it’s during a class or one-on-one. Our team is here to make sure you get the training and information you need to make the most of our solution.

Company Benefits

1. Reduce transition time

Anytime you change or update a software solution, there’s going to be a learning curve and it’s going to take time to get the new system up and running. However, when employees aren’t trained properly, this transition time can be extended as they use trial and error to figure things out. But with training and assistance from the software team, this time can be reduced, as well as the number of headaches.

2. Get the most from software efficiencies

You probably didn’t buy new software because it was going to take just as much time to do things as your current solution. You’re probably looking for some efficiencies or cost savings to justify your purchase. In order to take advantage of the efficiencies and improved reporting promised, you’ll need to learn how the developers intend the software to work. Training will walk you through each process and show you exactly how you can save time using the new system.

3. Save time on trial and error

Some teams will work diligently using trial and error to figure things out. This takes a lot of time, as data is entered, deleted, and reentered in a different way. Workers may be trying to use an old system with new software, and that just isn’t going to cut it. Why waste time with trial and error when training can give you the answers you need, allow you to practice using the new system, and get you up and running faster?

4. Improve morale

Software transitions are stressful. Team members can get frustrated with delays and time spent fixing errors and reentering data. When everyone gets trained on how to use the system properly, there’s reduced stress and employee turnover. Workers develop a sense of teamwork as they work together to implement the new system. They help each other solve problems and work through the process more quickly.

5. Track training progress

Employers can quantify and track the training progress of their employees, so they know at a glance who has practiced what skills. This can help with cross-training and job shadowing. If an employee is going to be changing positions, make sure they have time to review their training and refresh their knowledge about the new process.

Buying new software and not providing training is like throwing a person in the water and telling them to swim. They’ll figure it out, but it’s going to take a while and they won’t be very good at it. Software training provides an opportunity for workers to learn new skills, practice them, and see how the new system works. Employers benefit from reduced transition time, improved team morale, and the ability to quantify and track each worker’s skills.

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Author Biography:

Dawn Killough is a construction writer with over 20 years of experience with construction payments, from the perspectives of subcontractors and general contractors. Dawn has held roles such as a staff accountant, green building advisor, project assistant, and contract administrator.  Her work for general contractors, design firms, and subcontractors has even led to the publication of blogs on several construction tech websites and her book, Green Building Design 101.

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Ultimate Guide Features Industry Insight Tips & Advice

Is Construction Software Worth the Investment?

Construction software isn’t cheap, and when it comes to calculating the ROI, it can be difficult to see the upside. Even though it may not be obvious, there are some real, hard benefits to purchasing a construction-specific software solution.

The importance of investing in construction software

Many construction companies start out using general accounting software, like QuickBooks, to manage their finances. Usually, these solutions are effective for a while, but then the business gets busy, hires more workers, and soon outgrows the tool. During this phase, important job and budget cost tracking is often done using spreadsheets, which are prone to errors and don’t always have the most up-to-date information.

As a company continues to grow, they often look to invest in construction-specific software that will help them manage finances and projects within the same software. Investing in all-in-one construction software is important because it:

  • Provides one source for information, data, and project file storage, both in the field and in the office. This improves communication and increases collaboration.
  • Connects the field to the office, eliminating costly data silos, where information isn’t shared across teams.
  • Improves data accuracy by eliminating error-prone spreadsheets.
  • Improves accessibility by providing information for multiple hardware options, from laptops, smartphones, tablets, and desktops.
  • Allows teams to know what resources they have and when – which helps with forecasting.

Why you might not want to purchase software

There are many reasons contractors and suppliers don’t want to purchase new software. It can be difficult to make a change, especially when the current system is “working.” Many workers fear change, even if it will make their jobs easier or quicker. Fear of the unknown keeps many from making any kind of change, even a good one.

Changing software costs money. There’s no way around it, there’s a financial cost to any software system. While it’s important to know how much the software will cost, it’s also important to assess the potential benefits of a new system. These benefits aren’t always obvious and can be difficult to measure. They include reduced stress levels, more accurate information, and increased productivity.

In the short run, employees will be less efficient than they have been. This can be attributed to the training time needed to educate employees and decreased efficiency due to learning a new skill. However, employees will get better as time progresses, continuing to improve their efficiency, and changes in your processes can add to that efficiency.

Why you should invest in construction software

Investing in an all-in-one, project management and accounting, software solution will provide several benefits:

It will streamline and improve your current processes.

When a company is using general accounting software that isn’t specific to the construction industry, employees must often create new processes to track and report on data in the way that project managers or management want it reported. However, by using a solution specific to the industry, many of these processes can be streamlined or even eliminated. This increases employee efficiency and saves time and money.

It will increase productivity.

Employees have only one place to look for the information and documents they need, reducing lost time. Also, with increased accuracy, employees can rely on the information they receive, reducing time spent checking for errors. Data entry errors have cost companies millions of dollars.

Companies will need to hire fewer employees.

With improved efficiency and productivity, workers can be reassigned to other tasks, or a company may find there’s no need to hire additional workers to handle additional workflow. This saves time searching for, hiring, and onboarding new employees.

It improves industry compliance.

Construction companies have additional compliance requirements that other companies don’t. They must comply with hiring standards, contractor insurance requirements, safety requirements, as well as federal and state government pay requirements. An all-in-one construction software solution provides these companies with the tools they need to ensure compliance in all their activities.

It connects the field to the office.

One of the biggest communication breakdowns occurs between the job site and the office. Sharing data between workers in these two locations is key to completing projects in a timely and cost-efficient manner. By purchasing one software that integrates both field and office communication and data, you can save the time and headaches that occur because of miscommunication.

Helps you save more time by providing you with the latest tools.

It provides new tools, like automation and artificial intelligence, to help project teams streamline their projects and mitigate risks before they happen. Automation reduces workload by performing common tasks without human intervention. Artificial intelligence, or AI, helps project teams to predict costs and other risks before they occur so they can address them and potentially prevent them. For example, it can analyze activities and learn which ones cause the most delay or create the most risk and remind users when these tasks will be performed.

An all-in-one construction software solution, like Premier, allows companies to streamline their processes, quickly share information between the field and office, ensure compliance with industry and government standards, and take advantage of new tools like automation and artificial intelligence. To learn more about how Premier can take your construction company to the next level, schedule a demo today.

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Author Biography:

Dawn Killough is a construction writer with over 20 years of experience with construction payments, from the perspectives of subcontractors and general contractors. Dawn has held roles such as a staff accountant, green building advisor, project assistant, and contract administrator.  Her work for general contractors, design firms, and subcontractors has even led to the publication of blogs on several construction tech websites and her book, Green Building Design 101.

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Ultimate Guide Industry Insight Tips & Advice

The Pains of Data Entry and How To Solve Them

Few industries can rival the construction industry’s reliance on data. With so many moving parts in the form of contractors, subs, materials, inspectors, compliances, and accounting, having accurate data to work from is critical to keeping the job on track. However, the industry’s approach to data entry is antiquated at best.

But when someone does something long enough, they may struggle to realize inefficiencies or that there are better ways to do things. This couldn’t be more true for the construction industry, as many contractors have simply accepted the pains of data entry. But, there is a better way to get the job done with more speed, accuracy, and corroboration.

The Challenges of Data Entry

Data entry gets a bad reputation, and it’s usually for good reason (or several, for that matter). The following are some of the challenges that contractors face with data entry, and they certainly contribute to data entry’s bad name.

1. It Can Be Slow

Data entry is a painfully slow process. First, someone has to record the data—something that is often done manually in construction. Then, someone needs to sit down and enter the data into the system, piece by piece. Finally, that data is then used to form different reports and values, helping the contractor make informed decisions.

All of this takes valuable time from at least one of the contractor’s staff members, but likely three or four. This time spent can quickly equate to money lost, especially if those reports don’t contain the latest data or an error renders them useless.

2. It Can Be Inaccurate

Any time a human is responsible for data entry, that data is susceptible to errors or inaccuracies. Whether it’s that a decibel is in the wrong spot, the person entering the data can’t read the handwriting of the person who recorded it, or they’re inputting the data in the wrong place, mistakes will abound.

One small error extrapolated over several reports can be a serious issue. Not only can this cost the contractor all of the value they could’ve hoped for from the reporting process, but they might make critical decisions based on data they believed to be correct or up to date, only to find out it’s not.

3. Storing and Organization Can Be a Pain

Getting data into a system is one thing. Storing it and organizing it is an entirely different animal. With the amount of data that a typical project creates, file cabinets full of reports and data points just won’t cut it anymore. But, electronic reports saved individually to a local storage system aren’t much better.

Contractors that aren’t using a platform to sort and store their data are wasting time and potentially money. It can take longer to compile a report, make decisions, or avoid mistakes. Conversely, when that important information is readily at-hand, contractors can be more nimble and make better decisions.

4. It Can Be Hard to Access

Accurate, well-organized data and the reports that it comprises are great, but accessing them can be a nightmare. A report stored on a localized system back at the office won’t help with game-time decision-making, leading to contractors choosing between wasting time or flying blind, both of which can be very costly mistakes.

Also, poorly organized data can affect the way business is handled. Investors, executives, and partners rarely enjoy waiting for reports just to see how the latest project is stacking up. And, they want to know if things are on track with the very latest data. This situation can get even worse when the contractor, their clients, and the other parties are using different systems to access their reports.

Construction Management Software: Data Entry Solution

Luckily, construction data entry and many of the issues that go along with it are easily solved with Premier Construction Management Software.

1. Automated Workflows Reduce the Opportunity for Errors

One of the best ways to reduce data entry errors is to simply reduce data entry. Premier Construction Software provides automated workflows that allow users to input data and automatically distribute it to the folks that need to review, approve, or deny it. Since the staff isn’t re-entering the same data on several reports, there are fewer opportunities to introduce errors.

2. Gain Access from Anywhere

Premier’s all-in-one software solves data access issues, as well. By using cloud-based storage, Premier allows users to review data, reports, and even drawings from anywhere in the world. All they need is a web-enabled device. Contractors, clients, and decision-makers can quickly check the documents to make better decisions at the moment.

3. Standardized Systems

One of the most important aspects of all-in-one construction software is standardizing the systems which everyone uses. Rather than using four or five software platforms in-house to store and view documents, or potentially more across several clients and subcontractors, Premier provides access to several parties to the same platform. Again, this reduces the opportunity for error but also ensures everyone has access to the same data.

4. Automatic, Real-Time Updates

Data is only accurate if it’s up to date, and that’s one of the most significant hurdles that Premier’s all-in-one software handles best. Every time a change occurs within the system, whether it be a budget item, a schedule change, a compliance expiry, or a materials change, a whole-system update is triggered.

Any report affected by these changes will automatically reflect the new value. Anyone accessing those reports will see the most up-to-date data, allowing them to make the best decision possible with real-time information.

Simple Process

The biggest benefit of streamlining the data entry and management process with Premier Construction Software is how easy it is to implement. Premier’s team will help contractors implement their software, training their staff to use each of the features seamlessly. And, if any issues arise or staff has questions, each company will have one account manager to help them navigate the challenge.

Contractors using Premier software will be able to set up their own customized workflows, allowing them to use real-time data to create forecasting reports, job costing, and accurate billing. This translates to less time spent entering data, and fewer mistakes—something all construction companies should strive for.

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Author Biography:

Tom Scalisi has over 15 years of experience working in the trades. Since moving to full-time freelance writing, he has developed a passion for helping construction companies grow. He enjoys teaching contractors how technology can streamline their businesses and educating them about their rights during payment disputes. 

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Ultimate Guide Industry Insight Tips & Advice

The Ultimate Guide to Customer Support: How Support Impacts the Health of Construction Operations

So, your company is thinking of upgrading to a new, streamlined construction software program and ditching that old, generic software. But, one of your biggest qualms is that the new software may be hard to use, or confusing, or maybe integrating into your day-to-day business activities will be impossible. Maybe you’re worried about something going wrong with the software down the road.

What would you do then?

You’re right for taking this transition seriously, as it’s a big change for your company. However, with the right customer support, you won’t have to face these challenges alone. Customer support and account management in construction software are one of the most important features to look for before choosing a product. This guide will explain why.

The Importance of Customer Support in Construction Software

The construction industry thrives on building structures and renovating spaces. Time spent ironing out the wrinkles in a software program or transitioning to new technology can slow that down. For those reasons and more, construction software support is incredibly important.

1. It Helps During the Launch Phase

Transitioning from simple, stand-alone, and feature-limited software to a fully-functional software program may seem overwhelming for your construction company. Teaching employees that are used to old-school spreadsheets and programs designed over 40 years ago won’t be easy to do on your own, despite knowing the value it will bring in the end.

Customer support is at its most important during this stage of the game. The best construction software companies will offer one-on-one and group training to prepare key employees for the role, allowing them to lead the way for other employees. This training can last from a few days to a few weeks, depending on the company.

For example, Premier Construction Software’s initial training program lasts six weeks. During that time, employees learn how to run a fictional business using the software program. By the end of the six-week period, the business goes live and is fully functional with trained employees who know how the software works. Whichever construction software you choose should come with a similar level of start-up support.

2. Issues Happen Along the Way

Even the most well-oiled software might experience a snag every now and then. Most often, it’s a user error and the user doesn’t even realize it. Sometimes, there’s a hardware issue that needs to be identified. It’s rarely an issue with the software or an update, but it can be a possibility.

The problem is your company can’t come to a screeching halt because the software decided to take a nap. Your team needs that software back up and running as soon as possible in order to focus their efforts on other important functions.

For those situations, there is no replacement for expert customer support teams. These professionals should have the knowledge and ability to get your company’s data entry, drawing organization, storage, and accounts payable or receivable back up and running.

But what does solving this business emergency look like? Will your representative have to spend hours on hold, or wait for a response to an email? That’s the case in some situations. Other construction software programs assign an Account Manager to each client, giving them a point of contact to reach out to in any situation. They’ll get the ball rolling and ensure that the customer is receiving the attention they require.

3. It Avoids Growing Pains

Like most companies, the goal is most likely to grow and take on more, bigger, or more valuable projects. But, with that expansion comes growing pains (especially with some software companies). Creating new users, tracking changes, and ensuring everyone see the documents and data they need can be a challenge during this phase of growth.

Streamlined and automated construction software equipped with top-of-the-line customer support can minimize the impact of these growing pains. Customer support can help with managing new and old user accounts in and out of your organization, integrating expansions or updates, and tracking changes or adjusting workflows to ensure everyone is accountable and involved.

It can’t be overstated how important an expert customer support service team is to a construction company at this phase. Rather than users chasing their tails and making more work for themselves, a customer support representative can help the user identify the correct feature to use, how to track an error, or which update they need. The user can then learn how to avoid this mistake in the future, making the time spent working with the support professional well worth it.

Make Sure Your Construction Software Includes Customer Support

If you’re shopping for new construction management software, don’t overlook customer support. This is one of the most critical aspects of ensuring a construction software program integrates with your business and helps take it to new heights.

The success of a construction business is a reflection of the choices of employees, customers, stakeholders, and their organizations. These decisions can play a critical role in determining the success of your organization.

Not to worry, Premier has your back. From the very beginning, we will ensure you feel fully supported and successful. End the wait today and get your business back in financial control.

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Author Biography:

Tom Scalisi has over 15 years of experience working in the trades. Since moving to full-time freelance writing, he has developed a passion for helping construction companies grow. He enjoys teaching contractors how technology can streamline their businesses and educating them about their rights during payment disputes.