Active Construction Cuts Overhead by $75,000 to $100,000 a Year with the Help of Dexter + Chaney and Spectrum™
"In our business," states Rose Garms, co-owner and controller of Active Construction, "we manage our people, their time, and our equipment. That's how we stay profitable." A utility and site-prep contractor in Gig Harbor, Washington for more than 40 years, Active attributes their continued profitability to better communication between accounting and operations through the use of technology.
Implementing Dexter + Chaney's Spectrum™ Construction Management Software nearly 16 years ago was the beginning of a technology boom for Active's entire organization that continues today. State-of-the-art software that supports Active's 12 employees in the office, 60-100 in the field, and annual revenues of $20M, Spectrum has allowed this busy construction company to grow in dollar volume while controlling job costs and overhead expenses.
Dexter + Chaney has regularly enhanced Spectrum throughout Active's 16-year history with the company. Upgrades that deliver the latest technology and features year after year have been a contributing factor in Active's ability to manage revenue growth.
Three Keys to Cutting Overhead
Job setup, payroll/equipment time, and cash management are areas where Active has used technology to their advantage. By utilizing Spectrum's capability to electronically import data that used to be entered manually, Active has been able to cut overhead expenses dramatically. "Using technology to import data for these three items," declares Garms, "saves the company $75,000 to $100,000 a year."
Job Setup
According to Active's CFO, Anne Meek, importing job details from their estimating software into Spectrum was their initial venture into electronic data transfer. "It used to take us anywhere from two to three days to set up one job," Meek reveals. "The estimator would print out their bid and we would hand-type the information into Spectrum."
This manual re-entry of data is a thing of the past. "Now," Meek says, "a bid is sent to Spectrum electronically and all we have to do is review the information, edit the data if needed, and process it through. What used to take three days, now takes no more than an hour."
Payroll/Equipment Time
Weekly payroll processing for a heavy construction contractor is no small task. In addition to entering employee time, equipment hours must be meticulously tracked and allocated to the appropriate jobs. At Active, technology at the job site has streamlined this once-arduous task.
Garms explains: "The field foremen each have laptops. They key in their payroll hours and equipment usage daily and we import that information into Spectrum. It's a big deal having the equipment and payroll time come in electronically because then we're editing and managing, rather than keying in data."
Before they were able to achieve this data exchange between the field and the office, payroll took three days each week to process. Active would receive hand-written payroll and equipment information by noon on Monday. The office staff would have until Wednesday at 4:00pm to enter the data, process the payroll, and cut the checks. "You can see the kind of stressful situation we put ourselves into every week when payroll was a three-day event," Garms emphasizes. "Now we've got the entire process down to eight hours a week."
Cash Management
The development of Spectrum's Cash Management module has been another time and money saver for Active. Manual reconciliation of cancelled checks used to be time-intensive and at risk for human error. With Cash Management, Active has been able to electronically import cancelled check data and eliminate potential data entry mistakes.
Paying their bank $140 per month to prepare a file of cancelled check data to import into Spectrum's Cash Management was the original process used to capture this information. Over time, Active was able to create a utility to handle the cancelled check import and bypass the $140 monthly bank charge. "With Dexter + Chaney's help, we were able to do away with a costly and time-consuming process," Garms states. "Now, in less than five minutes, we transfer data from two bank accounts into Spectrum."
Equipment Costs: Informed Decision-Making
Effectively managing equipment hours and maintenance costs is an important aspect of heavy construction profitability.
"If we have a piece of equipment that sits out on the job and it's not being reported to that job, then we have one of two problems," says Garms. "One, the job is being understated, or two, no one else knows the equipment is there or whether it's being used properly." Active's asset manager, Dennis Kooker makes sure neither of these things happen.
"Dennis uses Spectrum's equipment modules quite extensively to monitor equipment maintenance, hours, parts and repair history, and so forth," Garms relates. "Spectrum gives him a day-to-day activity report per piece of equipment so he can tell if the equipment is being utilized properly on the job."
This insight also allows Active to evaluate when a piece of equipment is costing more in repairs than it is actually worth. "Dennis always knew when a piece of equipment was being repaired too much," Meek adds, "but now he has the proof to present to the ownership." Garms values this hard knowledge, saying, "When Dennis brings equipment reports from Spectrum to the management meetings, we can make a value decision based on fact."
Managing Manpower for Profit
For almost a decade, Active has been tracking how much profit the company makes per field man-hour. "In good years, the profit number is up there," says Garms. When profits are down, she points out, "We look into our bidding and focus on better management of our field workers' time."
Spectrum helps Active evaluate job time and analyze productivity and waste so they can take corrective action. "Spectrum's Productivity Report tells us by phase how we are doing regarding man hours and materials costs," Garms states. "We can tell, day-by-day, if we are above or below our target and make changes on the job as needed."
Rolling Out Technology in the Field
Garms and Meek will be the first ones to admit that implementing technology in the field can be challenging. Their approach with the initial payroll data import from the field was to start slowly, working with a single project manager. "We took a very amicable person that we knew we could work with to test the import," Meeks explains. "Then we opened it up to all of the project managers and foremen. Some of them were old-timers who had never even had a computer to work on and were very hesitant."
Over time, the culture in the field changed to embrace the benefits technology had to offer. "Having access to their budgets and productivity reports became valuable to the project managers and foremen. They could see at the end of the day or the end of the week how close to budget they were. It made them more conscious of how their jobs were doing," Meek relates. "Now if we were to take their computers away from them, they wouldn't know how the world would continue turning."
Working Smarter
With less time spent entering data, Garms and Meek have been able to take a more proactive role in managing the company for profit. "When I first came to work here," Meek remembers, "everybody was putting in a lot of overtime and working very, very hard. I said that we have to work smarter, not harder. With Dexter + Chaney and Spectrum, I feel we've accomplished that."
Garms concurs. "I think we're using our brain matter more effectively, more constructively. Now we can spend our time analyzing job data instead of entering it." Meek adds, "In our business, if we don't bring a job in for the hours bid, we have to know why. Is it missed change orders? Was the bid wrong? We have to analyze the data to know why if we're going to grow as a company."
Garms sums up Active's experience with Dexter + Chaney and Spectrum like this: "We've taken the existing staff and made them smarter - and have even eliminated an office position. As our company grows, Spectrum will grow too, because Dexter + Chaney will continue to develop new technology and features. Over time, our staff will be able to handle double the revenues without adding overhead. That's why I can honestly say that this technology saves Active Construction $75,000 to $100,000 a year."
Back to Case Studies