Masonry Magazine August 1992 Page. 9
Construction Computerization
Savings Quantified
Survey reveals that substantial savings can be realized by replacing manual functions with computerized job-cost accounting.
HOW MUCH can proper computerization of your accounting save you annually? According to what is believed to be the first study of its kind, a company with thirty field employees and job related revenues of $3-million could save as much as $100,000 annually by replacing manual accounting functions with computerized job-cost accounting.
The study, is based on a survey of one-hundred users of computerized job-cost accounting products. The following summary provides a treasure map of sorts-a map that suggests which "rocks" (or in this case accounting functions) should be overturned in order to find that $100,000 in savings.
Control Costs During the Job-According to the survey, companies can realize average annual savings of 1.1 percent of job revenues because of increased cost control during a job. Respondents pointed out that a quality computerized accounting program will generate timely reports that cover all costs for each job, phase and cost code. Complete integration of accounting functions assures that information is current. The company is alerted to cost overruns in time to make adjustments.
Estimate More Accurately-The study revealed that accurate estimating could increase average job margins by .6 percent. Thanks to easy access to detailed historical cost information and comparison to similar jobs or job phases, companies can estimate jobs more quickly and accurately with the proper software products.
In addition, mathematical errors are reduced because of built in automatic unit cost extensions. By helping estimators avoid underestimating, computer packages help increase average margins on each job.
THE 100 SURVEY respondents were very specific in terms of the savings they realized from computerized job cost accounting and estimating. To generalize the results, the savings were applied to a typical company with: $3-million annual revenue, 30 employees and 12 percent interest rates.
By TOM SCOTT
Vice President Marketing
Software Shop Systems
Take More Vendor Discounts
Well organized accounts payable permit companies to take full advantage of available vendor discounts, which can save companies 4 percent on material costs, the survey revealed. Sophisticated systems will automatically identify vendors that offer discounts, calculate due dates for discounts based on available terms, and report on discounts taken and lost for each vendor.
Reduce Workers Compensation Insurance Costs-To help with rising insurance costs, the right software products automatically track hours worked by each employee at each risk category. Companies can save as much as $100 per field employee per year in workers compensation premiums, the study showed.
Computerized documentation of hours worked at each category-undistorted by overtime dollars-can be the tangible proof companies need to
Finding $100,000
1.1% savings due to increased cost control
$3-million x .011 = $33,000
6% increased profit margins due to higher estimates
$3-million x .006 = 18,000
$100 reduction per employee in workmen's compensation insurance premiums
$100 x 30 = 3,000
.04% savings due to increased vendor discounts based on $750,000 per year in discounted purchases
$750,000 x .004 = 3,000
3.3 day improvement in billing and consequent reduction of borrowed capital (12% per annum/.033% daily)
$3-million x 3.3 days x .00033 = 3,267
3 day reduction in accounts receivable
$3-million x .0003 x 3 days = 2,970
Eliminate monthly service bureau costs of $560
$560 per month x 12 = 6,720
.08% increased billing accuracy
$3-million x .008 = 24,000
13 hours/week staff productivity improvement
$10/hr x 13 hours x 52 weeks = 6,760
Total $100,717