Spotlight on Construction Accounting Software

Construction firms usually have different accounting software needs than businesses in other industries. The preferred option is to utilize dedicated construction accounting software. The following are some of the considerations that may be factored into the decision.

Marketplace for products: Numerous kinds of software for the construction industry have been introduced into the marketplace. Prices can vary from as little as a $100 package to a high-end enterprise-level system for large construction companies costing as much as $50,000. For most construction firms, the optimal package probably falls somewhere in the middle.

Standard accounting practices: Whatever software package is chosen, it must be able to meet standard requirements for tracking income and expenses. Nonpractitioners, as well as accounting professionals, may become familiar with traditional construction accounting software. However, the software should have the flexibility to accommodate any special accounting practices of the construction firm. It might also help to use a system that can be integrated with payroll functions.

Job costing: It is generally important for a construction firm to be able to track a vast array of costs associated with multiple ongoing projects. This creates an advantage for software that simplifies reporting of all construction accounting aspects, including

• Hours worked and rates for individuals, teams and equipment;
• Parts and supplies expenses;
• Monitoring schedules and job progress;
• Work by contractors and subcontractors;
• Invoices and statements; and
• Management of change orders.

Having all these capabilities together in a simplified package reduces the administrative burden.

Other features: Depending on a firm’s needs, other “bells and whistles” may be appropriate. For example, some firms can utilize maintenance management software that tracks equipment usage and plans maintenance schedules. Greater efficiency in back-office scheduling, reporting and administration may be reflected in the company’s profitability.

December 2007