Construction accounting software

Construction firms have different requirements from their accounting software than many other types of businesses. The best choice to handle these requirements is dedicated construction accounting software. Here's what you need to know when evaluating competing construction software packages.

Types of construction accounting software
Software vendors have introduced all kinds of software for the construction industry, ranging from $100 packages that are little more than souped-up spreadsheets to $50,000 enterprise-level systems that can handle all aspects of a large construction company. Chances are, you need something in the middle. Be prepared to spend between $3,000 and $5,000 for a system that addresses the central accounting needs of a small to mid-sized construction firm.

Standard accounting
Your chosen software will have to handle all the day-to-day work of tracking income and expenses. If you're familiar with accounting software like Quicken, the types of inputs and reports found in construction accounting software should be easy to understand. Just make sure the software is flexible enough to handle any specific accounting practices your business follows. You may also want to look for a system that easily integrates with your payroll service.

Job costing
What really differentiates construction accounting software from traditional accounting packages is the ability to track all the costs associated with multiple ongoing projects. Look for software that makes it easy to enter and report on all facets of construction accounting as well as larger aspects of construction management such as:

• Hours worked and rates for individuals, teams, and equipment
• Parts and supplies expenses including shipping, defects, and replacement part tracking
• Monitoring schedules and job progress
• Tracking contractors and subcontractors
• Producing invoices and statements
• Managing change orders
• Multiple types of reports per project, per client, and business-wide

Having all these capabilities in one software package can really help reduce your administrative burden. For example, when a new shipment of materials arrives, you enter the information once. The cost gets reflected on your next invoice to the customer, on your total job cost report, and the subcontractor's task list and the project status report are updated to reflect the delivery.

Because this kind of information is often entered at the job site, make sure you consider the needs of your users carefully. Do your site foremen use laptops? Or will they want to submit project updates via a PDA or cell phone? Choose a construction software package that best suits the way your employees work already – the less they have to change, the more likely they'll be to take full advantage of the new system.

Other construction software features
If you're upgrading your software infrastructure, we recommend considering more comprehensive construction software systems. For example, some vendors offer estimating software that can integrate with their construction accounting packages. You may also want maintenance management software that tracks equipment usage and plans maintenance schedules. The more efficiently you can handle these back-office scheduling, tracking, and administration tasks, the more you can focus on completing your jobs on time and on budget, so it's worth taking the time do a thorough evaluation of your construction software needs.