administration Solution Building

What Makes the Production Tracker Such an Important Tool?

April 23, 2024April 20, 2024 by Mark Eastman

Because it Helps Keep Your Business Balanced

Recently we discussed the importance of keeping your construction business from getting out of balance. Achieving a balanced business requires paperwork and we know how construction contractors feel about paperwork.

I know, I know, paperwork is not a very exciting topic, but neither is concrete. And we all know how important concrete is in supporting a building. The same is true for paperwork and your business.

One of the three foundational piers in business is administration and finance. One of the building blocks in that pier is a Production Tracker. This tool provides valuable information for forecasting the company’s financial needs and production plans.

Wouldn’t it be helpful if you knew:

Which types of work were consistently the most profitable
How you were doing at meeting your financial goals for the year
When you should have the signed projects finished to stay on track
How well you’re doing at getting proposals signed
What the average price of your projects are

The Production Tracker is an Excel spreadsheet that lets you gather and track information. It has preset formulas that determine and sort the information you need to make your business more profitable.

This document provides information for:

Creating and recording project numbers
Tracking project bid amounts
Tracking dollars of signed proposals
Tracking dollars collected from projects
Percentage of jobs signed
Percentage of dollars signed per dollars bid
Percentage of dollars collected per signed
Average dollar amount of projects bid
Average dollar amount of projects signed
Average dollar amount of projects collected
Projected timeframe for doing signed projects
Projected date work should be done

This list can seem overwhelming but it’s really not.

Here is an example of what the Job List spreadsheet looks like.

Let’s go through the document and break it down into smaller brick size pieces.

Creating and recording project numbers – Having a numbering system can help you sort projects so that you can review which types and size of projects are the most profitable and what you do the most of. It may be that your most profitable ones are not the ones you do the most often. Having this type of information can help you to focus more of your attention on the right kinds of projects for you.

This Production Tracker is a place to list project numbers in conjunction with the size and types of the projects, as well as their chronological order. This document provides the numerical part of the project number specific to each project. The other portion of the project number is determined by job specific parameters that are not included on this document.

Tracking project bid amounts – Our Blueprint for Building a Better Proposal system provides the dollar amount for each project. Once a proposal has finished, the specific information to that project is entered into the appropriate cells on the spreadsheet. This information includes Job Number (column E), the Customer Name (column F), Description (column G), Bid Date (column H) and the Project Amount (column I). Regardless of the system you use for preparing proposals, you should have a dollar amount that could be entered into this document.

As each new project amount is added in the project amount column, the total project amount at the bottom will update, giving you a total dollar amount of the proposals you have done this year. Based on your company’s history, this dollar amount should give you a clear picture of where you are in relation to meeting your financial goals for the year. We will explain this further with the tracking dollars of signed projects.

Tracking dollars of signed proposals – Once a proposal has been accepted, the accepted dollar amount should be entered in the signed amount column. Initially, this amount should be the same as the amount in the project amount column. Sometimes the dollar amounts of projects are changed due to change orders. This can be either an increase or decrease depending on the change order(s).

As each new proposal gets signed the dollar amount of the signed proposal should be entered into the correlating cell in the signed amount column. Just like in the project amount column, as each new amount is entered in the signed amount column, the total dollar amount at the bottom automatically updates giving you a total of work you must currently do.

With the total of the signed amount column and the total of the project amount columns, you should be able to get a clear picture of where you are financially in relation to where you want to be at year end.

Let’s say your goal for the year was to generate a gross revenue of $400,000.00. Using the example, you can see that as of December 12^th you were at $352,877.66. This is close, but not quite there. If you compare the signed amount to the project amount ($664,381.27) you will see that the signed amount is 53.11% of the project amount. Based on this percentage, to get the signed amount to $400,000.00, the project amount would need to be $754,000.00.

This information is critical to the survival of your construction business.

Your business needs to be built on a solid foundation.

We’ve covered a lot here today. In our next post we’ll pick up at tracking dollars collected from projects.

Check out this and additional business building tools and training here. If you have questions, feel free to schedule a free 30-minute business coaching call.

Portions from a previous post 1/7/23

The “Job List” Is One of the Foundational Building Blocks of a Successful Construction Company

January 9, 2023January 7, 2023 by Mark Eastman

Now, What’s the Purpose of This Building Block and Why Does it Matter?

Recently we discussed the importance of building your construction business on a solid foundation and how paperwork is outside of most contractor’s comfort zones. I know, I know paperwork is not a very exciting topic, but neither is concrete. And we all know how important concrete is in supporting a building. The same is true for paperwork and your business.

As we discussed previously, one of the three foundational piers is administration and finance. One of the building blocks in that pier is a Job List which offers valuable information for forecasting the company’s financial needs and production plans.

Wouldn’t it be helpful if you knew –

Which types of work were consistently the most profitable
How you were doing at meeting your financial goals for the year
When you should have the signed projects finished to stay on track
How well you’re doing at getting proposals signed
What the average price of your projects are

The Job List is an Excel spreadsheet that lets you gather and track information. It has preset formulas determining and sorting the information you need to make your business more profitable.

This document provides information for –

Creating and recording project numbers
Tracking project bid amounts
Tracking dollars of signed proposals
Tracking dollars collected from projects
Percentage of jobs signed
Percentage of dollars signed per dollars bid
Percentage of dollars collected per signed
Average dollar amount of projects bid
Average dollar amount of projects signed
Average dollar amount of projects collected
Projected timeframe for doing signed projects
Projected date work should be done

This list can seem overwhelming but doesn’t have to be.

Here is an example of what the Job List spreadsheet looks like.

Let’s go through the document and break it down into smaller bite size pieces.

This Job List is a place to list project numbers in conjunction with the size and types of the projects as well as their chronological order. This document provides the numerical part of the project number specific to each project. The other portion of the project number is determined by job specific parameters not included on this document.

Tracking project bid amounts – Our Blueprint for Building a Better Proposal system provides the dollar amount for each project. Once a proposal has been finished, the information specific to that project is entered into the appropriate cells on the spreadsheet. This information includes Job Number (column E), the Customer Name (column F), Description (column G), Bid Date (column H) and the Project Amount (column I). Regardless of the system you use for preparing proposals, you should have a dollar amount that could be entered into this document.

As each new project amount is added in the project amount column, the total project amount at the bottom will update giving you a total dollar amount of the proposals you have done to this point in the year. Based on your company’s past history, this dollar amount should give you a clear picture of where you are in relationship to meeting your financial goals for the year. We will explain this further with the tracking dollars of signed projects.

Tracking dollars of signed proposals – Once a proposal has been accepted, the accepted dollar amount should be entered in the signed amount column. Initially this amount should be the same as the amount in the project amount column. Sometimes the dollar amounts of projects are changed due to change orders. This can be either an increase or decrease depending on the change order(s).

Let’s say your goal for the year was to generate a gross revenue of $400,000.00. Using the example, you can see that as of December the 12^th you were at $352,877.66. This is getting close, but not quite there. If you compare the signed amount to the project amount ($664,381.27) you will see that the signed amount is 53.11% of the project amount. Based on this percentage, to get the signed amount to $400,000.00, the project amount would need to be $754,000.00.

This kind of info is helpful when looking ahead to the future.

We’ve covered a lot here today. In our next post we’ll pick up at tracking dollars collected from projects.

I hope you’ve found this helpful. If you have questions, feel free to put them in the comments below and I will answer them.

Why is One of the Most Important Parts of a Construction Business Avoided So Much?

January 3, 2023December 24, 2022 by Mark Eastman

Because Admin and Finance are Out of the Contractor’s Comfort Zone

Most trades people like doing physical work, not paperwork. They like building things, not sitting at a desk making proposals or putting numbers in spreadsheets.

Avoiding paperwork is one of the biggest reasons construction companies struggle to stay in business.

They may be the most skilled craftsman out there but they consistently struggle to keep the business afloat. This includes things like –

Losing money due to under bidding projects
Not enough money to pay taxes
Can’t afford to have repairs done to the company pickup
Projects running over budget
Upset customers due to poor communication
Disconnection with production crews due to poor communication

An example of this is an email I received just this past week from a foundation repair contractor.

“I need help with all aspects of the business end of the business, and definitely with organization and systems. It’s easier for me to pick up a house than it is to figure out what to charge for doing it.”

All these problems can be solved with a good foundation that includes paperwork.

Whether it’s a dislike for doing paperwork or simply not knowing how to do it, paperwork doesn’t have to be as scary as it first appears.

It requires doing something different. If you keep doing what you’ve always done, you’ll keep getting what you’ve always got. (Variation of a Steven Covey quote) This reminds me of the Geico commercial where the group of young people choose to hide behind the chainsaws, rather than getting in the running car.

Recently we talked about the importance of building your business on a solid foundation. I told you that this foundation consisted of three piers, one of which is Administration/Finance. Let’s break this foundational pier down and see what it’s built of.

Administration – The process or activity of running a business or organization that includes but is not limited to –

Computer Systems
Team Member Records
Team Member Policies and Benefits
Office Support
Office Maintenance
Information Archiving and Distribution
Data Processing
Communications
Contract Preparation

Finance – The management of money that includes but is not limited to –

Budgeting
Invoicing
Cash Flow Forecasting
Financial Reports
General Bookkeeping
Accounts Payable
Taxes
Banking

Each of the things listed here has a mix of administration and financial aspects. A good example of this overlap is the Blueprint for Building a Better Proposal, which we’ve previously discussed in a series of blog posts and podcasts.

As we move forward discussing this foundational pier, I will share some of the different documents and processes that we’ve developed and regularly use at Timber Creek Construction.

The first one we’ll discuss is called the Job List. This is an Excel spreadsheet that serves several purposes, some of these are:

Generating consecutive and project specific job numbers
Tracking current total project bid amounts at present
Tracking current total signed projects at present
Tracking current total collected projects at present
Percentage of jobs signed
Percentage of dollars signed per dollars bid
Percentage of dollars collected per signed
Average dollar amount of projects bid
Average dollar amount of projects signed
Average dollar amount of projects collected
Projected timeframe needed to do the work based on annual revenue goal
Projected date work should be done based on annual revenue goal

We’ll dig into the Job List deeper next time.

I know, I know…this seems a little scary, but it doesn’t have to be with some help. Just remember that if your business doesn’t have a good foundation, it may not stay standing.

Check back in later to learn more about the Job List.