Side Story: Accounting

Masonry: A Unit-Based Business

The secret to tracking, controlling and producing more profitable projects is through "Production Rate." Basically, the Production Rate is the number of units per day that one mason can install. Related to the Production Rate is the right mix of masons, labor and supervision to produce the most cost efficient crew. How do you track this in your accounting program though?

After estimating takeoff yield units, we review similar projects and, using our expertise and experience, come up with the most appropriate Production Rate and crew makeup required for the job. Masonry-specific estimating programs often use this production rate/crew building technique. After one week on the job, the first things you want to know are:

How much was our production?

What was our unit-labor cost?

Did we make or lose money?

With the answers to these questions we can make the changes needed to maximize our success.

The accounting software your business uses must be able to record and store several essential job-costing facts. Most accounting programs will track labor hours and expenses, but we're also wanting to record units installed, separate productive hours and support hours, and be able to track all of this information on a daily basis.

Production and unit-labor cost tracking can all be generalized into three decreasing levels of sophistication and field reporting requirements. Often the size, duration and difficulty of the job will determine which level is most appropriate for each project. With that in mind, let's review the three tracking levels, in reverse order, with the one requiring the most field-supplied information first.

Level 3
With this level, initially a budget is produced, including units to install, productive hours needed for those units, and dollars allocated to complete the task. Each job foreman keeps track of who has worked on which task for how many hours and how many units got installed during that reporting period. Experience shows that data are most accurate when it's reported at the end of each day. Once inputted into the accounting software, daily production reports are immediately available comparing and projecting that day and week-to-date production rates, costs per installed unit, and final project profit or loss.

With this level of tracking, you should make sure that your accounting software is designed to keep Week Two's data separate from Week One. Your software should also have the ability to keep mason hours separate from labor hours, track installed units, keep each day's information separate, and have up to 12 days of data available at any one time, depending on how long after the period ending date that your payroll gets processed.

Level 2
Level 3 is the most comprehensive and detailed way to track your projects. However, sometimes either the job does not justify that level of tracking or the field crew is not capable of providing that much information.

Under the Level 2 type of tracking, the only information we are losing is who specifically performed each task. On union or prevailing wage jobs where all of the masons earn the same wages, this tracking is almost identical to Level 3. Rather than entering a specific task during the entry of employee hours and pay, upon completion of the job information for the period we call up a summary by craft type of the time entered. We will then perform a slight redistribution of how many hours of each craft are to be moved to each different task. Units are entered per task and the same either daily or weekly results as Level 3 can be achieved. Most clients using this level report the information weekly.

Level 1
If the tracking of specific tasks is not justified, we can greatly reduce the reporting requirements to only those who worked on the job this week and how many units were installed. The budget must be set up with costs, units and production hours, but the concept is the installed units "earn" budgeted dollars and hours. Those earned hours, in turn, are compared to the actual time and money from the weekly payroll to determine a profit or loss for the week, as well as an above or below expected production for the work completed. With the reduced input, though, Level 1 is unable to track the task that is producing the gain or loss. For jobs where there are a limited number of tasks per week or where total job duration is less than two months this is a very efficient and still revealing tracking method.

With the use of masonry-specific accounting software and the additional gathering of field reported production and cost data, you can greatly improve you ability to track, control and produce more profitable projects. A little energy can take your company to the next level of professionalism and success.

For additional information visit www.tutsoftware.com, e-mail jim@tutsoftware.com, or call at (800) 875-6885.