Job cost allows civil construction firm to account for costs
Georgiou Group in Malaga, Western Australia, was unhappy with its accounting software because it did not have a job cost module and only allowed them to capture basic gross margin items, forcing all other costs into overhead. The software also didn’t give work-inprogress calculations.
When Finance and Administration Manager John Siamos looked at the accounting software on the market, he quickly settled on Timberline as offering everything the civil construction company needed. Two years later, he’s still happy with the decision.
“It’s been a culture change for us. It’s so fantastic we still talk about how much it’s added to our ability to forecast, perform, have budgets, use report design, all areas have benefited. It’s brilliant,” Siamos says.
Work-in-progress reports keep firm on track
With its old accounting system, Georgiou couldn’t do work-in-progress calculations to keep its projects on budget. “Believe it or not, we got up to doing about $40 million a year, and we never did a work-in-progress monthly let alone at the end of the year,” Siamos says.
Instead, his project managers would track the contract on a Microsoft Excel spreadsheet. This would give a basic receivables and payables position, with no electronic purchasing system to capture and report outstanding commitments.
With Timberline, the company does monthly work-in-progress calculations so project managers and company executives always know where a project stands.
“What it’s done is give our project managers a proper budget,” Siamos says. “It’s just been fantastic in terms of our project reporting. We can really push our project managers to ensure that they not only achieve their gross profit from tender, but hopefully push it higher through analysis of the tender budget prior to contract commencement.”
Creating strong budgets
Using Timberline has allowed Georgiou to capture its financial data over the past two years and use it to create a strong budget for the future.
“We now truly understand what our gross margin is on a job because anything that job expends, we can put a cost to it,” Siamos says. “Before, part of it would get lost in overhead.”
For example, in the past when ground-engaging tools got worn out because the job was heavy in rock, the cost of repairs was assigned to overhead. Since the company started using Timberline, they now charge that cost to the job that caused the damage beyond normal wear and tear applicable to that equipment.
Georgiou uses Timberline Project Management to track RFIs, and finds the ability to save notes and attachments helps them settle disagreements down the line over variations.
“In the past, if you didn’t document it properly, you were out of luck. Now we can put e-mailed agreements straight into Project Management against the particular job and store it there,” Siamos says.“And if there’s ever a contractual argument or legal problem with a job, we can pull out all of our RFIs and all our discussion.”
Speeding up reports
In the past, it took Georgiou six weeks after the end of the month to be able to report its monthly profit. With Timberline, the firm has cut that time in half. And project managers don’t even have to wait for that report – they can have their project reports within three days of the end of the month.
“Depending on what kind of information you’re looking for, it’s sped up absolutely incredibly, such as daily Plant usage and recovery and daily labour charges,”Siamos says.
Timberline also helps the company’s accounting department keep up as the business grows. “We’ve grown revenue and grown the amount of work, but without having to put extra people in administration,”Siamos says.
Timberline makes it easy to fix data-entry errors with its change features as well.
In the past, if there was a dispute over an invoice or a change that needed to be made, Siamos or his staff had to do an invoice as a negative for the same amount and then re-post another invoice for the correct amount.“With change invoice, you just go in and change it,” Siamos says.
The same with the billing system.“We can void an invoice if it’s wrong in accounts receivable, and then you have a choice. You can either reinstate it in billing, or if you billed the wrong client, you don’t reinstate it, you just void it and then go back in billing to bill the correct client. We never had that before. We’d have to do reversals with negatives and re-key everything. Now we have all these change features, which are fantastic,” Siamos says.