This is the last of four blogs that have focused on measuring job production. The results from a concentrated effort in measuring production from the field and communicating that to the management team produces efficient and profitable jobs, and, most importantly, supplies you with reliable data.
Here are the key points from developing such a culture, as discussed in the previous blogs:
- All Job/Phase/Cost Codes should be identified by numbers (no alpha characters used). The first place to start is the coding system to identify the jobs/phases/cost codes. If you’re using any alpha characters, the risk of data entry errors increases and the speed of data entry decreases. Keep all data entry on the numeric keypad so users don’t need to jump back and forth during entry.
- The number of digits in the Job/Phase/Cost Code should be as few as possible. The longer the numbers, the greater the chance for error. Try to keep the numbering systems to as few numbers as possible. Less is always better!
- Reduce the detail of the phase/cost codes. If you have over 50 cost codes, consider whether that level of detail is necessary. Many times, project managers simply fill the buckets so that they “look” good, because they don’t have time to decide where everything should go. When this happens, the data doesn’t correctly represent the facts of the true job costs. Lower the number of phases/cost codes, and focus on correctly capturing the costs.
- Enter or collect the data only once. Look at how frequently the time is recorded. Does the employee write it down and turn it into a foreman? Once the foreman gets it, does he or she have to then enter it on a spreadsheet template that gets emailed to a project manager, who reviews and then forwards it to a payroll clerk, who then enters it into the accounting system? Look at all the potential for error. The same goes for the accounts receivable and accounts payable data entries. Review your current processes and eliminate redundancy of the entry of any data coming into your accounting system.
- Enter the data daily, and don’t let it stack up. When data entry backs up and the effort to get it entered into the system becomes rushed, accuracy is greatly reduced. Set procedures to process the data daily whenever possible.
- Learn from the results of the job costs for improvement, and never use the job cost as a weapon against those collecting and entering it into the system. People will hide facts to avoid getting into trouble. The goal is to accurately reflect the job costs and compare them to the budgeted costs. If we are always negatively responding to employees, they will tend to move the numbers around to avoid the confrontation.
If you implement these steps, your job cost reports are sure to become more accurate, which will have a positive effect on your bottom line. Next week we will be starting a series on Skill Based Pay and Production Measuring Incentives.
Your comments are always welcome!
Lee Clark and Steve Garber are founders of Gocorp, LLC and PayCrew.