Planning costs and materials

Upfront material planning and effective cost coding can provide the base for a successful project.

Welcome to “The Better Way: A podcast by Buildertrend.” Here you’ll learn to simplify and organize the way you run your construction business and make meaningful changes to achieve your goals. Because there’s a better way. The Buildertrend way. Tune in this season as hosts Zach Wojtowicz, a corporate development strategist at Buildertrend, and Brett Jones, a Buildertrend onsite consultant, teach strategies to start projects the right way.

Brett and Zach discuss how to ensure your team has top-notch planning processes for materials and costs.

HOW DO BUILDERS USE BUILDERTREND’S FINANCIAL FEATURES TO EFFECTIVELY COST-PLAN?

Brett: “Creating bids is obviously first and foremost, but then you can also establish your selections and allowances. Make sure you’re using your cost codes for those. And then ultimately, setting up Purchase Orders to help paint a clear picture of what the project will actually cost from the start.”

WHAT’S THE RECOMMENDED PRACTICE FOR BUILDERS WHO WANT TO GET THE MOST OUT OF BUILDERTREND’S MATERIAL PLANNING FEATURES?

Brett: “Collaboration. Let clients log in and view deadlines, subs approve purchase orders and bids and check schedules, assign To-Do’s, helping to facilitate the communication between people working on that particular project.”

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Brett Jones and Zach Wojtowicz | Buildertrend

Zach Wojtowicz:

The recipe for a successful project requires effective cost and material planning upfront. Welcome to “The Better Way, a podcast by Buildertrend.” I’m your co-host, Zach Wojtowicz. And here we’ll learn to simplify and organize the way you run your construction business and make meaningful changes to achieve your goals. There’s a better way to plan your projects, the Buildertrend way. This season my co-host, Brett Jones, and I dive deep into the strategies to start projects the right way. In this episode, we’ll zero in on methods to accurately forecast your costs and materials so you have what you need when you need it for your builds. Welcome to “The Better Way.” Zach Wojtowicz here with Brett Jones. Brett, episode four.

Brett Jones:

Episode four. Let’s get into it.

Zach Wojtowicz:

Planning costs and materials is the topic of today. A very important part of running construction company is making sure that you know what your budgets are and that your materials are getting there, right?

Brett Jones:

Absolutely.

Zach Wojtowicz:

Now Buildertrend has a lot of features that relate to the material and cost planning side. So where do we start? What can we do?

Brett Jones:

Yeah, I think the first thing is, obviously everybody wants accurate, real-time job costing, but that comes kind of the back end. And that’s how you get to that result by leveraging things in Buildertrend, such as bid packages, purchase orders, right? Within each one, you can have reminders and deadlines associated with them. The best part about our bids and purchase orders is you don’t necessarily need a sub or vendor active within Buildertrend. You just need a valid email address on their file, that way you can actually release it directly to their email, they can bid on it through their email and retroactively pull back into Buildertrend for you. Fantastic, fantastic tool.

Zach Wojtowicz:

Yeah. Great point. Your collaborators in Buildertrend don’t always need to be logging in, and that’s a great way to onboard people onto the system to get them familiar with your process and your technology. Bids and purchase orders, purchase orders we’ll kind of save for episode five, so leaving that one hanging there. So bids, getting numbers. Builders obviously have a desire to kind of see what the market is demanding for these material and costs. And the more you can proactively send out bids to inform your budget, the more effective you’re going to be when it comes to hitting your numbers. But that means that you need your subs to participate. And so them not having to log in or anything, they get an email for them to fill out the information, should make the planning phase a little bit smoother for everybody involved. And it’s a great way to introduce them.

Zach Wojtowicz:

They can sign up for Buildertrend through that bid if they so choose. For some people, it might not make sense to, like a vendor or something. Maybe they don’t need to log in and check schedules and do other things on the project. But for your subs that you’re using regularly, we talked about last episode, maybe you’re always using the same individuals for different parts of the projects. You can create a standardized system of, “Here are the bids that I’m going to be sending you for each time we have this plan or this project to get numbers, to make sure I’m getting the most up-to-date costs and everyone’s getting paid.” So there’s some other features that you can use with bidding that I’m interested to kind of get into with you, which is the ability to template bids. Have you ever worked with bidding templates in your time? Is that something that is a process that you’re familiar with?

Brett Jones:

Yeah, absolutely. I preach it every single time. Should come no surprise at this point that I preach templates like it’s nobody’s business.

Zach Wojtowicz:

You got it tattooed on your arm, “Buildertrend Templates.”

Brett Jones:

I really do. Templates are huge and bidding templates are no different.

Zach Wojtowicz:

I remember getting a lot of feedback from builders saying though, “Well, the scope of the project changes. So how can I set up a bid template?”

Brett Jones:

The scope of the project absolutely changes, but you’re still going to bid out demolition. You’re still going to bid out framing, right? You can usually anticipate what you’re going to bid out versus what you might handle internally from a labor standpoint.

Zach Wojtowicz:

Great point. What should I actually include inside of the bid template then? What needs to be inside of it? What can I even anticipate or have ahead of time so that things are ready to roll?

Brett Jones:

Yeah. I would say it’s three big things. The title of the bid package-

Zach Wojtowicz:

What’s it for?

Brett Jones:

Yep, exactly. So let’s say demolition, then you have the cost codes associated with that particular bid package. So if you’re typically… Let’s not take demolition, let’s do plumbing. Within the plumbing bid package. You might have plumbing ground, rough, and final. Three different cost codes you can associate every single time because that’s how you like to break out your budget. And then on top of that, the third item is that you can associate the subs and vendors that might be associated with that, right? So you say, “Hey, I’m going to send this out to five subs and vendors.” You don’t know which one you’re going to use, but that’s okay. You can still associate them regardless.

Zach Wojtowicz:

I’ll add one more piece too. The terms and conditions of the bid.

Brett Jones:

Great point.

Zach Wojtowicz:

So in the description, you’re always kind of sending the same kind of messaging. “Hey, this bid is for these terms, please get your number in by this date.” And they know consistently, this is kind of the expectations. I think a lot of people will make a mistake when they send bids through Buildertrend by not putting additional context in the description. They get an email and it’s just blank, but it doesn’t tell the sub anything about what the project’s for. You can get ahead of so much of that by having the template pre-filled out with everything that the project person needs to know about the project. And so much of that is the same thing from job to job.

Zach Wojtowicz:

So you can literally populate it with the data, but I love that you brought up the cost codes. That’s something that we haven’t gotten into yet on this season that I think is worth a discussion from a planning standpoint. When it comes to cost coding, what is that used for in Buildertrend? And I’m going a little bit off script here so, but I see opportunity in front of me. What are some of our best practices when it comes to cost coding, and how does that pull into planning?

Brett Jones:

Yeah. So to ask another follow-up question, what do you want to know specifically about cost codes? Because it’s definitely a rabbit hole. Are you looking for a typical process around cost codes, what typical cost codes look like?

Zach Wojtowicz:

You don’t have any best practices that you would put onto your customers when it comes to cost codes, as far as what would a user use cost codes for?

Brett Jones:

Oh, well, cost codes are the basis of anything financially related within your company. I’ve worked with clients that have phenomenal cost coding and have in turn accurate, real-time job costing so they can see what their estimate was, what their actuals are, and what they’re planning on spending. And then ultimately, see if there’s any variances in there, right? So you can make those adjustments later on and then get better with estimating over time. But then I’ve seen people where they have no insight into their financials. And at the end of the year, they say, “Yep, we’re in the green. We’re good to go. We can pay our employees. Let’s do the same thing next year.”

Zach Wojtowicz:

Yeah. They look at their P&L and, “We’re making money. We’re good.” I think the planning piece of your cost code that is worth emphasizing is by having a set of cost codes that you work with, it’s like a language for your company, you’re creating a consistent budgeting process.

Brett Jones:

Absolutely.

Zach Wojtowicz:

So that when you’re looking at your financials, you’re not surprised, you don’t see outliers. It always looks the same, which means you can start to notice when things are off.

Brett Jones:

Absolutely.

Zach Wojtowicz:

So we always try to encourage people not to add new cost codes without really thinking about it. Right?

Brett Jones:

Yep.

Zach Wojtowicz:

Making sure that everybody is familiar with those cost codes because, taking this bidding example, you’re going to have someone who’s doing the bidding. You might have somebody who’s doing the procurement. You might have somebody who does the accounting. You might have somebody who does the sales. Well, that’s four different roles. And if they’re all looking at the numbers differently, how are they going to be able to manage the project, right?

Brett Jones:

Right.

Zach Wojtowicz:

So a lot of this all ties together. There’s a right way to do it from a flow standpoint. Starts with the cost codes, but it pulls into the bid template. So that now, you’re using the same cost codes, you’re getting your numbers. That flows back into your budget and ultimately makes you really good at handling Buildertrend’s financial systems, right?

Brett Jones:

Yep.

Zach Wojtowicz:

When we get back into bidding, when we talk about the process of setting up bid templates, what are some other things that builders might be missing when it comes to their bidding process? Let’s just dial in on bids a little further.

Brett Jones:

Yeah. I would say that builders often ask for similar bids across most projects, right? Create a lot of consistency of those terms, conditions, structure, deadlines. And then ultimately you can link these to your schedule as well. So if you have bids that need to come in at a particular point in time, you can actually, instead of choosing an arbitrary deadline date, you can actually link it to a particular schedule item. And that way, if that schedule item changes, obviously that bid package deadline will change in conjunction with it.

Zach Wojtowicz:

Yeah. A bit of a moving target about when you need those things. But I’ve had builders do it a lot of different ways too. Maybe you want all your bids up front, so they just link it to the first schedule item. And it’s 90 days out. You still want to have those things tied together, but it isn’t necessarily required to have it at different phases. It just kind of depends on the way you handle things and move everything throughout the project. When we get into the actual budgeting features and the capabilities, we were talking about that from a cost code standpoint. Could you just give me kind of a summary of how builders use Buildertrend financial features for more effective cost planning?

Brett Jones:

Yeah, absolutely. I mean, creating bids is obviously first and foremost, but then you can also establish your selections and allowances, make sure you’re using your cost codes for those. And then ultimately, setting up POs to help paint a clear picture of what the project will actually cost from the start.

Zach Wojtowicz:

Yeah. So when we talked about selections previously, we didn’t really go into an allowance aspect. And it goes back to our philosophy of trying to be ahead of the curve and that you can delete things a lot easier than you can to create it. Allowances, you probably have the most common buckets of funds that you are giving your clients in order to go out and spend. Template it.

Brett Jones:

Absolutely.

Zach Wojtowicz:

Right? But make sure it’s cost-coded.

Brett Jones:

Absolutely. Yep. Everything should have a cost code. There’s also an option there to do flat fee, which automatically categorizes Buildertrend flat fee. You never want to use that just because it’s not very specific as to what it’s going to cost you and ultimately what you’re spending at the end of the day.

Zach Wojtowicz:

Actually, I will go into people’s accounts when I’m working with them and change the default settings pretty often to only use cost codes as the default, so you don’t accidentally start using Buildertrend flat fee in certain places. Like if you’re creating an invoice and you’re not itemizing it, you don’t know what you actually charged that customer for what, right?

Brett Jones:

Yeah.

Zach Wojtowicz:

Makes it even harder to track that information. Really important piece is make sure you are consistently using the cost codes throughout on allowances, bids, the estimate, invoicing. I mean, all of it ties together to making sure that it’s clear of what items am I actually managing in this particular piece.

Brett Jones:

Absolutely. I think one of the biggest takeaways from Buildertrend as a whole is obviously project management tools are pretty easy wins. A lot of people can kind of limp along and integrate that right away. But one of the biggest things that I focus on while being on site is the financial tools within Buildertrend, just pulling everything together for them and showing them that, “Hey, this is how the financial tools work exactly for your particular company. Bids, purchase orders, standard cost codes, making sure those are built out appropriately, using them for change orders, using them for your selections allowances. They can all tie together. It gives you so much insight into your financials.”

Zach Wojtowicz:

One last point here I want to make before we call it an episode is the idea of how do we maximize our ability to plan for costs and materials? What’s the recommended practice for people from a high level to be able to really get the most out of these material planning features?

Brett Jones:

Yeah, I think it’s just collaboration. Let clients log in and view deadlines, subs to approve purchase orders and bids and check schedules, assign To-Do’s, helping to facilitate the communication between people working on that particular project.

Zach Wojtowicz:

Yeah. It’s all about opening up and trusting the people that you work with every day to really use the system to facilitate that network and ultimately get everybody on the same page. As we know, so many times people are just assuming things that maybe aren’t necessarily correct because there’s no place to actually crosscheck it.

Brett Jones:

Right.

Zach Wojtowicz:

So bidding, has the bid been approved yet? Right? Has the PO been cut yet? All these things can be tracked and are forms of communication, just by putting into the system and really making sure that people are doing those things to get the most out of the project, the software, and ultimately making your business that much better.

Brett Jones:

Absolutely.

Zach Wojtowicz:

Well, thanks for joining us today on this episode where we really dialed in on bids and some of the financial features, and we’re going to go just one step further, we kind of avoided it, and talk more about the purchasing and the job costing features in the next episode. Join us next time. Thanks for listening to The Better Way. If you’re a Buildertrend customer, schedule training to learn more. All listeners, be sure to rate, review, and subscribe to The Better Way wherever you get your podcast. Also visit buildertrend.com/podcast to sign up for the email notifications when the next season drops and explore our other podcast, The Building Code. Don’t miss our final episode this season where we’ll showcase how to manage purchasing.


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