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LG 50PG30 50-Inch 1080p Plasma HDTV (Electronics)
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Contractors that also manufacture some of the products that they install are not too out of the ordinary these days. Both sides of their business require estimates and quotes for projects and it makes sense to desire one piece of software capable of performing these tasks for both the construction and manufacturing side of the business. If your company is both a contractor and manufacturer, such as a custom cabinet maker, and you are looking to integrate both sides of your business with one piece of software, prepare yourself for some bad news.

When looking for a new software solution, finding a piece of construction software that covers both sides of the business is the ideal. Unfortunately, finding software that can run both aspects of the business is difficult. Although both manufacturing and construction involve job cost, there are a number of issues that arise that make finding a perfect software solution unlikely.

To begin with, construction and manufacturing have different sets of constraints when it comes to scheduling jobs. Manufacturing companies (or parts of companies) deal with machines and individuals in job shops. These shops often have to rush jobs in the cue that arise unexpectedly but nonetheless need to be completed as soon as possible. The software used, therefore, has to have the ability to reflect how these rush jobs impact other jobs. Construction, on the other hand, rarely deals with sudden changes and although lead times are often much longer, a new challenge arises in dealing with numerous other variables, such as subcontracting.

Cost accounting is also different for construction and manufacturing. Manufacturing views work in process costs as the job moves from one work center to another. All work in process jobs are recorded on the balance sheet as assets until they are shipped out which results in inventory costs changing as jobs progress. Further, manufacturers are concerned with job progress information so they can promise a delivery date to customers.

Construction accounting is much different and breaks projects down completely differently. Revenues and costs are viewed as percentages in relation to the complete job. Many contractors will not record a cost until he pays an invoice, even if the services or materials have already been delivered or used. Contractors concern themselves with the cost of the project to date in relation to the total budget for the project in terms of overages and underages. These cost breakdowns are not possible or useful in a manufacturing setting.

Capturing costs in real-time is only possible with the right construction software and the right supporting processes. A good software package will give users the ability to track jobs in a linear fashion as the job moves along.

Construction companies (or parts of companies) also have to deal with issues that arise from managing the project, many of which do not occur or are not relevant in a manufacturing environment. For example, manufacturers are not concerned about tracking things like record retainage for jobs and progress billing, but construction companies are.

Lastly, quoting for manufacturing projects involves things like bills of materials that are not tracked in construction jobs.

The bottom line is that, although some companies are both contractors and manufacturers, one piece of software is not going to be able to be used for both sides of the business. As nice as it would be, the two operations differ so dramatically in terms of "relevant information" that even if software existed capable of serving both sides of a business, chances are it would be far too arduous to use. As a result, you will need to invest in separate manufacturing and construction software packages.

David Kraft is a freelance author that specializes in the field of construction accounting software. He writes articles that are aimed at helping construction professionals choose the right software for their business, which is often a difficult decision. Please check out his construction software site for more information.

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