Specialty Contractors usually have trouble getting operations onto ERP software as the software is usually made fits GCs better so other CFMA members have found the following information helpful for successful software selection AND adoption.
Regardless of the software you choose, adoption IS your biggest risk.
You can significantly lower risk with these 2 initiatives.
- Initiative #1: Build a fair contract
- Initiative #2: Secure detailed plan for successful adoption.
Suggestions for Initiative #1 (Build a fair contract)
1.a. SAFEGUARD AGAINST RISK of UNFAIR SUBSCRIPTIONS:
Unfair subscriptions have an imbalance of rights and obligations and can include lack of transparency of total cost to onboard, misrepresentation of products and service and failing to provide options for cancellation without penalty.
Include the following into your agreement;
- Client may cancel agreement at any time (any payments made are non-refundable)
- Software vendor shall provide detailed plan, including a complete list of tasks, commitments, milestones and skills and hours required for successful onboarding.
1.b. SAFEGUARDS AGAINST RISK of CLOUD CUFFING:
Cloud-cuffing is when software vendors charge license or subscription fees BEFORE the client is LIVE while also keeping client data hostage in order to extort additional payments from client in future, should client decide to change providers.
Include the following into your agreement;
- Software vendor shall defer subscription fees and/or licensing fees until client is LIVE on related software. LIVE is defined as when the following critical milestones are achieved:
- AP payments are paid through software
- Payroll runs (and/or) Payroll service export is completed through software
- Client is posting to the GL
- Entry of historical AIA/progress billings details to enable accurate retention billing
- Software vendor shall ensure that lifetime user licenses is granted in the agreement are grandfathered into ANY future agreements or end user license agreements that and updates that accepted by client.
1.c. SAFEGUARD AGAINST SMOKE STACKING:
Smoke-stacking is when software vendors oversell the level of integration of products in a tech stack. This can also result in additional fees to improve integrations as well as fees to maintain the integrations when they break with updates.
Include the following into your agreement;
- Software Vendor shall ensure integrations between estimating, mobile apps, project management and accounting functions are integrated to the level represented in sales demonstrations with no additional set up or support fees outside of contract, as well as no additional fees for keeping integrations compatible with updates to any product outside of contract.
1.d. SAFEGUARDS AGAINST R&D REDIRECTION:
R&D redirection is when software vendors collect similar fees from all customers in all industries while functions and workflows mostly benefit a core group of customers (common when subcontractors use software primarily made for general contractors)
Include the following into your agreement;
- Software vendor shall ensure annual support fees are aligned with the demonstrated value delivered to client's trade(s) over the previous 3 years of the product's release notes, as it compares to value delivered to other industries.
1.e. SAFEGUARD AGAINST OVERAGES AND OVERRUNS:
Software vendors can undersell the complexity and cost of deployment which can result in overages of 200% to 400% of the cost on contract as well as multiple schedule overruns.
Include the following into your agreement;
- Software vendor shall provide a complete deployment plan with GMP (guaranteed maximum price) for all commitments required for a successful GO-LIVE.
Suggestions for Initiative #2 (Secure detailed plan for successful 'adoption')
Specialty contractors need to complete the following tasks in order to achieve successful adoption on ANY ERP CONVERSION.
We recommend having software providers indicate which tasks they will complete for you, and at what maximum cost so you don't get charged overages, and which tasks you are required to complete:
- Import and verification of vendor list, customer list and related data
- Inclusion of company logo into all external documents
- Completion of employee list/safety/experience/HR data
- Completion of GL account listing, open jobs listing and cost code listing
- Scoping for custom integrations
- Payroll defaults, union, DB, CPR, fringe
- Sample GL Transactions for replication
- Sample check stubs (Payroll, AP, Garnishment) for replication
- Sample job cost/job budget for replication
- Complete items database development for each branch/company/division to customer spec to enable effective item selection for POs (Specialty Contractors require item codes by vendor and descriptions, UOMs, dimensions, properties, expense types to be included in database development)
- Sample reports (PO, AR invoice, PM reports) for replication
- Sample WIP to align with WIP in go-live
- Complete AR aging (By Customer/Job)
- Outstanding retainage (By Customer/Job)
- Trial balance (Same date as AR)
- Historical SOV's to be manually entered to enable accurate retainage billing
- Invoice & cash receipt register
- Creation of billing templates to customer/GC invoice templates
- Creation of vendor PDF invoice template mappings for PO matching
- Complete change order log for replication
- All sales tax rates/reporting for replication
- Monthly WIP reports (Fiscal Year) for validation
- Employee YTD &payroll info – pay stub/time sheet for replication
- Payroll register reports for replication
- Sample reports (CPR, Union, etc.) for replication
- Sample direct deposit and positive pay files for replication
- All open subcontracts for replication
- Complete benefit plans/enrollment for replication (RE: ACA)
- Preliminary training/introduction or training materials review and Q&A for customer, vendor and employee info
- Preliminary training/introduction or training materials review and Q&A for inventory/material management
- Preliminary training/introduction or training materials review and Q&A for vendor pricing, job special pricing and POs
- Preliminary training/introduction or training materials review and Q&A for payroll info; pay rates (Union/Davis Bacon, prevail wage, benefits, safety cert etc.)
- Open AR for replication and tie off before go-live
- Open AP / Discount Report for replication and tie off before go-live
- Trial balance for go-live
- Employee YTD's (Quarterly) - 940 & 941 for replication
- Open check lists/deposits for replication and tie off before go-live
- Open/pending change orders for replication and tie off before go-live
- Bank balance as of trial balance (All) for tie off before go-live
- Bank reconciliation (All) for replication in documentation and tie off before go-live
- Job cost to date for replication and tie off before go-live
- Budget's for replication and tie off before go-live
- WIP Report review and customization if needed
- Training for payroll/HR
- Training for accounting/financial mgt
- Training for pre-construction
- Training for job start up
- Training for purchasing
- Training for job costing
- Training for document control
- Training for contracts & subcontracts
- emergency data repair of 1st month end to ensure future month ends are sound
- Training for executives
- Training for remote tools
- Punch list creation for outstanding gaps and functions for optimization
- emergency data repair for 1st quarterly to ensure future QRTLYS are sound
- CPA review to ensure integrity of financial reporting
- Year-end emergency data repair of 1st year to ensure future year ends are sound
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Chad Pearson (dealer of truth in build)
Plexxis
Brampton ON
(416) 574-1677
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