Contractors suffer 44% failure of tech adoption (2021 construction technology report) and I think it is just as much about people as it is about product.
People wouldn't skydive with a 44% chance of failure, yet they gamble with ConTech adoption...
Planning in ways that increase rates to an acceptable level, 95%+, will remove the gamble.
***This process will help #buildTRUTH ....
BACKGROUND:
When I was Police Officer, telling partial truths, or failing to tell the whole truth and nothing but had serious consequences for the perpetrator.
But in business, partial truths are a STANDARD in sales and marketing and it is CUSTOMERS who suffer the consequences while perpetrators get financially rewarded.
We should #BuildTRUTH in the trades and force bad actors to either embrace better ethics or be exposed.
PROCESS:
Check out these two videos or read below:
- Negotiating fair contracts using simple police tactics: (10 min) https://youtu.be/ud4MdeOxt2k
- Tips for Software selection and fair contracts: (10 minutes) https://youtu.be/uwFtU9U8Xf
This will help you
select software AND
create a fair contract while
getting the true cost of labor up front,
(instead of being surprised by excessive change orders on the adoption, which is an all too common practice).
Step 1 of 3:
Software selection (most software is mage for GC workflows...these tips help)
- Use these tips in the first 4 minutes of this video: https://youtu.be/uwFtU9U8XfU
- Watch the full video (10 min) for more info on our process and protections
Step 2 of 3:
Build a fair contract
Regardless of the software you choose, adoption IS your biggest risk.
(Lower risk with strategic terms in your agreement)
NOTE: You may get resistance but YES you can do this.
(Current CFMA members have these exact terms in their agreements)
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.
Step 3 of 3:
Get detailed plan for successful 'adoption' INCLUDED IN YOUR AGREEMENT
This helps avoid deceitful tactics designed to make the cost of adoption attractive so you commit, only to be charged excessive change orders after you have got so far into the project that you feel you have to keep going. (This tactic is called ESCALATION OF COMMITTMENT)
All steps below are needed for successful adoption so have all vendors indicate which is included vs, which ones you are responsible for.
Then have the vendors indicate the guaranteed maximum cost for all the service they will provide.
- 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
- HIGH PRESSURE PERIOD: 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
- HIGH PRESSURE PERIOD: emergency data repair for 1st quarterly to ensure future QRTLYS are sound
- CPA review to ensure integrity of financial reporting
- HIGH PRESSURE PERIOD: 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)
Director of Business Development
Plexxis
Brampton ON
(416) 574-1677
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Original Message:
Sent: 10-27-2022 14:33
From: Tyler Helget
Subject: Which ERP do different trades focus to?
Hello,
Just curious, but do specific trades focus more on specific ERP's? (i.e. Drywall - Plexxis, Electrical - SAGE, etc.)? Or would you say, that it's based on how many projects you have?
Thanks for the help!
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Tyler Helget
Construction Solutions Manager
Siteline
Wichita KS
(316) 570-2232
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