Imagine a football game without a scoreboard. You turn on the TV, fans are cheering, a touchdown is scored, but there is no way to know which team is winning and by how much. It is only at the end of the season, after the teams have played all of the games, that the league announces the standings.
Welcome to the world of job costing for wireless construction.
Every day in the United States, companies dispatch more than 29,000 field workers to remote locations to install the nation’s growing wireless infrastructure. Many companies managing these field crews face various daily hurdles: weather delays, incomplete site details, missing materials, dependencies on third parties and other variables that stack the odds against a successful deployment.
Darrin Wagner, CEO of Test Communications.
These challenges affect a company’s bottom line through increased costs and project delays. Because of the unique nature of wireless infrastructure construction — short-term projects, multiple cost drivers, crews moving in and out of different sites — the ability for business owners to track accurate daily spend and project profitability is beyond the reach of many companies.
Darrin Wagner, the CEO of Test Communications, a growing wireless services company with headquarters in Slidell, Louisiana, is one of those owners. Other than a monthly update from his accounting system and a few manually updated trackers, Wagner had limited visibility into where his company spent money on a day-to-day basis.
“We offer a wide range of telecom infrastructure services, and it was becoming increasingly difficult to manage our field activities with QuickBooks and Excel,” Wagner said. “Our monthly accounting reports could tell me how we were doing as a business, but only after the fact. I was essentially flying blind with no way to determine where we were making and losing money at the project level.”
Budgets are updated automatically to reflect project costs and margins.
With competition becoming more aggressive and sophisticated, Wagner also faced increased margin pressure during the project bidding process, which further shrunk any margin of error he had to deliver a project on time and on budget.
A Better Way
Wagner knew there had to be a better way. In 2019, he began to explore different options to track his company’s financial performance down to the project level with the goal of establishing baseline measures to identify inefficiencies and opportunities for improvement.
“You can’t change, without the ability to measure,” Wagner said. “For us to be competitive in this new environment, we needed to focus on operational excellence, and that required a new approach for our budgeting and job costing capabilities.”
Reflecting on this journey, Wagner has identified five essential steps to accurately tracking job costs to help measure and improve project margins.
1. Use software to track project performance accurately.
Wagner’s vision included obtaining accurate and timely updates on all project progress and costs. His reliance on manual data entry from different sources, with multiple trackers, created delays and inaccuracies in the eventual reports.
“I realized I needed a software platform to help achieve my goals,” Wagner said.
His wish list for a software platform included the ability to manage his projects and crew deployments while also providing accurate, automated daily updates on progress and spend.
After an extended search, Wagner selected the Fieldclix software platform to help achieve his goal of measuring performance, establishing baselines, and embarking on a company-wide improvement program.
“It was important to find a software platform that captured operational and financial data in real time to help make informed adjustments for active projects as well as ongoing improvements to my business, and Fieldclix fit the bill,” Wagner said. “With Fieldclix, our office and field teams have one platform to collaborate across dozens of active projects with instant access to the data, reports, and documents they need to perform their job.”
Project costs are captured in the field and displayed in graphic reports.
Pro Tip #1: Capture both operational and financial data in one platform. It is challenging to manage the entire project life cycle without an understanding of field progress, visibility into daily costs and the status of your client and vendor financial transactions. Many software platforms only offer either operational or financial workflow support.
2. Establish project budgets, and track costs daily.
Wagner’s project managers did a great job managing against projected milestones and dates, but they had limited visibility into the amount of money they were spending to achieve these goals. “We didn’t know which decisions and events were increasing our project costs,” he said. “We focused on getting the job done, but often at the expense of our project margins.”
Wagner’s goal was to have his project managers focus on both the operational and financial aspects of their deployments, with an emphasis on project P&L (profit and loss).
“With Fieldclix, we get accurate daily updates on all our costs, including labor, materials, rentals, subcontractors and field expenses,” Wagner said.
His project managers now establish an operating budget for all cost items at the beginning of the project, which receives a review and approval before they spend the first dollar.
“Instead of finding out on day seven of a five-day build whether we’re under or over budget, my project managers can now see where they stand and make adjustments while there’s still have time to make a difference.”
Pro Tip #2: After establishing your project revenue from the client’s purchase order for a specific site build, remove pass-through costs, such as materials to create something called service revenue. Service revenue is the amount of money you have on the table to play with as controllable spend. Remove the amount that reflects your desired project margin, and consider removing an additional amount that reflects your estimated overhead costs (such as project manager hours and equipment). The remaining budget is what the project manager has available to execute the site build.
3. Redefine roles, and establish measurable goals.
It is one thing to deploy a new software platform and an entirely different matter to get the organization to adopt the new operating procedures.
“A software platform like Fieldclix absolutely changes the game,” Wagner said. “It changed our perspective on the project manager’s role and how they are measured.”
Wagner now looks for financial management experience when hiring project managers and has trained existing employees to operate as P&L managers.
“We’ve established a set of objectives and key results across the business, starting at the corporate level and cascading down through the regions to the project level,” Wagner said.
He can now track his revenue, cash flow, work in progress (WIP), accounts receivable and profitability at all levels in the company.
“Now that we can measure with accuracy, we’ve been able to establish a culture of accountability,” Wagner said. “Everyone knows what is expected and can see how they’re performing against their targets and peers. More importantly, we can now reward employees for meeting and exceeding their goals.”
Pro Tip #3: Let the system be the bad guy. In the absence of accurate data, the resolution of internal issues can pose a challenge due to differing points of view — such as how much time a crew spent onsite. By using data and reports accepted as accurate across the organization, a company reduces the potential for internal friction, resulting in more positive working relationships.
4. Track locally for global improvement.
While rolling out the new software platform and setting up his measurement program, Wagner realized there were no existing standards for project performance he could rely on.
“A lot of people fall into the trap of measuring teams against a national average or other external baselines,” Wagner said. “However, the reality is the time required to hang an antenna differs by customer, by region, by site type, and by project team.”
Because of this, Wagner created targets based on historical performance and set expectations for continuous improvement at the local level.
As a business owner, Wagner keeps an eye on corporate performance with the confidence that his remote teams are working to meet targets he has set across different layers in the organization.
Pro Tip #4: In addition to P&L, keep a close eye on your project WIP (work in progress), which can tell you how much revenue is expected to come in the door before completed work is invoiced, as well as the amount of committed costs you have for external vendors. Accounting systems do not often track these metrics, which limits visibility into your true cash position.
5. Keep raising the bar.
With his new operational and financial reporting system in place, Wagner now has the confidence to step out and grow into other markets. “I can confidently pursue new services and clients because I have the data to project what our performance is going to look like,” Wagner said. “Since we’ve implemented Fieldclix, we’ve already grown into two new markets.”
Wagner can now meet budgets on 70 to 80 percent of his projects and expects to continue to find opportunities to weed out inefficiencies and extend his profit margins from a 5 percent improvement to 10 percent and beyond.
Wagner said he strongly believes the investment in the software and associated operational changes brought his company a significant payoff.
“We have not only achieved an ROI financially regarding increased profits, but also culturally,” Wagner said. “Our team members are striving for individual improvement and being the best version of themselves. They welcome the visibility that Fieldclix provides because it allows them to show off when they win. And my team loves to win.”
Rob Tymchyshyn is cofounder and CEO of Fieldclix, a provider of project management software for remote construction. His email address is [email protected]. Visit www.fieldclix.com.