3 Ways Knowify can Help Construction and Trade Contractors Succeed in 2022
Project tools like Knowify are critical for trades contractors. We examine 3 ways firms can boost their profitability.
Project tools like Knowify are critical for trades contractors. We examine 3 ways firms can boost their profitability.
Being a trades or residential construction contractor is a tough but rewarding gig. As contractors look ahead to 2023 and beyond, they need to manage challenges sourcing time and materials for jobs, while also managing the increased prices that they have to pay for those inputs. In addition to supply chain and inflation challenges, contractors can’t take their eye off all the demands of operations: they need take sure projects run smoothly, customers are happy, and importantly, still having money left over to pay themselves! Customers don’t care about the reasons a job won’t be done on time or on budget, and a good reputation can be easily lost.
So, how do successful operators manage jobs, customers, team communication and profits? And, just what exactly is Knowify?
Knowify empowers trade and subcontractors with the project and client management tools needed to execute every job more effectively. Contractors can handle budgeting, bidding, job costing, invoicing, payments, and much more – all in one place.
Knowify calculates all the numbers and shows you the real-time impact every job is having on your business, so you can focus on what really matters – and build your business with confidence.
Here are really strong candidates for Knowify project management:
* Custom homes
Here are businesses that are not a strong fit for Knowify:
* Larger Residential developers (some small ones are ok).
* Commercial general contractors.
* Anyone that wants inventory tracking (inventory does not sync with Quickbooks!).
As a project management and invoicing tool, it also integrates seamlessly with accounting tools like Quickbooks Online - helping you ensure your jobs and accounting are all synchronized and up to date.
Ok, so that sounds well and good. What are the three ways that Knowify can help trades contractors succeed?
Way #1: Start Simple First, and then add Complexity
At Tuulyp Consulting, we’ve helped many clients adopt cloud technologies in addition to continually vetting and onboarding new apps ourselves. All the times where we’ve seen a crash and burn scenario where a high powered app just ends up not getting used - it’s usually because a team, a company or a department tried to go too fast too soon. Walk before you run!
The good news is that Knowify was designed with this above principle in mind. Contractors don’t need to fly into the advanced features right away. For example, Knowify features a Simple job costing feature in addition to Advanced and Professional capabilities. New users are encouraged to master the basics before moving on to those other features. Advanced capabilities such as budgets and multiple project phases can be added later when the skills and confidence with Knowify has increased.
Why is this extra important for success? Because even the best tool in the world is useless if it is not used. One of the major reasons that technology doesn’t get used is because the learning curve is too steep. Users try advanced features right away, get discouraged and then give up on the entire exercise.
Successful Knowify contractors spend time familiarizing themselves and getting used to using simple job costing styles and other basic features first, before they proceed to more advanced features. Because Knowify was designed with user experience and usability in mind, its user base has high levels of adoption and success leveraging its more advanced features over time.
Way #2: Professional Estimates, Proposals & AIA Progress Invoicing (G702, G703 Invoice styles)
An easy way to lose money in today’s contracting market is to underestimate costs and time required, or to build in too small of an expected profit margin for jobs. Another way to lose out is to not win the business in the first place! Many businesses fail to win new customers simply because the estimate quality is low or their bid is deficient in some way. Professional estimates, proposals and invoicing capabilities help Knowify users manage critical profitability risk and customer experience aspects of estimates, bids and invoices.
G702 and G703 invoice styles.
Every construction project is different, and there are frequently unexpected events and change orders that may be required along the life of a job. Jobs can often last weeks, months or even multiple years. Along the way, multiple payments are often requested. Tracking and managing payments is a complex exercise, and can consume a significant amount of a business owners time. Knowify helps by streamlining contract and payment information fields and ensuring that calculations are done correctly in the background. For American Institute of Architecture (AIA)or ‘Progress’ invoicing, Knowify completes all the time-consuming calculations for jobs that must be invoiced multiple times on their way through to completion:
Example AIA Invoicing fields:
Contractor’s Application for Payment:
Original Contract Sum:
Net Change by Change Orders:
Contract Sum to Date:
Total Completed and Stored to Date:
Retainage is the percentage of payment held until the job is complete.
Total Earned Less Retainage:
Less Previous Certificates for Payment:
Current Payment Due:
Balance to Finish Including Retainage:
Imagine that you are a Flooring subcontractor with 3 jobs on the go. One of those jobs is for a customer called “Highland Apartments”. Highland’s job is on the more complex side, with 3 anticipated stages/phases: floor preparation, installation and finishing. Let’s say that you expect the installation phase to take the most time.
In our example, you’ve allocated $150,000 of materials and $200,000 of labour to the Highland Apartments job as a whole, and will be paid 80% up front and 20% upon completion (e.g. the customer contract is for $500,000). As you spend money on your credit card, or issue purchase orders, those activities can be recorded and assigned to that job as they occur. Similarly, as labour hours and time sheets are submitted and approved, that time gets recorded against Job #3. Depending on whether you are using simple or advanced/professional job costing, you will be able to manage the Highland Apartment’s at a broad, or granular level, respectively.
Broad (Simple Costing)
With simple job costing, you won’t have granular reporting on progress within each phase as you accrue costs, but you will be able to see and monitor expected profitability as a whole. For example, if you are close to halfway done the project for Highland Apartments , and total costs against that project are $200,000, you know you are above budget for the project as whole. You should have costs for $175,000, and have experienced cost overruns of approximately $25,000. This could then be a project that you carefully review and monitor closely to ensure that costs do not continue to exceed estimates. Or, perhaps the customer has asked for a change order, and has not been invoiced for these changes (or had the contract amended). Knowify can handle change orders without difficulty, helping business owners manage changes or unexpected events and avoiding scenarios where unprofitable projects are an unwelcome surprise at the conclusion of a job.
Granular (Professional / Advanced Costing)
For business owners that have progressed in Knowify usage to the advanced/professional level, costs can be managed even further at the phase level. Here, we would break down the $350,000 of costs along phases.
Highland Apartments: Job #31002
Phase 1: Floor Preparation
Phase 2: Installation
Phase 3: Finishing
In advanced/professional job costing, we would quickly be able to see where our costs have exceeded initial estimates for the job. Perhaps labour costs have increased dramatically for Phase 2. We might have experienced labour turnover, or have encountered an unexpected problem and had to pay higher-cost subcontractors to complete a portion of the job. Regardless of the reason, we can track and monitor expenses so we can better manage that profitability risk aspect of the job. Often, cost overruns are related to something that can be addressed with better estimates, contract language, or a change order, or some other contingency to help avoid scenarios where the business owners’ profitability takes the hit. What’s measured gets improved!
Way #3: Office-Field Communication & Job Monitoring
Labour is a major cost input in the trades and residential construction fields. Companies want happy, productive, high skill teams, and Knowify is a powerful tool to help support and enable those teams once you have them in place.
Workers in the field, particularly team supervisors, benefit from having both jobs costs and time sheets coordinated in a single place. Permissions can be customized and fine tuned for users, giving supervisors the access they need, while other users can be established with view-only and time-sheet specific permissions as appropriate. Knowify administrators can setup new worker users such that they can submit their own time sheets, or have supervisors submit hours on their behalf. Supervisors are able to approve worker submitted hours, and can use handy location and time tracking data to make sure hours align with jobs and timesheet submissions. Situations where workers might go from one project to another, or be paid at different rates for different jobs, can be managed via location and job/pay rate specific tracking, thereby helping to ensure that costs are tracked accurately for each customer/job. In the USA, 1099 subcontractor tracking can be enabled such that costs track and get pushed to the appropriate vendor in Quickbooks.
Plant future success with gantt….
In addition to these mission-critical features, Knowify also features communication and job management features. One of the key communication and management tools for any job is the project plan itself. One of the few constants with customers and jobs in the real world is that change and unexpected events will almost always occur during the job. Disruption, change orders, increased costs, unexpected turnover, errors and mistakes are the norm and business owners need to plan for it. The skills that separate high performing contractors from the rest is their ability to plan for contingencies in advance and to respond to unexpected events with flexibility and foresight. Knowify features a Gantt chart capability to help owners manage the impact of any change to all of the jobs that are currently on the go. A delay in one phase can easily impact later phase within a single job, or even potentially impact the estimated start date for other jobs. Proactively staying on top of this, and allowing synchronized communication about jobs across both the office and the field teams is a powerful capability within Knowify, and a key way that top performing contractors stay efficient and profitable through challenging times. Customers are always more understanding of changes and adjustments that are addressed proactively and communicated well ahead of time.
Next steps: Take Action and Get Knowify Working for you!
At Tuulyp Consulting, we are proud to be Knowify Certified and a part of the Knowify Construction Company Advisory Network (CCAN). As well, since Knowify and Quickbooks are designed to work together, we’re also Certified Quickbooks Online (QBO) experts. The combination of these skills and certifications help us provide US and Canadian trades contractors with a one two punch: 1) experts on implementation to help you and your team implement and get trained up in Knowify, and 2) experts on bookkeeping, controllership and CFO functions to help your business outsource that all-important bookkeeping and ongoing advisory to a trusted party to keep you on the right track as you grow and scale. With decades of experience across our team helping contractors and trades professionals be successful, we welcome the opportunity to discuss whether Knowify is the right fit for you and your business.
Want to know more?
We are incredibly passionate about construction and trades industries. Despite all the challenges around supply chain and rising costs, we’re convinced that it remains one of the most exciting, dynamic industries out there. We’ve packed more insights into a white paper to further help businesses grow and be successful, and we’re offering that for free!