A Comprehensive Guide to Construction Software Selections & Implementations

In the fast-paced construction industry, the right construction accounting software can be a game-changer, streamlining operations, improving project management, and boosting profitability.

Selecting and implementing this software, however, can be adaunting task. The wrong choice or poor execution can lead to costly errors, project delays, and frustration across your team.

This comprehensive guide is designed to help you navigate the complex process of selecting and implementing construction accounting software. We’ll explore critical elements to consider when choosing software, delve into best practices for implementation, and highlight common pitfalls to avoid.

Whether your company is small, mid-sized, large, or an enterprise, this guide will provide the insights you need to make informed decisions that will benefit your business in the long run.

The Mantra: People, Process, & Technology

Understanding the interplay between people, processes, and technology is essential when making the right software selection. These three elements should guide your decision-making to ensure the software enhances operations and aligns with your company’s strategic goals.

People:

Your construction accounting software should align with the skills and needs of your team. It’s vital that the software is user-friendly and that your staff can use it effectively without extensive training. This alignment ensures that your team can quickly adapt to the new system, which reduces downtime and boosts productivity.

Process

The software should enhance and streamline your existing operations. It should be capable of automating tasks, improving efficiency, and providing insights that help you make better business decisions. The right accounting software for construction should not just fit into your current processes but should also help you refine and improve them.

Technology:

The accounting software for construction contractors you choose must integrate seamlessly with your existing systems and be adaptable to future technological changes. It should be robust, scalable, and capable of growing with your business as it evolves.‍

Key Considerations for Software Selection

Selecting the right contractor accounting software is a crucial decision that impacts your company's efficiency and profitability. The process involves assessing your team’s needs, business processes, and technological requirements to ensure the software supports your long-term goals. This section will guide you through the key considerations to help you make an informed choice that aligns with your company’s objectives.

1. Assess Your Team’s Capabilities ^(People)

The success of your software implementation depends on your team’s skills, availability, and capacity. Start by evaluating whether your employees have the technical expertise and process knowledge needed for the project, particularly in critical areas like adjusting the chart of accounts, cost codes, and accounting processes.

Consider the availability and workload of your team members. They need sufficient time and focus to manage the implementation effectively without being overburdened by their regular duties. If your team lacks the experience or capacity to handle these complex tasks, it’s crucial to bring in third-party experts, such as RedHammer, who can help align the company’s vision with the software setup, ensuring a successful implementation.

2. Gather & Document Requirements ^{(Process, Technology)}

Once you’ve assessed your team, the next step is to document your software requirements thoroughly. Begin by assessing your company’s needs across the three key elements: People, Process, and Technology. Your documentation should not only address your current challenges but also include your future vision for the company.

It’s important to consider how the software will drive necessary business process changes. Aligning the software with optimized processes is key to a successful implementation. To ensure a comprehensive approach, it’s often beneficial to involve a third party, such as RedHammer, to assist with the requirements gathering process. Their expertise can help you cover all bases and make the best decisions for your company’s future growth.

3. Get Your 'Financial' House in Order ^(Process)

Before embarking on a new software implementation, it’s essential to clean up your existing systems to avoid carrying forward any issues. Start by tidying up your master data, such as customers, vendors, and jobs, to ensure accuracy and consistency. Catch up on all system reconciliations, as any unresolved discrepancies can complicate the transition to new software like QuickBooks for Contractors or QuickBooks Construction.

Additionally, ensure all financial schedules, including prepaids, amortization schedules, and depreciation schedules, are current. This step is not just a best practice but a critical foundation for your new implementation. If not properly followed, it could lead to significant issues in the new system, such as compromised data integrity or, even worse, a degradation of business operations.

4. Hire an Implementation Specialist ^{(People, Process,Technology)}

Hiring an implementation specialist like RedHammer is crucial for bridging the gap between the software company and your organization. An implementation specialist ensures that the project’s vision, requirements, testing, data conversion, and go-live phases stay on task and within budget. They are an excellent way to supplement your team with the expertise necessary to keep the business running smoothly.

By providing the necessary oversight to manage both the technical and business aspects of the implementation, an implementation specialist helps to reduce the risk of miscommunication and delays, ensuring that your company’s needs are fully met throughout the process when implementing construction accounting programs.

Read more about RedHammer's Software Implementation Services

5. Ensure Scalability ^(Technology)

Scalability is a crucial consideration when selecting GAAP construction accounting software. It’s about more than just handling an increased number of projects or users; it’s about the software’s ability to manage growing complexity within your company.

A scalable solution should be robust enough to support more intricate workflows, larger data sets, and sophisticated reporting without compromising performance. This ensures that as your business grows and becomes more complex, your software will continue to meet your needs without requiring a complete overhaul. Ensuring that your software can grow with your business is essential for long-term success.

6. Prioritize Functionality & Reporting ^{(Process,Technology)}

In construction, the right software must focus on essential functions like job costing, AIA billings, and WIP (Work-in-Progress) reporting. Avoid unnecessary features that add complexity without value. Robust job costing and accurate WIP reporting are critical for tracking expenses and ensuring project profitability.

AIA billing functionality is essential for managing progress billings and maintaining compliance with industry standards. Effective reporting capabilities should allow you to generate necessary reports easily, with flexibility for customization when needed. This balance ensures your software remains practical, delivering key insights while adapting to your specific operational needs. Whether you're using accounting software for construction or another specialized platform, this functionality is essential.

7. Evaluate Integration Technology ^(Technology)

Your company likely uses several software systems for different tasks, such as managing projects, tracking time, or handling finances. The new software must integrate smoothly with these existing systems.

However, it’s important not to rely solely on the sales pitch. Do your own research by exploring case studies, requesting demonstrations, and consulting with third-party experts if necessary. Understanding the integration technology—whether it’s based on APIs, middleware, or direct connections—will help you make an informed decision that supports your company’s operational needs. Software such as Foundation Payroll (Payroll4Construction) or Foundation Accounting Software could be potential solutions depending on your integration needs.

8. Choose the Right Technology Platform ^(Technology)

Choosing software with the right technology platform is vital to ensuring its long-term viability within your organization. Many companies claim to offer cloud-based software, but these are often hosted solutions that don’t provide the full benefits of a true cloud environment.

This consideration will help ensure that your software remains relevant and effective as your business grows and changes. QuickBooks Construction, better known as QuickBooks Online, for example, offers a cloud-based platform that provides scalability for growing construction companies.

We've written an entire blog on Choosing Between Cloud and Hosted Construction Financial Software: Key Differences and What You Need to Know

‍9. Conduct Thorough Research ^{(Process, Technology)}

Thorough research is essential when selecting construction software. Start by exploring potential solutions online, but don’t stop there. Reach out to industry peers and other companies that have gone through similar implementations to get their insights and recommendations.

Consulting blogs and industry reports can also provide valuable perspectives on the best options available. Additionally, consider engaging a consulting firm to help you identify and evaluate the most suitable software for your needs. Once you’ve compiled a list of potential software providers, share your documented requirements, budget, and project plan with them.

It’s essential to understand each provider’s implementation methodology and clearly define the roles and responsibilities of both parties throughout the project. Be sure to request software demos, and if necessary, ask for a proof of concept to ensure the software aligns with your needs before making a final decision.

Lastly, consider hiring a construction accounting software specialist like RedHammer to assist you with your Construction Accounting System Selection. ‍

‍Best Practices for Construction Accounting Software Implementations

Successfully implementing construction accounting software requires more than just selecting the right product; it demands meticulous planning, stakeholder engagement, and a comprehensive understanding of your business processes. This section will cover the best practices that will help ensure your implementation is smooth, efficient, and delivers the intended benefits to your organization.

1. Plan Thoroughly ^{(Process, Technology)}

Thorough planning is the cornerstone of a successful software implementation. Without it, projects can face delays, cost overruns, and unmet objectives. This section will outline the key elements of effective planning to help you set a solid foundation for your project.

Assign an internal project manager or hire a third-party expert to oversee the implementation, manage timelines, and address issues promptly. Proper planning and oversight are crucial to prevent delays, cost overruns, and ensure that the final product meets your needs. Whether you're implementing general contractor accounting software or more advanced solutions, planning is key.

2. Ensure Stakeholder Engagement ^{(People, Process)}

Stakeholder engagement is critical in ensuring that your software implementation is successful. Executives must set the tone, while managers and end-users should be actively involved throughout the process.

Regular updates, clear communication, and addressing concerns as they arise keep everyone aligned and committed to the project’s success. The active involvement of stakeholders at all levels helps ensure that the accounting software for contractors meets the company’s needs and is adopted effectively.

3. Prepare for Data Migration ^(Technology)

Data migration is a critical component of any software implementation and requires thorough preparation. Begin by assessing the quality of your current data. Identify gaps, inconsistencies, or outdated information that could cause issues during the migration process.

Clean up your data before migration to ensure that only accurate and relevant information is transferred to the new system. Plan how data will be mapped from the old system to the new one, ensuring smooth transfer without loss or corruption. Whether you're moving to QuickBooks for Contractors or another construction accounting software such as Sage 300 CRE, data migration is a key aspect.

4. Determine Reporting Requirements Early ^{(Process,Technology)}

Reporting is often overlooked until the end of a software implementation, but this can lead to significant issues. It’s crucial to determine your reporting requirements at the very beginning of the project.

Consider the different dimensions of your business, such as divisions, departments, and channels, and how these will be reflected in your reports. Early identification of reporting needs ensures the system is configured to deliver necessary insights. GAAP construction accounting software often comes with flexible reporting tools, making early preparation essential.

5. Avoid Customization ^{(Process, Technology)}

While customization may seem attractive, it can lead to significant complications. Customizations often require additional resources, extend timelines, and make future updates and maintenance more challenging.

Focus on leveraging the software's built-in capabilities and adapt your processes where possible. Minimizing customization helps maintain the software’s integrity and ensures that future upgrades remain compatible, especially when using Sage 300 CRE accounting software or similar platforms.

6. Take Process Change Head-On ^(Process)

Embrace the opportunity to implement best practices and improve efficiency during your software implementation. Rather than simply replicating existing workflows, use this as a chance to innovate and optimize.

Align your new accounting software for construction with improved processes to ensure maximum value from your investment. Taking process change head-on can lead to significant productivity improvements and help your company stay competitive.

7. Prepare for Comprehensive Testing ^(Technology)

Testing is an essential part of the software implementation process. Prepare for both unit testing and end-to-end integration testing to ensure that the software functions correctly and meets all business requirements.

Comprehensive testing reduces the risk of post-implementation surprises and ensures a smoother transition by confirming that all parts of the system work together seamlessly.

8. Invest in Training ^(People)

Training is a vital component of a successful software implementation. Begin training early in the process. Use web-based resources, set up dedicated training sessions, and encourage team members to collaborate and share knowledge.

Well-trained users are more likely to fully leverage the software’s features, contributing to a successful implementation and minimizing the risk of errors. This is particularly crucial when working with complex systems like accounting software for construction contractors.

9. Manage Change Effectively ^{(People, Process)}

Change management is crucial for successful software adoption. Communicate clearly and frequently throughout the project to ensure everyone is informed and on board with the changes.

Provide ongoing support, training, and encouragement to ease the transition and ensure the new processes are adopted successfully. Effective change management minimizes disruptions and ensures a smoother implementation process. When working with solutions like contractor accounting software, this step is critical to avoid resistance from the team.

10. Maximize Technology ^(Technology)

Maximizing the technology available in your new software is crucial for achieving long-term efficiency gains. Whether your system includes OCR scanning, process automation, built-in AI, or other advanced features, take full advantage of these tools to create significant process efficiencies.

Invest time in understanding how these features can be integrated into your daily workflows. By fully utilizing the technology at your disposal, you can enhance productivity, minimize errors, and ensure that your organization is getting the maximum return on its investment.

Check out our blog on Maximizing Efficiency with the Right Construction Management Software: A Complete Guide for Contractors to learn more about how your construction accounting software works with Construction Management Software platforms like Procore, BuilderTrend, Knowify, and ProjectHQ

Common Implemenation Pitfalls to Avoid

Many construction companies fall into common traps during software selection and implementation, leading to delays, underutilized software, or even project failure. This section highlights frequent mistakes and offers practical advice to keep your project on track.  Explore these pitfalls and solutions in our blog The Pitfalls of a Bad Implementation: How to Avoid These 10 Common Mistakes

1. Underestimating Complexity ^{(Process, Technology)}

Underestimating software implementation complexity can lead to rushed decisions and inadequate preparation. Misjudgment often results in projects that fail to meet their objectives. Take the time to fully understand the complexity of the system and its impact on your business processes. Proper planning helps to avoid surprises and ensures a more successful implementation. This is especially true for construction accounting programs, which often involve complex integrations and data management.

2. Poor Planning ^(Process)

Inadequate planning can severely impact the success of a software implementation. Without a clear plan, projects can quickly become chaotic, leading to missed deadlines and budget overruns. Invest time upfront in developing a comprehensive project plan that addresses all aspects of the implementation, from initial setup to post-go-live support.

3. Missing the Opportunity for a Fresh Start ^(Process)

Failing to reset key elements like your Chart of Accounts and Cost Codes during implementation is a missed opportunity. New software provides a chance to clean up and reorganize these components to better reflect current business needs. Seize this opportunity to enhance your financial and operational reporting and ensure that outdated information isn’t transferred to the new system.

4. Not Identifying Reporting Requirements Early ^{(Process, Technology)}

Failing to identify reporting requirements at the start can lead to costly adjustments later. Without a clear understanding of necessary reports, the system configuration may not support your business needs. Early identification of reporting requirements ensures that the system delivers the insights your business needs from the start.

5. Relying Solely on the Software Vendor ^(Technology)

Relying solely on the software vendor for setup and testing can be risky. While vendors know their products, they may not fully understand your business processes. Active participation in setup and testing helps tailor the system to your needs and prevents misalignments between the software’s capabilities and your business requirements.

6. Not Understanding Your Contract ^(Process)

Failing to thoroughly read and understand your contract with the vendor is a common pitfall. Contracts typically include baseline services, with additional work often handled through costly change orders. Pay close attention to the scope of work, especially in areas like testing, training, and data conversion support. Ensure the terms align with your needs before signing.

7. Insufficient Training ^(People)

Insufficient training can lead to underutilization of the software’s capabilities, causing users to revert to old processes, which limits the effectiveness of the new system. Proper training ensures that users are confident in using the new system and can fully leverage its features, contributing to a successful implementation.

8. Not Prioritizing Data Migration ^(Technology)

Data migration is critical, and if not done properly, can cripple a new system. Poor data migration can lead to inaccuracies, causing operational issues and poor decision-making. Prioritizing data early allows you to clean up and standardize formats, ensuring integrity and reliability in the new system.

9. Not Planning for Post Go-Live Support ^(Technology)

Failing to plan or budget for post-go-live support can undermine long-term success. Even the best systems require ongoing maintenance, updates, and troubleshooting. Secure post-implementation support as part of your initial contract to ensure continuous operation and avoid unexpected costs.

10. Poor Change Management ^{(People, Process)}

Without structured change management, the adoption of new software may suffer. Resistance to change can derail a successful implementation. Effective change management requires clear communication, continuous support, and involvement of key stakeholders to ensure smooth adoption.‍

‍‍Construction Financial Software Recommendations

Choosing the right software for your construction company requires understanding your unique needs and selecting a solution that can grow with your business. This section provides tailored recommendations for small, medium, large, and enterprise-level companies to help you find the best fit for your operations.

Each Software Link below takes you to an in-depth review, covering pricing, features, pros and cons, and RedHammer’s expert analysis to help you make the best choice for your business.

For Small Companies (Revenue: Up to $7 Million)

Small construction companies need simple, cost-effective construction accounting software solutions. This section offers recommendations for software that provides essential features without overwhelming complexity, helping you manage your business effectively.

• QuickBooks Online: Ideal for small companies, offering basic accounting and job costing functionality with an easy-to-use interface.
• QuickBooks Enterprise Contractor Edition: Tailored specifically for contractors, this version of QuickBooks offers specialized features for job costing, project management, and contractor-specific financial reporting.

For Medium-Sized Companies (Revenue: $7 Million to $50Million)

Medium-sized companies require a balance between ease of use and advanced features to manage their growing needs. Consider the followingoptions:

• Sage 100 Contractor: Balances ease of use with advanced features like job costing, project management, and financial reporting, making it suitable for growing construction companies.
• Viewpoint Spectrum: A comprehensive construction management solution offering robust financial and operational capabilities tailored for medium-sized businesses.
• Sage Intacct: A cloud-based financial management solution that integrates well with construction operations, providing strong accounting and reporting features.
• Sage 300 CRE: Designed for larger mid-sized construction firms that require detailed job costing, project management, and financial reporting.
• Foundation Software: Offers robust job costing and project management features, making it ideal for medium-sized construction firms.
• CMiC: Offers an all-in-one solution with integration capabilities, suitable for medium-sized companies managing a range of projects.
• ComputerEase: Designed for small construction businesses, offering strong accounting, project management, and job costing features.

For Large Companies (Revenue: $50 Million to $500 Million)

Large construction firms require software that can handle the complexity of large-scale projects and intricate financials. The following are well-suited for these needs:

• Viewpoint Vista: Provides comprehensive project management, financials, and field operations, making it ideal for large firms.
• Acumatica: A cloud-based ERP offering comprehensive construction management tools, excellent for large, growing companies that need scalable solutions.
• NetSuite: A robust cloud-based ERP that supports complex construction operations with strong financial management, project management, and CRM capabilities.

For EnterpriseCompanies (Revenue: Over $500 Million)

Enterprise-level construction companies need robust software that can manage vast operations, complex projects, and extensive financials. Consider the following option:

• JD Edwards EnterpriseOne: An enterprise-level ERP system that offers extensive capabilities in project management, financials, and supply chain management, making it suitable for large construction enterprises with complex needs.

Key Points Summary: Software Implementations

After exploring the various aspects of software selection and implementation, it’s essential to recap the critical points. This section summarizes the key takeaways, offering a quick reference to help you focus on the most important elements of your project.

• Document Your Requirements: Thoroughly document your current and future software needs to guide your selection process.
• Assess Your Team’s Capabilities: Ensure your team has the necessary skills and consider bringing in experts if needed.
• Plan and Manage Implementation: Prioritize comprehensive planning, including stakeholder engagement and detailed project management.
• Prepare for Data Migration: Clean up and map your data carefully to ensure a smooth transition to the new system.
• Ensure Scalability: Choose software that can grow with your business and handle increased complexity.
• Prioritize Functionality & Reporting: Focus on selecting software that meets your specific business needs without unnecessary extras.
• Invest in Training: Start training early to ensure your team can effectively use the new software from day one.
• Manage Change Effectively: Communicate clearly and manage resistance to ensure smooth adoption of the new system.

How RedHammer Can Help You

Implementing construction financial software can be challenging, but RedHammer offers specialized services to guide you through every step. This section details how our expertise can help you avoid common pitfalls, optimize your software, and achieve the best outcomes for your business.

• Customized Solutions: We work closely with you to understand your unique needs and provide tailored software solutions that alignwith your business goals.
• End-to-End Implementation Support: From planning to post-implementation support, we guide you through every step to ensure a smooth transition.
• Data Migration Expertise: Our team ensures that your data is accurately migrated, preserving data integrity and avoiding costly errors.
• Comprehensive Training Programs: We offer training that’s tailored to your team’s needs, ensuring that everyone from project managers to accountants can use the new system effectively from day one.
• Ongoing Support and Maintenance: We provide continuous support and maintenance services, so your software remains up-to-date and any issues are resolved quickly.
• Optimization and Customization: We help you customize and optimize your software to meet your specific operational needs without overcomplicating the system, ensuring it remains user-friendly and effective.

Learn more about RedHammer's Software Implementation Services