Job Costing Software Proves That Time Really Is Money

At a loss for how to increase profitability in his seven worker shop, Mark Stearns, Owner of Alaskan Wood Moulding in Anchorage, paid a sizable sum to a business consultant "basically to insult me - to tell me everything I was doing wrong in my business." The advice came down to this: Stearns needed a better grasp on his employee s productivity. His knew the material and equipment costs of making customized moulding, but could only guess at how efficient his workers were. The problem was that he could not be certain which jobs were money-makers, which were losers, when he wasn t sure about labor costs.
Immediately after implementing a computerized job time-tracking system, Stearns noticed that employees weren t standing around for 10 minutes at the end of each day guessing on their time sheets. When he saw his profits increase after using the system for more accurate job-costing, he knew he had found the solution. Tracking labor time on jobs has helped Stearns decide which jobs to seek out and which ones he should turn down. We ve found that if it is a smaller job, we have to be much more cautious because we can lose money a lot quicker, he said.
Job time-tracking software has been developed specifically for shops by companies like TaskKlock, Trakware and Data-Maxx. Some utilize user friendly technology as simple to use as an ATM, where workers touch a screen and the program records their hours by task, from how long workers spend sanding or running the band saw, to doing non-productive tasks like cleaning the shop or taking a lunch break. Such systems immediately compile worker task time for management to see how long it took to complete one job or task versus any other. Worker, or machine productivity may also calculated and reported for management to evaluate which processes, employees or machines complete the task or job most efficiently - generating the most profit.
When it comes to increasing productivity and profitability, no shop is too small for job and labor tracking. Time-tracking software is available on the market for shops as small as one person. Barrie Nadin owner, operator and usually sole shop worker of Phoenix Installations in Orlando, Florida benefits from a system based on an in shop touch screen. There s only me here so I m often interrupted in my work. Because the touch screen is so easy to use, I can switch from one task to another quickly and keep it all recorded.
For owners of most such small shops, the added burden of task tracking and job time costing often seems too prohibitive of an administrative indulgence. That s exactly who needs an automated task time tracking system the most: the business owner doubling as the shop worker who simply doesn t have the time to track job time. As Nadin explains, I m not a record keeper, so without an automated system I would have no way to realize where I don t make money. Now I can see where I m not making profit and so I m able to address the problems. I can see my own inefficiencies and focus more on the tasks that I can actually bill for.
To determine exactly where that line is between the cost of completing a job and turning a profit, Greg Diez of Millworx, a custom cabinet shop in Pacoima, California relies on a time-tracking system to precisely monitor the elusive costs of doing business. We job cost every thing we do whether it s $500 or $5,000. Job costing to me is what drives this business. I get down to the very smallest component of my business and make sure that what I m bidding is making money for me.
Once workers clock in on the system they already have to know what job they re working on, said Tom Corkery, owner of European Techniques, a cabinetmaking shop in Prescott, Arizona. Before, they would punch in and then kind of walk around and look for something to do. Now they have to know what they re going to do before I can pay them for their work. It s helped increase the amount of awareness on the job.
And it s not just the shop workers who are made more aware and productive. Most importantly, using a software system to track task and labor time has made Corkery himself more precise with his actual job costs. Most cabinet jobs are pretty much guesswork, he said. But this will tell us whether we are making money on a job. This precision translates into more accurate bidding which creates efficiency on the job right up front.
Chief Estimator at Pegasi Unlimited in Phoenix, Arizona, Debbie Hernandez tracks time on jobs to give her accurate data for bidding a job. "Everything we do is custom. Estimators joke that it s like throwing a dart at a bulls-eye. The more accurate the data I can have, the better my aim."
In Diez s opinion, It doesn t matter what size a business is, if monitoring labor is cumbersome we must ask ourselves what we re not doing instead to be making money with that time. For a smaller shop, because we juggle so many duties, it s even more important to be using our time more effectively and incorporating as much automation as we can.
The author, Mark Stearns, is the founder of Alaskan Wood Moulding, a custom woodworking company in Anchorage since 1989. Mark and Walter Erskine also developed a timekeeping and job costing software, TaskKlock, for AWM. They created a separate company and have been selling TaskKlock in North America since 2001.
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