The Virtual CFO

Requirement 2 for Successfully Implementing Construction Project Budgeting: Project Managers Understanding How Budgets Can Benefit Them, Part 1

(Now back to the construction budgeting series)

I once worked for one of the larger general contractors in Tennessee, Hardaway Constriction Corporation. My main role at Hardaway was to look after the company’s interest as it spun off one of its divisions to an ownership group of the divisions’ managers.

There were jobs being completed by the division for Hardaway and the division was beginning to obtain work under the new company name. Because of this, we had regular meetings to discuss the status and progress of the jobs the division was completing for Hardaway Construction.

At one of these meetings, we were discussing how a project manager had been uncooperative to a request I had made. In frustration, I made the comment that the project manager is already acting like he owns the place. When I said this, Mr. Hall Hardaway stopped me and said, "Project managers become project managers because they want to be in control and run their own business, which is what a project is".

Project managers run projects for construction companies and they are the ones who are ultimately responsible for the profitability of a project. Additionally, project managers have the greatest ability to control and influence the expenses associated with a project.

This is the reason that project managers must understand that budgets will benefit them in order to successfully implement budgeting of construction projects.

The Virtual CFO Recommends Windows Desktop Search

I chose Windows Desktop Search because it would allow me to search Outlook emails and documents as well as the contents of the files on my hard drives.

Over eighty percent of the correspondence and documents I receive from clients are via email (the other ten percent I scan and electronically file on my hard drive). It is not uncommon for me to receive twenty or so "fact filled" emails from a client while preparing a set of financial statements. It obviously takes time to go through these emails when I am looking for a particular fact a client has supplied.

I also keep client’s work papers on my hard drive. So there are times when I have to open multiple documents before I am able to find the information I am looking for.

I installed Windows Desktop Search two Thursdays ago and I began using the application on Friday morning while working on a client’s financial statements.

I was able to use Windows Desktop Search to find every document I needed while working on this client’s financial statements. I was able to search for text within files as well as contents of email correspondences. Microsoft’s Windows Desktop Search had no problem finding searched text within Word, Excel, and PDF files (I have Adobe Acrobat Professional and I use its OCR function on all PDFs).

I often remember that a client has given me a particular fact, but don’t remember exactly where that fact can be found. When this occurs, I usually have to read through multiple emails or files in that client’s directory to find that particular fact. For two weeks, I have been able to use the desktop search to find these facts in a matter of seconds.

For example, last week I was working a second set of financial statements for another client. On the first set of financial statements, we exchanged several emails concerning a particular account balance. I needed to review one of the client’s responses concerning this particular account balance to see if it was relevant to statements I was working on.

Prior to installing a desktop search application, I would have had to look through multiple emails in order to find this correspondence (I just looked and I have received fifty-nine emails from this client to date, so it may have taken awhile to find the email I needed). I used the search terms "client name" and "name of account in question" in a Windows Desktop search and in less than five seconds I had found the email I was looking for.

I had another client call to ask a question about a forecast I had prepared earlier in the year. Prior to using Windows Desktop Search, I would have had to drill down to this client’s directory using My Computer in order to find the forecast. In a few seconds I was able to find this file by searching "client name" and "forecast".

After two weeks of hands-on use of the program, I am very impressed with the performance of Windows Desktop Search. The hardest thing for me to do is break the habit of using My Computer to drill down through directories to find the documents I need.

Happy Thanksgiving from The Virtual CFO

The Virtual CFO and CPA for Small Business would like to wish you and your family a happy Thanksgiving holiday.

The Virtual CFO is thankful for:

• My wife;
• My daughter;
• Our families;
• My clients! I really enjoy serving you and your businesses;
• Living in a country where you can create your own opportunities and income as an entrepreneur;
• The men and women serving our country in the military; and
• All the people I’ve worked with, and for, in my professional career.

I hope you enjoy your day off!

The Virtual CFO Experiences Problems with Google Desktop Search

Google Desktop was the first application I tried. I did this on the recommendation of the webinar panel member and without evaluating the alternative desktop search applications available.

I installed Google Desktop last Tuesday evening and indexed my computer’s files. After the indexing was complete, I ran a few test searches and was impressed with the results.

After booting up on Wednesday morning, my computer began to run extremely slow. At one point, it took over a minute for an Excel file to open. I pulled up Windows Task Manager and saw that Google Desktop Search was using 100% of my CPUs processing power.

It was impossible to be productive when my computer was running so slow. I spent a considerable amount of time waiting for files to open and applications to complete processes. I was unable to find a way to stop, pause, or schedule Google Desktops’ processing to a later time so it wouldn’t use all of my CPU’s processing power while I was working.

I searched the Google Desktop help forum and found that other users were experiencing the same problem. Google moderators acknowledged that they knew about the problem but there was no solution available to stop the program from using 100% of the CPUs processing power.

I uninstalled Google Desktop Wednesday morning and decided to take the time to evaluate the desktop search alternatives available. I had used Google Desktop Search enough before uninstalling it to know that a desktop search program would work well with the paperless directory structure I have been using.

When my analysis was complete, the choice came down to three products, Copernic, Windows, and Yahoo! Desktop search applications.

In my next post, I will discuss why I chose Windows Desktop Search as my desktop search application and my experience using this product.

The Virtual CFO Evaluates Desktop Search Applications

(I’m going to take a brief, three posts break from the construction budgeting series to write about my experience this week with desktop search applications and how Windows Desktop Search can help you work more efficiently.)

CPA for Small Business, LLC has a paperless office. Last Tuesday, I participated in a CPA continuing professional education webinar where optical character recognition in a paperless CPA office was discussed. The webinar was taught by a panel of paperless office experts and CPAs whose firms were paperless.

During the session, one of the participants asked the panel members how they organized and searched for documents in a paperless environment. One panelist said that his firm used My Computer to organize its paperless documents and Google Desktop for searches.

I was interested in this answer because I had recently purchased a document management program to index CPA for Small Business’s electronic documents. I was planning to install and implement this software before tax season.

When I thought about the panel members’ answer, I decided to see if a desktop search tool would work for me. I already use My Computer to organize my client's files, so using a desktop search application would allow me to add a search component to the file organization structure that I already have in place. This would be a far better alternative for me when you consider the time it would take to learn to use a new document management program as well as the time involved in importing all of my client’s documents into this program.

In my next post I’ll discuss my frustrating experience with Google Desktop Search.

Requirement 1 for Successfully Implementing Construction Project Budgeting: Part 2

The project manager mentioned in the previous post was paid a base salary plus a quarterly bonus of 15% of the net revenue for his projects. His wife served as this project manager’s clerk and she was responsible for creating the quarterly bonus request that the quarterly bonus was paid from.

After the budget implementation failed, the owner of the company asked me to analyze this project manager’s bonus request for the prior year. The analysis showed that the project manager had not included any of his project’s direct payroll related cost (such as employer FICA, Medicare, and unemployment taxes) or any of the company’s overhead (such as his project’s share of workers’ comp, liability, or health insurance cost, fuel for superintendents vehicles, etc.) in his quarterly bonus request.

When these expenses were deducted from the revenue the bonus was based on, we found that this project manager’s projects made $100,000 less than reported on the prior year’s quarterly bonus requests. This meant that the project manager had been paid $15,000 more in bonuses than he actually earned for the year.

After reviewing the analysis, the owner and I agreed that this was the reason the project manager refused to participate in the budgeting process. At this point, I gained the owners support and we successfully implemented project budgeting at this company.

Requirement 1 for Successfully Implementing Construction Project Budgeting: Support from the Owner and/or Top Management

If you are going to successfully implement budgeting for construction projects, the number one requirement is that you have the support of the owners and/or top management.

I was once the CFO of a construction company where we attempted to implement project budgeting. The company had grown from a $2 million to a $5 million/year business because of one project manager’s jobs. This project manager knew this and he used it as leverage to get his way at this company.

When we began budgeting projects at this firm, this project manager balked and told the owner that he didn’t think that the budgeting process was worth his time. The owner refused to make this project manager participate in the budgeting process. In this situation, the owner did not put his support behind budgeting for individual projects and the result was that budgeting at this company failed.

Without owners or top management support, budgeting for construction projects will undoubtedly fail.