TK Constructors Estimating Coordinator Amber Chew-Block explains what came next: “We determined the most effective way to get in front of new houses was to run a sales pro forma report and highlight all the options that had a price but no cost behind them. Our purchasing coordinator worked with our estimators to build the material list for the options we were selling. We also built the material list for all 30 of our standard homes. This helped us identify the actual costs of building each of these elevations. Our estimators, who produce our POs, would no longer estimate and enter every house manually. The team has switched gears, and instead of estimating every house, they estimate options before we even make them available to the customer. Also, it is no longer first in, first out for quotes. We can enter the quotes as needed for production. We have analyzed and now perform the work based on critical points in our process.”
The changes have made it easier for the accounting department as well.
“Paying directly off the purchase order has become easier for our accounts payable as the purchase orders are more accurate,” Amber says. “A new administrative position in the purchasing department receives and researches variances to ensure that double and errant payments are not made. Implementing an in-house form for these variances puts the superintendent in the driver’s seat, letting the purchasing administrator know what they have agreed to with a subcontractor, speeding up processing time on the variance, and keeping communication clear. The number of variance POs we used every time the order changed is projected to decrease by 1.3 million from last year.”
Amber says they also implemented the use of cost codes, allowing projects to be broken down by category, such as framing labor vs. framing materials on a PO. They can use these to isolate and extract specific data, such as how much they spent on framing labor alone. “We didn’t know anything about these before; they are a great way to track spending on each house,” she says.
According to Amber, cost codes are just one of the things they learned by being proactive and taking ECI’s Purchasing 101 class. “The class gave us further insights and a different view of the amazing things that can be done in the system with just a few keystrokes,” she says. “Many on the team also attended in-house training on report writing to push the business to the next level.”
And price increases?
“When the costs for material or labor go up, we enter it, and everything is updated so when we create a PO, the correct price is filled in automatically,” Amber says. “It’s been a game changer and a time saver. It used to take me two POs per house. Using the Update Purchase Orders utility has made what used to be a massive undertaking into a short, sweet, and to-the-point process. Before this, cost increases would be recognized on the variance purchase order as it took too long to redo all the purchase orders. Now when one supplier changes pricing, it’s a few clicks. The system does the work and saves us about 20 hours a week of work.”