By Joseph P. Leverich, CPA

Investing in top-of-the-line financial management software can lead to fewer mistakes in estimating, bidding, project management and job-cost accounting. In short, an upgrade in your technology can help your construction company better compete in today's tough marketplace.

But the dizzying array of applications makes this a difficult buying decision — especially for a contractor who's trying to keep busy on the job site. To get a better handle on what you need, let's look at each of the major steps in such a purchase.

Questions to get started

Strange as it may sound, technology upgrades demand a bit of soul searching. That is, when making the decision, you need to think about what your construction company truly needs and will be able to use. What type of system and functionality would you like? Do you need a basic estimating software program? Or would a more powerful system that integrates financial, project management, purchasing and inventory activity be more appropriate?

Assuming you already have some technology systems in place, compatibility is an issue, too. If you're using an older operating system, new software may not be compatible. In that case, you'll be looking at additional costs to have an IT consultant update the older applications or upgrade both hardware and software.

When making the decision, it's recommended that you also get input from your staff. For example, your accounting and scheduling personnel should be able to tell you what types of reports they need from a new system. From there, you can develop a "wish list" that you can use to compare different packages.

In addition, talk to customers who use the software you're considering and ask them questions on "the good, the bad and the ugly" with the application features. They also can grade the vendor's technical support — a critical factor with any software purchase. Also ask other contractors who've used the software for at least one year to see if they're satisfied with their purchase.

A vendor "hot list"

As you might expect, there's no shortage of vendors selling financial management software. So, just as you'd do your homework on a heavy equipment purchase, do it for your software as well.

Generally, longevity will be a plus. Look for companies that have been in business for at least five to 10 years and have a track record of successful implementations, and a long list of satisfied customers. Also find out what kind of technical support is included with your software purchase.

For example, is on-site software training part of the package? If not, you'll likely need to send your IT person out for training, which could cost you additional dollars in travel expenses. In addition, if you buy a top-of-the-line system but the vendor's customer service is nonexistent, you and your employees won't be happy.

Your ultimate goal is to create a "hot list" of the top vendors. With your list in hand, you can get to the serious business of comparing and contrasting the various bids. To aid you in this critical decision, ask for free trial periods or extensive online demos to help you determine the best product for your construction company.

Implementation tips

Once you've decided on a product and vendor, there's still one more important step you must take: implementing the software. You could jeopardize the entire purchase by failing to implement the software upgrade properly.

For starters, designate a project manager to lead the transition to the new application. Next, back up both your existing programs and data in case the upgrade doesn't "take" the first time around. And, before "going live" with the new application, create a test environment to give it a try.

Finally, bear in mind that training and support will be very important over the long haul. Allocate enough time for your employees to get proper training on the new system, and consider engaging an outside consultant to be on call for technical questions and issues. This will help ensure you and your employees get the most out of the upgrade.

From horror to happy

You've likely heard horror stories of construction companies that haphazardly attempted to upgrade their financial management systems only to lose time and money fixing the resulting problems. Approach this task cautiously to ensure your upgrade story has a happy ending.