I'm An Accountant, What Do I Know About Estimating?

A prospective client recently asked if I was qualified to train his staff on SMB Basic Estimating, and what was the best database to use. I responded:

You are correct - my background is in accounting, and I have never worked as an estimator in the real world. I have implemented SMB Basic Estimating for about a dozen companies. I do have a thorough understanding of SMB Basic Estimating, having been "certified" in Estimating, as well as Service Receivables, Project Management and Report Writing, for over 7 years. I teach estimators how to use the program, not how to estimate.

I do have strong feelings about Estimating with SMB:

• SMB is a terrific estimating tool for an experienced estimator.
• It does not replace an experienced estimator, but makes the estimator more productive, and the estimating process more transferable to other estimators in your company.
• SMB Estimating implementations will fail unless the company designates a responsible estimating employee empowered and enabled by management to spend the time and effort to ensure that the estimating implementation is done in a fashion consistent with existing estimating assumptions and practices. This is a working position, not supervisory.
• In my opinion, there are no useable prebuilt databases for SMB. I have little confidence that any prebuilt estimating database has the materials that your company buys, at the prices that are available to your company. The production rates for labor in a prebuilt database are similarly a mystery - do they really reflect the production capabilities of your company? Finally, prebuilt assemblies are not necessarily reflective of how your production staff will approach a project.
• I think that using the same database as all of your competitors (like RS Means) for anything other than a "rule of thumb" test of your own estimate, is likely to leave a contractor in the middle of the pack on bid opening day.
• I am a firm believer in a company taking full charge and responsibility for the most important task that they can do - estimating and bidding their work. If they cannot take the time to build an estimating parts database, assemblies and templates that reflect their typical materials, the prices they receive from their suppliers, the production rates that reflect their crews' talents and shortcomings, the assemblies that make sense to their estimators and project managers, and the templates for the types of projects for which they typically compete, then they should not attempt to use SMB Basic Estimating.

This is the point where some will say "this accountant is full of manure," but like I said, I have some strong feelings (and real affection) for SMB Basic Estimating.

Changes to Arizona Withholding

Arizona Income Tax Withholding Amounts are calculated as a percentage of the Federal Income Tax Withholding Amount. Federal Government has recently reduced the amounts to be withheld for Federal Income Tax. In an apparent effort to avoid a corresponding decrease in Arizona Income Tax Withholding Amounts, Recent legislation has increased the percentages to be used for calculating the Arizona Income Tax Withholding Amount.

Follow this link for a table of the new changes.

Sage Master Builder users will have to manually adjust the Rate column on each Arizona employee’s Arizona State Income Tax calculation. Effective May 1, 2009, replace the previous percentage rate with the new percentage from the above table. Another manual update will have to be done on January 1, 2010 as indicated above.

New SMB Update is Available

Sage recently released a new update which includes revised federal withholding tax tables that reflect changes as a result of the recent economic stimulus legislation. This update also includes a change in how workers compensation is calculated in Utah.

Current Tech Support subscribers should have received an email notification, probably dated 03/19/2009, with a subject of "Sage Master Builder Software Update 09-C". This email contains a link and instructions on how to download and install the update.

Send us a note if you have any questions or concerns.

UPDATE

The new update, which is contained in a file named SMB1340.exe, inadvertantly broke the Master Builder API, which is necessary for interfacing with some third party applications. As soon as Sage realized the problem, they corrected it by issuing a patch for the API, SMBAPI1340.exe. So, if the API is important for your company, don't forget to download and install the API patch, SMBAPI1340.exe, after installing the tax update, SMB1340.exe.

Frustrations!

One thing that really saddens us is when we find a Sage Master Builder user that is frustrated with his use of the program.

All too often, users continue to perform tasks in the way they (or the person they succeeded) were taught, without exploring whether there is a better way to accomplish their tasks. One of the great blessings (and curses) of Master Builder is that there are often several ways of using the system, some of which may be better suited to a particular user’s needs than others. There are many keyboard shortcuts often ignored that can help with a process. Templates are available in many different areas but frequently overlooked.

Many times, we hear from an owner or manager who wants to see certain information in a report, but no one has produced that report to meet his needs. We can often show him an existing report that meets his exact requirements, or gets close enough to satisfy the user’s need. There are over a thousand standard system reports that come with the program, as well as a very useful report writer that can solve many other needs. The Query Wizard can create on screen reports very quickly as well! We also use Crystal Reports to create complicated reports when we determine that the Master Builder report writer cannot solve a particular problem.

The stories of dissatisfaction with the way a user’s system was originally configured and implemented are the most frustrating of all. Too many times, users have tried to implement their own system without experienced implementation assistance. Some sales pitches in the past undersold the value of implementation assistance and encouraged new users to install, configure and implement the program themselves, relying only on the Internet-delivered classes and the on-line help screens. We have helped many such frustrated users reconfigure their systems or even re-implement their entire system, leaving the users much happier.

What is most frustrating to us is that many users just don’t know that they can begin to solve the problems that cause their dissatisfaction with a phone call!

Solutions for a Difficult Economy

We get a lot of questions about what contractors should do during a recession. My answer is really simple – Do What You Should Have Been Doing When Times Were Good! There’s no time like the present to start doing those things that would have made you more efficient and profitable during the good economy.

What sort of things?

• Don’t waste money on unnecessary capital expenditures or overhead. That doesn’t mean “Don’t Spend,” but just be certain that the spending is for necessary and beneficial costs. If you’re overhead is bloated with more staff than needed, more office space and expenditures than needed, or other questionable costs that you know the company really doesn’t need and doesn’t contribute in a meaningful way to the company profitability, cut it out! How much more profitable would you have been during the good times if you had taken this approach then?
• Take a Zero Based Budget approach to your overhead. Don’t just accept the rationale that we spent this amount last year, so we’ll spend 5% more this year. Look at every overhead cost and ensure that it is necessary and productive.
• Don’t stop marketing! Just make sure that your marketing efforts are properly targeted and cost effective. Marketing during a down economy will continue to build market awareness of your company so that when the economy does rebound, your sales efforts should slingshot forward, unlike companies that cut their marketing when the economy started to slow down.
• Control your job costs as if your company’s life depended on it, because it does! A recent survey showed that job cost slippage, or the difference between estimated job costs and actual job costs was the single largest predictor of success or failure among a select group of remodeling contractors. Failure to accurately estimate job costs and failure to produce the actual work according to the cost estimate result in lost profits that fall straight to the bottom line.
• Perform job autopsies to learn why you have job cost slippage. Job autopsies should be performed on jobs to determine why you did well on some jobs and poorly on others. The information learned from an autopsy should then be used going forward to improve on future jobs. See my white paper on Job Autopsies for more information.
• Use your technology wisely. If you have invested in Sage Master Builder, make sure that you are reaping the efficiencies available so that your staff is doing the best with the limited resources available. If you aren’t using a purchasing management system for subcontracts and materials purchases, consider implementing one to increase management control over such costs.
• Training is a wise investment. Training staff to perform their jobs more effectively is almost a no-brainer! Making sure that your staff knows how to use their tools the right way, whether it’s a new machine in the shop or Sage Master Builder will increase staff efficiency, enabling them to do more work in the time allotted. Like any other cost, make sure that the training is cost effective and time and cost savers like the internet are being used, rather than spending large sums on travel and lodging.

I often worry that the media is stampeding everyone into a doom and gloom scenario during this recession, prompting businesses to overreact to the economic forecasts. Pay attention to your own economic indicators and react to them appropriately.

What Causes Master Builder Data Corruption?

Those Sage Master Builder users that read their original installation instructions (and you might be surprised at how few actually bothered to read the installation instructions!) may remember an instruction to Turn Off Write Behind Caching. Too often, when working with a client that has experienced data corruption evidenced by General Ledger Audit errors, we find that Write Behind Caching is not turned off. Sometimes we find that it was never turned off on a particular machine, or the machine was recently replaced and they forgot to turn off the caching when they installed Sage Master Builder, or a well-meaning computer technician turned caching back on while trying to improve the perceived performance of a computer.

What is Write Behind Caching? Write Behind Caching is a technique used by the Windows operating system to improve the perceived speed of a computer. If a computing process includes a significant amount of writing data to a hard drive (which is a relatively slow process) and there are other processes to be performed, the operating system may decide to hold the data that is to be written to the hard drive in RAM or volatile memory until the operating system decides that it now has the time to write the data to the hard drive.

This can create real problems for most accounting programs that involve complicated postings or writing data to a hard drive. When Master Builder saves an accounting transaction, there are often a large number of posting or writing processes involved. If the entire transaction, with all of its data postings, is not completely and timely written to the hard drive, the data may not be available for use by another concurrent user. If part of a transaction is being held in the cache of computer that suddenly loses communication with the hard drive to which the data is to be written (as with a file server), the complete transaction may never get posted into the data files and data corruption, including unbalanced transactions and unposted updates to records, may result.

The long and short of it is simple – turn off the Write Behind Caching on each machine that uses Sage Master Builder! The nearly imperceptible loss of processing speed is a small price to pay for reducing or eliminating data corruption and those pesky audit errors.

Feel free to send us a note if you need help in checking your Write Behind Caching status.

New Budgeting Tool for Sage Master Builder Users!

I’m really excited about a new product on the market for use by Sage Master Builder users – zMgtToolkit by Zoom Integrated Products.

One of the more tedious tasks that SMB users face is creating operating budgets and loading them into the General Ledger Account records. The problem is compounded when departments are used as there is no automated process for entry of the department operating budgets into the department sub-account records or roll up of the departments budgets into the consolidated account.

zMgtToolkit solves this problem with a powerful and information packed budget creation and posting tool. At $295 for the first user license (and $59 for each additional user), the program is a bargain and will pay for itself in saved time the first year that you use it for your budgets!

The program is named a toolkit because Zoom is developing a series of modules that will perform a number of other useful tasks, including

• Budget Forecasting
• Budget Management
• Budget Historical Review
• Break-Even Analysis
• Cash Flow
• Charts and Graphs
• Pivot Grid
• Reports
• Department Allocation
• Unapplied Direct Cost Allocation
• Overhead to Direct Cost Allocation
• Archive Import
• Cost Code Conversion
• Parts Update
• Assembly Quick Replace
• MB Find and Replace
• Recalc Assembly Totals
• Recall Jobs

When these modules are developed and available, there may be nominal additional license fees.

Send us a note or leave a comment if you want additional information.