Kristin’s Construction Corner – Improving Construction Processes by Integrating Lean Six Sigma

We hope you find this educational video from KatzAbosch’s Construction Service group beneficial. Using six sigma in construction accounting is an excellent way to improve your business. Whether you are a business owner, an executive, or a team leader, there are many ways that our process improvement consultants can help you including with the implementation of six sigma.. To learn more about six sigma or our process improvement services please click here.

Six Sigma in Construction Video Transcript:

Hi contactors, Kristen Bailey here, CPA and certified construction industry financial professional at KatzAbosch, a CPA and consulting firm that specializes in construction contractors. 

Today, we have with us special guest Claudia Walter, a shareholder of KatzAbosch, and a lean six sigma green belt. She’s helped several contractors eliminate waste and be more efficient.

Thanks for joining us, Claudia.

Good morning, Chrissy.

Claudia, what are some of the most common back office procedures to see contractors perform that do not provide the benefit they think it does?

Well, a lot of companies still print customer and vendor invoices and keep paper files. Paper files take up a lot of room, and there’s a lot more likelihood of misfiling. Also, there are people who print things just to scan them in instead of saving the data electronically and with a

little bit of training they wouldn’t, you know, they would avoid that time waste and paper waste

Although saving files electronically seems like more work, it allows people access across the firm from various locations you know even on vacation or a job site, and it’s much easier when you’re trying to retrieve a document. You can be on a phone call with somebody and you can look into something right there at your computer versus having to track down the file in a specific document and get back to someone. Also, if you implement standard naming conventions and something is misfiled or if the files themselves are OCR, it’s much easier to find a document that’s misfiled or lost.

If you do have vendor invoices emailed to you, make sure you’re using a central email box like accounts payable at yourcompanyname.com. It’s much easier to manage documents in a central location than your overall inbox, and multiple people can have access. You can have access to that inbox along with oversight and cross-coverage in the case of unexpected absences

Thanks, Claudia. When I am out visiting clients, I do see a lot of paper files lying around, and a lot of clients are referencing paper job binders. 

Yeah, speaking of job binders. Many contractors keep a lot of paper and manual information for jobs which is available in their system and can easily be retained in their software. 

If invoices are emailed in or if they email them to their customers an electronic version can also be saved with the posting itself, and many contractor software will allow application of burden  and will create the job cost schedules and even post the over and under billing adjustments for you. 

I’ve seen clients use excel to accumulate costs or change orders, and it often creates a duplication of information that’s available to them in their software, maybe with a little bit of setup. So, if you’re not using these features, it could be a huge time saver. It also helps to eliminate errors that are more likely to happen outside the system

Another thing a lot of software does is track pto. We see a lot of this done manually or in excel and again, not being directly in the system, it’s the information is more subject to errors

Absolutely. What about cash management procedures?  Anything there?

A really great banking feature is positive pay. It allows the bank to only clear the transactions that have previously been sent to the bank for approval. So, in today’s fraudulent world, it can really help you to avoid scams and you know it’s just really good control. Some banks even link with your software in order to help you clear transactions so that can be a time saver.

A lot of banks will allow you to set alerts on both your banks and or credit card accounts to alert you to low balances, high balances, transactions over a certain dollar threshold, and even events such as logins and credit limit changes. Additionally, using a lock box or requesting electronic payments will make cash available more quickly and also help to eliminate the need to scan checks or go to the bank.

So, it sounds like there can be a lot of time saved around monitoring bank accounts, credit cards, the bank reconciliation, and getting cash in the bank. So, thanks for joining us today, Claudia.

Contractors, we know it’s much easier to stop doing something or to make some small tweaks to your current process than it is to start a whole new process,  but if you have any questions or want more information around process improvement, please feel free to reach out to us. Thanks for joining us today and we’ll see you next time.