Ontario contractor Sierra Infrastructure integrates project management software with its estimating software, and increases its profit margins with estimates that reflect its true operating costs, ForConstructionPros.com and Equipment Today magazine, by by Don Talend, brand storytelling, content management, and content strategy expert. Construction industry

1. Home // Profit Matters // Project Management Software Makes Sierra Construction’s Bidding More Profitable
Infrastructure contractor only gets the margin-targeting value of bidding
software after integrating it with a project management system’s detailed cost
records
Sierra Infrastructure, Woodstock, Ontario, uses estimating software that allows inputs of comprehensive unit costs by
input category. Also, the project management software it adopted in 2015 makes it easier to capture the true costs of
project inputs.
VIEWPOINT
By Don Talend, Contributing Editor
Adopting estimating software allowed Sierra Construction to target specific profit margins on
jobs and tasks, but the real boost to company’s bottom line didn’t come until they integrated
project management with the estimating system.
VIEW GALLERY
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2. According to Mike Zaluski, general manager of Sierra Infrastructure, the Woodstock, Ontario,
-based firm’s division that builds municipal water systems, wastewater treatment plants and
sewer and water mains, the company primarily used Excel for estimating until 2009. Estimating
benefited somewhat from improved job costing when Sierra started using Bid2Win software,
now known as B2W.
The bidding software allowed estimating based on the costs of different machine and labor
class inputs, whereas Sierra had previously tracked only overall crew costs and machine hours
with its Excel-based process. But job costing still lacked the detail required for the kind of
forensic accounting estimators need to build in and protect profit margins.
When Sierra added Viewpoint Vista project management and financial software in 2015, the
company began to get a handle on its true costs, Zaluski says. Prior to that, “Our job costing
was very inaccurate,” Zaluski says. “It mostly told us how much labor was spent and how many
materials were purchased and it wasn’t broken down into the types, so we weren’t really able
to break down our costs. Now everything gets sorted out so we can drill down into the actual
components and we know the exact costs of labor and equipment and what makes them up.”
Prior to using the new project management and financial software, “A lot of costs went into
what I’ll call almost overhead that didn’t get allocated to jobs properly—the controls weren’t
there,” Zaluski says. “Fuel for machines is a good example. In the past, we had a big fuel bill at
the end of the year and we would divvy those up across all of the projects.”
The Vista software centralizes digital versions of all invoices by project so that they can be
allocated to the correct inputs and project managers have a central location for approval.
Now, “We have a target profit, not only by project but by task so that we can tell how much
profit and overhead we anticipate making on each task,” Zaluski says. “Then, as we track that
task and how much time was spent on it and how much material was used on it, we can see
which tasks are above or below the estimate.” When a project is complete, Sierra can analyze
project profitability, both overall and by individual inputs such as materials. Also, the company
can track individual change order inputs and determine the change order’s profitability.
Also, by monitoring projects with monthly profitability reports, Sierra can adjust cost inputs
even before completion in many cases. For example, a given project might be overstaffed,
which often correlates to equipment underutilization. Or a project might be using 20% more
gravel than expected at a given phase, so Zaluski will start asking questions that potentially
lead to a reduction.
Improved visibility to job costs has given rise to a more strategic approach to bidding projects.
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3. While company revenues have remained steady for now, Sierra is equipped with more insight
into its operating costs and is pursuing more high-margin projects and forgoing less-promising
projects.
Now the estimating process is more efficient, too. Zaluski can delegate many estimates to a
junior estimator and check the rationale behind costing against objective historical cost data if
necessary.
To get everyone up to speed on the Vista software, Viewpoint sent someone to train Sierra’s
implementation team, which consisted of two employees from accounting and one employee
from each of the company’s other divisions. Then, the company held a full day of training for
the rest of the staff and the implementation team manager provided ongoing training for
project managers.
The learning curve for Vista was a fairly short one, Zaluski says. He adds that more-experienced
employees may have resisted changes in habits – for example, recording project
documentation with pen and paper. He attributes the contrast to less-experienced employees
learning new habits, rather than having to replace old ones.
The number of projects Sierra has bid on has increased 40% to 50% since the company
integrated the B2W bidding with Vista software, according to Zaluski. Sierra is bidding on fewer
private and municipal projects in favor of what Zaluski describes as more complex,
management-heavy projects such as a recent light-rail transit project as a subcontractor.
Greater complexity means greater business diversification for Sierra in the short term and
Zaluski expects the average contract amount and thus overall revenue to increase in the longer
term.
“Our win ratio is a lot lower, but we get to throw more darts out, so to speak, and we’re able to
bid more jobs at potentially higher margins,” he says. Most importantly, the use of the bidding
and project management software has boosted Sierra Infrastructure’s overall operating profit
margin by a few percentage points, he reports.
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4. Sierra Infrastructure, Woodstock, Ontario, uses estimating software that allows inputs of
comprehensive unit costs by input category. Also, the Viewpoint project management software it
adopted in 2015 makes it easier to capture the true costs of project inputs.
B2W
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