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Choosing A Job Management System - What Is Right For Me?

*written with contribution from Robert Mark, Head of Growth at Tradify HQ (NZ)

The world of job management can be an overwhelming one at times. The range of options, and the depth of business discussions make this a difficult decision for many business owners. In my opinion, one of the greatest challenges is that “job management” is a blanket term that is too broad to cover such a wide variety of industries and business models.

With this in mind, it is my view that job management can be split into two key areas: (i) service-based job management, and (ii) project-based job management. The business objectives of these two groups are fundamentally different, and the most important step is to determine which broad job management structure your business fits into.

This article delves into the key differences between the two business structures:

*Service: Manage many jobs and reduce non-billable downtime.

Service businesses often have staff on the road and a high turnover of jobs within a day. These include the likes of: plumbers, electricians, PC repair, HVAC, cleaners, security, equipment hire, mechanics and home maintenance businesses. These businesses are looking to easily track time and materials on the go, manage multiple jobs in a day, and schedule staff so that these jobs are delivered on-time. The service business must first determine a correct billable rate for their staff. This should be suitable for their skills and level of expertise, and consistent with industry standards. It is also essential from a financial view that the billable rate is sufficient to cover labour costs, operating expenses and profit margin.

Provided the billable rate is correct, the two fundamental requirements for these business owners are as follows: (i) Ensure billable time of all staff is maximised, (ii) Ensure all billable work is invoiced and paid for based on this calculated hourly rate.

* Information about service-based business provided by Robert Mark at Tradify HQ

See example below for a service-based job financial breakdown

Project: Deliver a project within timeframes and within budget

In contrast, the project-based business commits to deliver a project within budget, regardless of the actual hours spent, or the cost to the business. Project-based job management businesses include the likes of: engineers, architects, consultants, IT project managers, creative agencies and those in the building and construction industry. These business owners need to plan in advance, separating their projects into stages with key milestones throughout. To ensure these milestones are reached, they use budgeting and forecasting tools to plan timeframes and costs by stage. The project-based business takes on the risk because of the potential to reap the rewards if the project is delivered under budget.

The key requirements for a project-based business to ensure success are as follows: (i) Measure against previous projects to ensure the quoted rate is accurate; (ii) Track the profitability of a project throughout, with detailed reporting at each stage; (iii) Set key dates throughout the process to ensure project milestones are reached, (iv) Plan the resourcing of projects, assigning staff and setting timelines to deliver specific outcomes.

See example below for a project-based job financial breakdown

Why is this important?

The decision to implement a new job management system in your business is not one that should be taken lightly. I’d always encourage a company to conduct due diligence, and explore the best option for their business needs. There are currently no systems on the market that are an ideal fit for both service-based and project-based job management.

I speak to a number of business owners that are in the process of trialling ten or more systems, and are feeling overwhelmed by the whole process. I’d suggest that it’s simply not feasible to thoroughly test ten systems. My personal recommendation is that you narrow your search to a maximum of four systems.

Once a business understands the broad job management category that they fit (service or project), this will help decision-makers to narrow their search, rather than feel overwhelmed by the vast array of options on the market. This in turn will help them to better research the right systems, and to ask the key questions to get the best results for their business.

Service-based Job Management Software examples include: Tradify, Geo-Op, Fergus, SimPro, Service M8, SmartTrade

Project-based Job Management Software examples include: WorkflowMax, ProWorkflow, Tidybuild, Harvest, BuilderTrend, Microsoft Project

Here is a summary of the fundamental differences between Service-based and Project-based businesses:

Service

  • Easily manage lots of jobs in a single place
    High turnover of jobs
  • On-charge time and materials
  • Reduce admin time - simplicity
  • Easily plan and adjust the daily schedule for all staff
  • Create jobs, quotes and PO’s on the go
  • Fix and supply work on the road
  • All time tracked under single ‘labour’ task
    Easy link to supplier product lists
  • Standardised billable rate across many jobs
  • Access to app: geo-tracking and photos
  • 5 or 6 tabs per job (task/costs)

Project

  • Easily track the profitability of each job against a quote
    Generally longer-term jobs lasting over two weeks
  • Work has estimated timeframes and deadlines (mostly fixed price)
    Ability to backcost time and materials against estimates (budgeting)
    Access all job information in a single place to improve job planning and budgeting
    Breakdown of projects into stages to split time and costs into key deliverables
  • Time and costs tracked at each stage to improve reporting by stage
  • Ability to customise jobs for different clients, categories, stages, and billable rates
    Scheduling focused on longer-term capacity planning across all staff and projects

To find out more about what's right for you, let's have a chat. 

Robert Mark: rob@tradifyhq.com

Stewart Ellison: stewart.ellison@xero.com


 

 

Service: Financial Breakdown

Billable rate - $150 per hour
Cost rate - $70 per hour
Gross profit (billable less cost) - $80 per hour
Overheads by staff member - $1200 per week

Example 1 (40 hours - 100% billable week)

Revenue (150*40) - $6,000
Cost (70*40) - $2,800
Gross profit - $3200
Less overheads - ($1200)
Profit - $2000

Example 2 (20 hours - 50% billable week)

Revenue (150*20) - $3,000
Cost (70*40) - $2,800
Gross profit - $200
Less overheads - ($1200)
Profit - ($1000)

Example 3 (Breakeven - 27 hours - 67.5% billable week)

Revenue (150*27) - $4,050
Cost (70*40) - $2,800
Gross profit - $1,250
Less overheads - ($1200)
Profit - $50

To avoid losing money on each staff member, the business owner requires that his staff members work a minimum of 27 billable hours per week (breakeven - 67.5%). An average weekly billable rate of 28 hours will only produce $50 profit, and is unlikely to be a sustainable business.


 

 

Project: Financial Breakdown

Quoted - $15,000 (100 hours at $150 per hour)
Estimated cost - $7,000 (100 hours at $70 per hour)
Expected gross profit - $8000 (100 hours at $80 profit per hour)
Overheads by staff member - $1200 per week

Example 1 (project delivered in 100 hours)

Invoice on quote - $15,000
Actual cost - $7,000
Actual profit - $8,000

Example 2 (project delivered in 80 hours - under budget)

Invoice on quote - $15,000
Actual cost - $5,600 (70*80)
Actual profit - $9,400

Example 3 (project delivered in 120 hours - over budget)

Invoice on quote - $15,000
Actual cost - $8,400 (70*120)
Actual profit - $6,600