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Construction projects can mean big profits or big losses. The difference usually is how well the project was managed. Trades contractors who manage their projects closely see problems and take action earlier than those who don’t, preserving profits that would otherwise dwindle over the course of the project.
ServiceTitan helps contractors maximize their profits with a powerful set of project management tools. Unfortunately, not many people seem to know ServiceTitan can help them better manage their construction projects.
Product Manager Tha Mhlanga set out to change that at Pantheon 2023, ServiceTitan’s annual conference for the trades. In his presentation “Managing Projects for Profits,” Mhlanga showcased ServiceTitan’s capabilities for managing construction projects alongside its commitment to creating the best solution in the industry.
“I work specifically on construction projects and around job costing, our project tracking workflows, anything WIP (work in progress) reporting-related, budget versus actual, progressive billing, and AIA billing. That's kind of where I live and breathe here at ServiceTitan,” Mhlanga said, introducing himself along with co-host Jake Squiers, General Manager of Ferrara's Heating and Air Conditioning in Lufkin, Texas.
From there, Mhlanga showcased how ServiceTitan makes managing construction projects easier, with Squiers sharing real-world examples from Ferrara’s.
Sometimes these projects are 12, 18 months long, and they may have been estimated even a year before that. By the time you get to the end of the job, I'm just relieved there’s a profit.”
Project Tracking: Understand Budget vs. Actual in Real Time
“By show of hands, who here uses the Project Tracking functionality right now?” Mhlanga asked. “Okay, there's only a few. We need to get those hands up.”
Mhlanga has good reason to feel enthusiastic about Project Tracking. It provides real-time visibility into project billing and job costs across every phase of every project. That helps contractors see their current profitability and opportunities to improve it.
“It allows you to do several things, but it's really a one-stop shop for tracking your documents or a centralized document management, automating tasks that are happening on all your different jobs and projects, streamlining your purchasing processes, initiating purchase orders within your project tracking, and then also being able to progressively bill,” Mhlanga said.
Project Tracking functionality tracks costs such as materials, equipment, and labor. It then calculates cost variance so contractors can see if they're under budget (green) or over (red). With important data like this automatically tracked, calculated, and summarized, contractors become proactive instead of reactive about project costs.
For instance, a general manager could look three to six months out on a project and see they need to push invoices now to ensure sustainable cash flow.
How Project Tracking Helps Ferrara’s Manage Projects for Profits
Ferrara's Heating and Air Conditioning uses Project Tracking to profitability manage construction projects up to 12- or even 18-months long.
“Ferrara's has been in business about 40 years. We do a lot of residential and commercial service work, but about 60% of our total revenue is in large-project mechanical bid-spec and design build, as well as building automation,” Squiers said.
As Squiers detailed how Ferrara’s stayed profitable on a school addition project nine months in, he shared some tactical ways he uses Project Tracking to do so.
“So, in this case, I usually separate our general equipment, our big rooftop units, and grills and such. I'll break that out as a separate value because oftentimes we'll get that equipment in before we actually have to install it. Well, on this equipment line it's almost $270,000. I break that out because once that’s received at our warehouse, I can bill for it,” Squiers said.
He further explained, “Once you get equipment, you know an invoice from that vendor is pretty soon going to be coming. So, I want to get that equipment billing out there as soon as possible, so that maybe 35, 40 days later when I actually do get paid on that pay application, I can use that cash to pay for that equipment.”
Progress Billing: Get Paid as Quickly as Possible
“Who here, by show of hands, likes to get paid as quickly as possible?” Mhlanga asked. “Okay, that's everyone.”
That’s where Progress Billing helps out. Progress Billing helps ServiceTitan users get paid faster by reducing much of the friction involved with billing construction projects.
“In creating AIA billing and every single enhancement that we continue to make, all we're trying to do is to allow you to get paid as quickly as possible by making the AIA billing process efficient, making this construction billing process efficient, so that you can set up your schedule of values,” Mhlanga said.
Progress Billing allows contractors to set up a schedule of values as soon as an estimate is created, such as how much they intend to bill in a specific period. From there, it generates G702/G703 forms and invoices, and exports to third-party accounting systems.
How Progress Billing Helps Ferrara’s Manage Projects for Profits
“I've got about 50 large construction projects that are active, meaning they're under contract and on a monthly basis, usually about 30 of them I have to do progress billing,” Squiers said.
Getting paid faster isn’t the only benefit Squiers sees from Progress Billing. He also likes the AIA billing capabilities because it improves the visibility of work done each billing period.
“All of our general bid-spec work contracts usually require AIA billing, but I actually like the AIA billing for even our design build or end user because it gives a good description of the work that you're doing on a progress basis, because the whole goal is to generate an invoice that someone's going to pay,” Squiers said. “So, it's kind of like a status report and an invoice at the same time.”
Work-in-Progress Reporting: Know the Difference Between Work Done vs. Work Invoiced
“We know that as a part of billing and incurring costs throughout the course of a project, we need to be able to track work in progress. We need to be able to ensure that we're recording revenue accurately at the end of the month,” Mhlanga said.
ServiceTitan’s Work in Progress (WIP) Reporting tracks all projects in progress. The benefit for contractors: They can compare monthly earnings based on a percentage of completed work versus what they invoiced customers.
“We know those things aren't the same thing,” Mhlanga said. But with WIP Reporting, contractors have clarity on billing both as a percentage of work done and as work invoiced, helping them better understand their projects’ profits.
“You can just go into the WIP report, look at all your projects that have been ongoing for that specific period of time for the month, and then take a look at the over-under billing, or look at all the revenue on that project, all the total cost on that project,” Mhlanga said.
How WIP Reporting Helps Ferrara’s Manage Projects for Profits
For Squiers, one of the biggest benefits of WIP Reporting is the ability to see a high-level financial status of all Ferrara’s active projects.
“So what I love about this is that while you can go into a single project and get all the details, I needed something to kind of pull all of 50 projects together at a snapshot at any given time to see how it's going,” Squiers said.
That view lets Squiers surface critical financial data, such as estimated margins versus actual margins, and estimated labor hours versus actual labor hours.
Another reason Squiers loves WIP Reporting: It helps manage work backlogs and plan remaining work.
“When you're budgeting for the next year, you can easily see how much backlog you're bringing into that new year for budgeting, and how much of that backlog we’ll be invoicing in the next year,” Squiers said.
