A Windows-based financial management system that encompasses both accounting and project management allowed MCW Consultants Ltd. to handle an increased volume of work due to significant organic growth as well as growth from acquisition of another company, without increasing the size of its accounting staff.
More specifically, since 1990 MCW Consultants Ltd. has increased revenues by 65 per cent, number of employees by 50 per cent and with the help of the powerful new Wind2 accounting software, the accounting and administration staff has remained constant. This ability to do more with the Wind2 Software product has helped put the MCW Companies 15 per cent above the average revenue per employee, for a firm of comparable size as published in the Association of Consulting Engineers of Canada 1999 Business Survey.
The software enables the existing staff to function more efficiently by eliminating some of the redundant tasks they used to perform. For example, they no longer enter information from employee time sheets into a spreadsheet to track projects. Employees do this themselves using the new software. And since project management and financial systems are integrated, the accounting staff no longer manually enters data from the project management spreadsheet into an accounting program.
They save additional time in the consolidation of data from the firm's four (4) offices. For management, the new system has been valuable in adapting to the larger volume of business by providing reports that give an immediate picture of the firm's profitability.
MCW Consultants Ltd. is a mechanical and electrical consulting engineering firm with offices across Canada. The firm provides engineering audits, conceptual design, detail design, construction management, and commissioning services for both new construction projects and renovations. MCW Consultants Ltd is involved in projects across Canada and around the world from Hong Kong to Moscow.
Duplicate data entry
MCW Consultants Ltd. employs approximately 120 people. Fifty of those are engineers while the rest are support staff. The accounting department, which handles the firm's $10 to $15 million annual revenues, consists of three employees in the Toronto office, one in Winnipeg, and two in Vancouver. These employees are responsible for compiling information related to project status, such as data from engineers' time sheets, and consolidating it with the financial information such as billing and expenses. In the past, this required them to manually gather time sheets and type the information into the spreadsheet that tracked project status.
They also spent time manipulating the spreadsheet data to summarize the information. The spreadsheet was not integrated with the DOS-based accounting software so there was also the time-consuming step of manually entering data from the spreadsheet into the accounting program. Once a month, financial data from each of the four offices was consolidated so that management could evaluate the performance of the entire firm. Employees in Toronto and Vancouver prepared hardcopies of their data and sent them to Winnipeg. There an employee re-entered the information. The process of re-entering the other office's data required between three and four days each month.
In addition to the time lost to data re-entry, this approach did not provide management with the information needed to track the profitability of on-going projects. Determining the numbers of hours spent on a project required gathering information from time sheets and a project management time schedule. Determining expenses required similar efforts using expense reports and the financial accounting software. It was difficult, however, to keep both the project management spreadsheet and the financial system up-to-date. By the time information became available, it was often too old to be valuable as a means of telling where a project stood in relation to its budget.
To improve the efficiency of the accounting process and to get a better handle on profitability, MCW Consultants Ltd. decided to combine the tracking of time and expenses in a single program that handles both project management and financial accounting. They chose the Wind2 Financial Management System (FMS) for Windows from Wind2 Software, Inc., Fort Collins, Colorado. The Wind2 System fully integrates general accounting functions with project invoicing and reporting, budget control, profit analysis, employee management, cost proposal development, and accounts receivable tracking. Besides being impressed with the comprehensive reporting capabilities of the software's report writer, Crystal Reports, MCW Consultants Ltd.'s research indicated that this was one of the best time-tracking programs available. Management also appreciated the fact that there was excellent local support available from Brink and Associates, Toronto.
Integrated system
Now employees enter their time daily from their PCs using the software's timesheet module, sparing the accounting staff the task of compiling this data. The information is instantly charged to the appropriate project, giving each local office manager up-to-the-minute project reports. These reports are generated by the software's business management module, which accesses employee time records, as well as project expenses and client receipt information, to show where labor costs stand in relation to the project billing. Because the reports are available at all times, there is plenty of time for corrective action to prevent overruns. If a manager sees that a project is 50 per cent complete, for example, and that 75 per cent of the labor costs have already been incurred, he can work on remedying the problem prior to final billing.
Once the time and expense information has been entered, it can be used to create invoices with hardly any additional effort. The invoices are more complete because, for example, if an engineer has entered a five-dollar plotting charge for a job into the software, the billing module picks up that item up the next time a bill is generated for that client. Project management information also moves seamlessly into financial accounting, eliminating the need for time-consuming consolidating entries that were required in the past and making it possible for management to obtain a real-time picture of business performance.
The monthly consolidation of the four offices' data goes much faster with the new system. All offices provide their Wind2 data for the month electronically for integration into the Wind2 program. The entire process takes one person about one-half hour, eliminating the three or four days of data re-entry that were required in the past. Because this information is integrated with the financial system, real-time financial reports are available within hours of the completion of monthly billings.
Standard and custom reports with critical information
The software's report writing capability gives MCW Consultants Ltd.'s management the ability to take action on potential problems earlier than they could in the past because the reports are available instantly and both financial and project data is complete and up-to-date. For example, the custom designed gross margin report shows, for each project, the actual labor cost to date, expenses, how much has been billed, and how much has been collected, giving management an instant picture of profitability. If a project manager sees that a lot of employee time is being spent on tasks that were not in the original estimate, he or she knows that it's time, if negotiations for change orders have not commenced with the client, to start them. Or, by seeing $20,000 in expenditures that haven't been invoiced, he or she knows it's time to bill that client. Also, the time journal report shows each person's chargeable versus non-chargeable hours. This allows management to take action and adjust staffing levels. Management believes that these reports are indirectly helping to increase profitability by letting them take action on these types of issues immediately. In addition to showing the profitability status of each project, the gross margin report can also be generated to show the profitability status of projects for an individual office, and for the entire company.
MCW Consultants Ltd., with the help of Brink and Associates, using the system's built-in report writer customized some of Wind2's many standard reports. The customization was done primarily to simplify the standard version and maximize the comfort level and familiarity of the report format so that management would embrace its use. In some cases, however, the customization was done to turn a generic report into one that is specific to MCW Consultants Ltd. For example, the accounts receivable report was customized to include the firm's name and the local office that generated the report. Client names are portrayed in bold print to make them easy to identify. These sorts of changes are an aesthetic improvement over the reports from the old DOS-based accounting system that were generated in plain text on a line printer.
MCW Consultants Ltd. is a larger company than it was before the implementation of an integrated accounting-project management system. But the efficiencies of this approach allow the same size accounting staff to handle the increased activity. One person's time is no longer wasted each month re-entering financial data for consolidation. More importantly, in spite of the increase in the firm's size, management now has a better understanding of its overall performance, thanks to current and accurate profitability reports.
Bob Morrison is Financial Administration Manager with MCW Consultants Ltd. For more information visit www.wind2.com. ET