Take Control of Commercial Projects: Tools and Strategies for Predictable Project Outcomes

State of the Construction Industry

According to a recent ServiceTitan survey of 1,000+ specialty contractors, the major challenges facing commercial service contractors are:

• Budget overruns (83%)

• Rising material costs (64%)

• Rising labor and overhead costs (63%)

• Raising wages to be more competitive (55%) 

• Average time to get paid after pay application submission (38 days)

“So really, all core critical pain points, struggles, and challenges that customers and the industry at-large are facing that we seek to solve with some of the workflows we have in ServiceTitan,” says Mthabisi (Tha) Mhlanga, ServiceTitan Senior Product Manager.

>>Download our Commercial Construction Industry Report for key insights shaping the commercial construction industry. 

Optimizing Project Profitability

Contractors can manage profitability in ServiceTitan by using the budget versus actual tracking and project financial dashboards.

“This is truly meant to provide real-time visibility on what's going on from a project perspective in terms of our budgeted costs and against our actual costs, material, labor equipment—all of those different elements that make up our job costing, that make up profitability itself,” Mhlanga says.

The goal is to help commercial contractors manage more efficiently, so they can make smarter decisions that impact profitability in a good way.

Here’s a quick look at project financials and budget versus actual.

Project Financials

ServiceTitan’s project tracking module starts with a project dashboard that displays the project number, name, status, business units, service address, and who to bill to. On the left panel, you’ll see tabs for the Dashboard, Project Plan, Task Management, Financials, Jobs & Appointments, Estimates, Purchasing, and more. 

When you click on the Financials tab, you immediately see a project summary with key performance indicators (KPIs) highlighted to show you exactly where things stand on the project. These critical KPIs include:

• Contract value

• Actual billed to date

• Total budget expenses

• Total actual expenses (equipment, materials, labor, subcontractors, etc.)

• Cost to complete

• Change orders 

• Cost adjustments

• Margin tracker

• Earned revenue (to calculate work-in-progress and over/under billing)

• Open invoices

• Payments

• Budgeted versus actual labor hours

The real-time data on margin tracking, earned revenue, and actual billed to date keeps projects rolling at Solace Enterprises, an 85-employee commercial HVAC, plumbing, solar, service & construction company based in Sacramento, Calif.

“We use this data. The project managers and our director of construction are using it on a day-to-day basis,” says Gary Shurtz, Chief Operations Officer/General Manager of Solace Enterprises. “You know at any given point, you're looking at the best, most current data.”

Solace, a $30 million business, also knows its labor costs in real time, with 65 field personnel clocking in and out using the software and automatically applying those hours to specific projects. And if Shurtz wants to know the last time Solace got paid on a particular project, he just drills down into the open invoices to find the data.

“A lot of really cool things that just give you an overall pulse of where your project's at, and then also give you a highlight into what areas need a little deeper dive,” Shurtz says.

The open invoices, in particular, can help you know when it’s time to collect payment on a project and work to shorten the time between application for payment and receiving payment, Mhlanga adds.

Budget vs Actual

ServiceTitan then drills down into more detail with its Budget vs Actual table so you can stay on top of purchasing and manage any delays.

For example, you can immediately see the actual expenses billed as compared to actual expenses incurred, and if either of these columns go over 100%, the entire bar at the top turns red to alert you to take action. ServiceTitan is currently working on adding a new alert to notify you before these columns turn red.

Shurtz says ServiceTitan really allows you to customize and fine-tune your settings here so you can see what you have in terms of committed costs for the whole project.

“It gives you a better quick glance to say, ‘What percentage of my budget have I used?’ Not just the impact from a dollar standpoint, but percentage as a whole. ‘What can I anticipate is still going to hit this project from a material standpoint, from an equipment standpoint, from a labor standpoint?’”

The differently colored project labels are also customizable.

“You can set those as you wish for your projects for your trade, and you can really map certain items in your pricebook that tie directly to those project labels to streamline and make sure you're comparing apples versus apples on how you estimated a project,” Shurtz says.

The Budget vs Actual table also shows:

• Original budget (original sold estimate)

• Change orders

• Cost adjustments

• Total budget (projected)

• Committed costs (such as unreceived purchase orders)

• Actual budget

• Variance

• % of budget used

The goal, Mhlanga says, is to help commercial contractors see real-time data on all costs associated with any project. Whereas before in ServiceTitan you could only see purchase orders and vendor bills, you can now see all of your costs committed to that project.

“You get the option to choose how this actual cost column is being dictated and being decided,” Mhlanga says. “This is the way we manage profitability in ServiceTitan today.”

Managing Cash Flow

More than 500 customers now use our Application for Payment feature to manage cash flow, Mhlanga says, and the feature will continue to improve as more contractors use it. 

“It allows you to efficiently bill your customers in a very seamless way so you can collect payment on time or as early as possible, or as early as the GC [general contractor] actually releases that payment to you,” he adds.

To use this feature, scroll down to the bottom of your Financials dashboard and choose “Add Application for Payment.” Here, you can choose the project label to bill out to customers or use the description on your estimate. Contractors typically use project labels for internal purposes and send the full estimate description to customers. 

“Contractors want very specific things on the AIA billing, on the schedule of value line items. So being able to split that up allows you to edit and modify it however the customer or the GC wants to look at it,” Mhlanga says. 

For Solace Enterprises, the Application for Payment feature improved efficiency by eliminating the need for redundancy. Before, Solace created a project estimate in its previous software, but then they also had to manually create an Excel sheet for the specific schedule of value line items. Now, they use ServiceTitan’s continuation sheet (schedule of values), which is derived directly from the estimate.

“You set the retainage on the project upfront, and it's going to default to withhold that percentage from every invoice, from every line item,” Shurtz says. “Once you have your continuation sheet filled out, it's a quick click to generate an invoice that directly ties to that Application for Payment.”

Shurtz suggests completing these Applications for Payment as a team so your project managers can discuss what’s already been billed, what’s still coming, and what the forecast looks like to complete the project.

“It helps so much, just making sure from a cashflow standpoint that you're covering costs,” Shurtz says. “It's really, really helpful in terms of just streamlining the billing process.”

Holistic Project Reporting

If you're managing multiple commercial projects in ServiceTitan, it’s much more efficient to review all projects in one place. That’s where Holistic Project Reporting shows you profit margins, earned revenue, billing schedules, and more for every single project that’s currently underway.

“Holistic Project Reporting is meant to provide you with that one place to be able to see all of this information, so you can make decisions quicker, manage profitability, and have that real-time visibility,” Mhlanga says.

Under the Documents tab, you can find the active projects report (work-in-progress) and filter it to find data on:

• Estimate details

• Job status

• Payroll hours

• Purchasing

• Project costs

• Revenue

• Over/under billing

• Estimated margins

• And more

At Solace Enterprises, Shurtz says he consistently uses the same WIP template so everyone is familiar with it, but he tweaks it to meet three different purposes:

1. Weekly production meetings and active project management — “Every week, our construction team gets together to go over any active projects on that report to identify any issues early. If we're bumping up against our estimated versus actual hours, labor hours, or labor costs, we're highlighting that right away to say, ‘Hey, it looks like we're nearing capacity or we're nearing budget on hours. What's going on? Are we close to done?’”

2. Accurate monthly billing, including anticipated costs — “Costs that hit that month, total costs that hit the project, and then a spreadsheet where our team has the ability to add anticipated costs they know are coming. If we're anticipating by the end of the month that 85% of the cost on this project is going to hit it, then we need to make sure we're billing over 85% of the revenue so we're not in a negative or an under-billed position to manage the cash flow.”

3. Work-in-progress (WIP) billing — “Your accountant will love this once you get it dialed in. Your over/under billing is calculated at the click of a button, assuming you have strong project data. And that's a feature that's built right in within the WIP report.”

“It's truly comprehensive in the sense that we use it to start projects, we use it to manage our projects, we use it to bill our projects, and we use it for the financial side and our over/under billing calculations at the end of every month,” Shurtz says.

Connecting Operations in One Platform

The improvements ServiceTitan made to its construction workflows and connecting service and construction operations in one platform is what persuaded Solace Enterprises to switch to the commercial construction software in February 2023.

“That was the big thing for us, because we'd been managing multiple softwares previously. And there's a lack of continuity of communication between them and access to information,” Shurtz says.

For example, if the company’s install team replaced a piece of equipment for a customer, the service team assigned to maintain that equipment for the same customer for years may not know it was replaced because the data lived in a different software prior to ServiceTitan.

“What we see, ultimately, is that ServiceTitan is our foundation. It's our source of truth for really anything project-, job-, or customer-related. And if it can incorporate all of that in one place, it just streamlines things so much. We're not training people on two, three different softwares. They're getting trained on one,” Shurtz says.

“We’re trying to streamline things, make communication flows more efficient, make project historicals more efficient, all of that,” he adds. “For us, it's been a game-changer. If you work in our company and you touch any sort of revenue-producing division in terms of service construction, energy solutions, it doesn't matter. This is your hub, this is where you live, this is where you find information.”