Finance Leadership in Construction’s Next Generation – with Jennifer Murphy

Rishi Srivastava (00:00)
Welcome to Finance at the JobSite, the podcast where construction finance meets the field. I’m your host Rishi Srivastava, founder of Being Human. In each episode, I sit down with construction CFOs, controllers, owners, project managers, IT leaders, ERP consultants, and industry experts to uncover how they connect the back office with the field, choose and implement technology, manage cash flow, and drive profitable projects.

Whether you are running the numbers, leading the team, or designing the systems that keep projects moving, this is your place to learn what’s working, what’s broken, and what’s next in construction finance.

Rishi Srivastava (00:41)
Today our guest is Jennifer Murphy. Jennifer, welcome.

Jennifer Murphy (00:44)
Thank you.

Rishi Srivastava (00:45)
First section here is on your role, background, and ESOP context. Can you share your journey to becoming CFO at Pleune Service Company and CFMA’s national chair?

Jennifer Murphy (00:57)
Sure, I’d love to. Thanks for asking. I started my career after getting my accounting degree in very large manufacturing companies. That was my experience. I’d worked for ISO 9000, big manufacturing companies. Situation came up though where I either had to move to another state or change jobs and I left that and I ended up my job. I was a controller and a general contractor. It was my first…

into construction and I really didn’t know what construction accounting was versus what I had been doing so heavily in cost and manufacturing accounting. And someone at the company I was at recommended CFMA, which is Construction Financial Management Association. And it’s an organization that is geared around people in the financial ⁓ industry of construction companies.

And so I joined back in 2006 just to learn more about construction accounting because if I had learned it in college, I didn’t remember any of it 15 years after college. So that was where I joined and first heard of CFMA. I spent about three years at the general contractor I was at and we ended up closing the doors. And from there I went to Pleune Service Company where I’m at now. I’ve been there almost 16 years. We are a

commercial heating and cooling company. We work in the state of Michigan. We’ve been in business 52 years and we are an ESOP, which means we’re an employee-owned company. We became a partially employee-owned company in 1988, so 37 years ago. And we’ve been 100 % employee-owned since 2002. So 23 years is 100 % employee-owned company.

leadership at our company, especially our president, from the minute I joined really encouraged us to be involved in the industry. And so I was already a member of CFMA, but not what I would call an active member. I went to meetings, I attended some classes, and so I got much more involved in our local board, local committees, served as our chapter president in 2016-17. After I did that,

I was asked to start doing some more at the CFMA national level. And so I served on some committees nationally for CFMA and then got asked to be part of our executive committee. So CFMA is a nonprofit, but we are what we call member led. And so our board and executive committee are all made up of members of the organization, but we all actually work for companies in the construction industry.

So I served on our executive committee for three years and then was asked to be an officer. And so this year is my third year in the officer track and I’m the national chair. So I’m representing our 99 chapters and 11,000 members across the United States. And it’s been a great honor. It’s an amazing organization and I have so many peers.

that I can bounce stuff off that experience the same things I do all over the country. And so it’s been so rewarding and I’m blessed that my company encourages me and supports me being involved in it because it takes me away from the office quite often.

Rishi Srivastava (04:02)
I listened to you in the CFMA annual presentation. It was so motivating. Thank you so much for presenting that kind of presentation. Good.

Jennifer Murphy (04:09)
No, think yes.

mean, and for anyone, I mean, really my present day, you know, every one of us has to find what makes us rich and it’s different for each one of us. And so really, I think focusing on what are those coins that kind of for me being Irish, fill your pot of gold and make you rich. And it can be professional, can be personal, it can be, you know, community, faith, whatever it is, you know, every one of us needs to find those things, though, and make sure we’re doing the things that that

Rishi Srivastava (04:28)
Bye.

Jennifer Murphy (04:38)
fill that pot for you.

Rishi Srivastava (04:40)
Hmm, yeah, completely. What daily behaviors or decision making approaches shift when everyone in the company is an owner under an ESOP structure?

Jennifer Murphy (04:50)
So, you know, when I joined Pleune I had never even heard of an ESOP. I wasn’t sure what it was. And now I’m actually one of our trustees, which means there’s two of us that administer the plan. It’s an ERISA retirement plan. It’s a legal IRS plan for retirement. But the thing that really when people buy in is that there’s no owner that is taking your profits.

So at the end of the year, whatever we make as a company, we retain earnings that we need to retain to manage the next year’s purchases or ongoing operations. But we set a goal every year that’s communicated to the employees at the start of the fiscal year. And once we’ve met that retained earnings we need to keep in, we pay everything back to our employees in profit sharing. So they realize that everything they do and everything they contribute every day comes back to them.

at the end of the year. I try to simplify it because a lot of people don’t understand it. say, imagine you bought a share of GM stock and every time they announce their earnings, as long as they’ve beat their projections, their stock price goes up. And when they have really good years, they pay you a dividend check. we try to speak that way about our company is every one of us is contributing to that pot. And when we beat those projections,

our share price goes up, means your retirement account that you’re putting nothing in, the company’s putting it all in, goes up and then we cut a large profit sharing check to you. So you get cash in your hand that current year for all your hard work, but yet you’re also seeing a retirement account grow for you.

Rishi Srivastava (06:17)
What happens when you don’t meet those projections? So let’s say you do less than what you’re expecting.

Jennifer Murphy (06:23)
You

could see your stock price go down. You’re going to get shares of stock every single year. So, you know, that’s the other thing to remind is we can have a bad year and it’s more than just how our company performs. Your stock value in an ESOP is really what would someone be willing to pay you? Pay for the company if they were to come in and buy it. And so we were having a couple of great years, but with inflation and what happened in interest rates.

our stock price actually went down because now investors are expecting a higher rate of return because interest rates were up. So even though our business performed well and we were putting a lot of money in our pockets of our employees, we actually saw our stock price go down simply based on inflation and interest rates because that’s how they value it is what would someone be willing from the outside to pay for you. So there are factors outside of just how the company does that play into

Rishi Srivastava (07:09)
Thank

Jennifer Murphy (07:14)
the financial, you know, stock value. But the thing we, we really try to engage with our employees is you’re always going to have, it’s just like investing in the stock market. You’re going to have a year or two here or there that goes down. But over the 30 some years we’ve had less than five years, our stock price has dropped. So every single year you’re getting shares and almost every year they go up. so, and your shares don’t stay in at the price you got them. They’re at whatever the value is. So.

If you’re building up and every year that price is going up, those shares you’ve had for years are always valued at the new price. So it’s a long haul strategy. but we have employees that have been with us 40 years, 45 years. I’m the second least senior was 16 years of our exec team. I mean, we’ve got two vice presidents with over 35 years, another, our president at 30. I mean, people stay because they see the value.

in a company that gives, you we’re giving back to the employees because you’re the owners and you actually make an impact every day. All your hard work doesn’t go to somebody’s yacht and country club memberships that comes back to you.

Rishi Srivastava (08:18)
Yeah, as an employee, ⁓ this kind of structure definitely can be motivating. So what are the advantages and challenges of focusing exclusively on the Michigan market as a 30 to 35 million commercial, mechanical, and service contractor?

Jennifer Murphy (08:34)
So I would tell you, know, coming from a general contractor that did work all over the United States, some of the nice part is I’m not every new job figuring out what the registration and licensing and tax requirements in every state we go into and having to file, you know, personal property tax returns and tax returns and withholding and buying insurances in all these states all over. And for us being employee-owned, one thing that’s really important to our employees

is they want to go home most nights to their family. We have employees that have chosen to work for us because we are in a traveling company. There’s some that they like that they want to be in hotels, they want to travel, they do. And we do have jobs occasionally. We’ve got one going right now that’s about two and a half hours from our office and we don’t want our guys driving that, you know, after 10 hour days, that’s just not safe. And so we put them up in hotels, but it’s for a month or two. It’s not a constant.

And so some of the bonuses we actually retain a lot of employees because we are local and they know where they’re going to be working and they know they’re going to be home with their families at night. I would say some of the downsides are it’s harder if say your backlog’s dropping, you’re not winning some work, it’s harder to go find new work because you’re…

region that you can find work in is limited compared to just saying, I’m going to start bidding all over the United States or I’m going to jump in another state. And hey, I know that state unfortunately just got hit with a natural disaster and there’s probably a lot of work there. So that can become a little harder when you do need work. And for our service side of the business, there’s only so much service work and there’s a number of mechanical contractors in our area. And so

We lose some preventative maintenance contracts and we gain some as customers switch, but there’s just not an overextended market that we are in. So that can sometimes be difficult for us.

Rishi Srivastava (10:17)
Mm-hmm.

Next section here is on wip meetings and project controls. How have your web meetings evolved over time? Cadence, attendees, agenda, and which changes most improved forecast accuracy?

Jennifer Murphy (10:27)
Mm-hmm.

⁓ So I would tell you when I started, we would have our WIP meetings and first when I started the company we didn’t have project managers. Our salespeople sold the jobs and project managed them and so it was very hard to have an idea what was happening in our jobs because what might have been a change order they might be giving to the customer so they’d give them future work or they’re not getting paperwork and

Rishi Srivastava (10:48)
Hmm.

Jennifer Murphy (11:00)
We eventually hired project managers and took that away from the sales team. And then initially, we spent a lot of time, our WIP meetings seemed to be operation meetings. The PMs would say, this is what’s going on in the job, and I’d have sales asking, well, why? And then they were problem solving the jobs in our WIP meeting and they took hours and I still didn’t get accurate projections. But I’ve worked hard with…

our construction vice president and he was a former project manager and so we spent a lot of time on the importance of the accuracy of the forecast. I’ve spent a lot of time educating our project managers on all the users of the WIP that it’s not just an accounting function. It’s not just, the accounting department needs this. I’ve explained to them how our sureties use it to

give us bonding capacity. I have to give it to our bank quarterly. And I have to meet every year with our underwriter from our bonding to go through jobs on the WIP and why did we lose or gain? I’ve started to involve them in our annual CPA review when the auditors go through the profit fade and look back and the gain and look back. I bring our project managers in to answer those questions.

So they understand why that WIP is so important to be accurate because these are the questions that come up and what it drives outside of just accounting need in that report. So it took a long time, you know, just the education and getting that. But now we hold our WIP meeting the first Friday of every month. Before we get into the WIP meeting, the project managers have the WIP report for two days.

They put together what we call wip notes by job by job. Every project manager puts notes on what’s going on in the project, what their projections are for hours, for materials, for labor dollars, for subcontracts, what change orders. We have the cost and the job, but we’re waiting on the paperwork so we can adjust the contract. And so that’s all given to me prior to the wip meeting, which allows me before I go into the wip meeting to take their notes and projections.

look at what I see in the wip, look at I see an open commitments and then our wip meeting becomes very much more of if I see differences or I can ask questions and I mean we just had our wip the last Friday and we were or actually we had it Tuesday I apologize and we were through it in about 45 minutes in you going through 30 jobs because they come in and then any action items that come out of it.

those same WIP notes, our project assistant puts those right in Sage and we send them out. And so they’re bolded in red. So everyone knows what their follow-ups are from that WIP meeting. And so it has definitely turned it into a very quick and efficient meeting. We have good discussion. We don’t spend a lot of time on what’s going on in the job more than where the, the, ⁓

estimates are, but also if the PMs are running into issues, it gives us time to brainstorm as a team. Like, hey, I might be able to bring up, well, the contract says this, so you have the right to push back here. You know, I tend to be more involved in the contracts or the risk side. And we also, besides the PMs, our project assistant is in those meetings, our construction biller who sets the jobs up and does the billings.

The sales people are invited. Our purchasing agent who does all the purchasing for the job. So if we have questions on open POs or maybe material being returned, she’s in there to answer the questions. The VP of construction is in there. So we have a whole team in there so that we’re getting all the information that we need at that time in that meeting.

Rishi Srivastava (14:31)
Yeah, that slow progression to or maybe fast progression to this perfect fit seems like has been a work for you.

Jennifer Murphy (14:36)
Right.

Rishi Srivastava (14:39)
How do you turn web variances into concrete actions within the same week instead of waiting until the next cycle?

Jennifer Murphy (14:46)
As I mentioned, as we go through that WIP, if we identify certain things that need to be done by someone or need to be followed up, within usually a half hour of the meeting, the project assistant has those WIP notes out with the action items by job in bolded red, and we address that. And then we’re an October 31st year end, and so we sit after our August WIP meeting as a team and we look at all the jobs in the WIP.

to see which ones we might be able to close yet this year, what needs to happen on those jobs in order for them to close. And then we meet again after the September and we’ll meet, we just met again after, say, okay, what progress have we made on these? Are we going to get this done? And so it’s just constant, you know, communication and follow-up and, really having someone that’s taking those action items in notes and getting them out, I think is one of the most important parts of it because it.

you go through a meeting and it’s easy to get tied up and forget about stuff and go on to the next thing, but having those notes come out immediately so everyone is aware of them and then we follow up with each other on our assigned tasks.

Rishi Srivastava (15:48)
using any tool for note taking during these meetings.

Jennifer Murphy (15:50)
Yeah, yep, everything

is put actually in Sage. So Sage 300 is what we use. And in within a job overview, there’s a note for every job. There’s notes. And so that’s where the project managers put their notes before the WIP meeting. And we just pull them out into Excel. And then the project assistant puts those action items right back into Sage. So everything is documented. You can go into that job and read.

If it’s a two-year job, you can read month-by-month notes and action items within that job.

Rishi Srivastava (16:18)
So what I meant to hear was, let’s say there’s this audio meeting going on. Is there some recording of this meeting, this meeting that you have is happening and then maybe an AI is kind of summarizing it or translating Is that something like that you’re doing or maybe not?

Jennifer Murphy (16:33)
No, no,

it’s our project assistant is sitting in there taking notes and yeah, we’re still a little old school in that.

Rishi Srivastava (16:40)
Yeah,

totally makes sense. If a peer contractor asks you for a 90 day plan to tighten wip discipline and speed up cash conversion, what would be your first three steps?

Jennifer Murphy (16:54)
First, I would say you have to get buy-in from your operations management and the PMs that it’s more than an accounting report. So first, getting that buy-in is your first step. Second, then I would say it’s education on whether the CFO or the controller, educating those users on what all that report does and even a basic wip of like…

Rishi Srivastava (17:03)
Mm-hmm.

Jennifer Murphy (17:18)
you give me these numbers, this is what drives us to help them understand the importance of that. And then when it comes to cash conversion, I think one of the important things that we’ve put together is we have a report that goes out every single Monday to our project managers and it comes right out of Sage. We’ve written, it’s called a My Assistant Report and it shows them the balance of AR on every one of their jobs. So.

Rishi Srivastava (17:40)
and

Jennifer Murphy (17:40)
they quickly, every Monday, they have a ballpark, they know what they’ve built. So if they see a job’s got a million dollars and they’re only building, two or 300,000 a month, they know that we haven’t been paid in a few months on that job. So that’s one of that cash conversion. And then we work together as a team on…

asking, you know, following up on payments and things like that. but the first rate, you know, for me, it’d be buy-in education and then finding a way to get reports to them that are useful to them in an easy to read, you know, format.

Rishi Srivastava (18:15)
Yeah, yeah. the field teams, have trouble with really long reports. And we’ve got 50 columns and like 100 rows. It’s hard to figure out what these reports are telling you.

Jennifer Murphy (18:21)
Mm-hmm. Mm-hmm. Right.

Right,

right. We, yeah, we’ve even done that with our wip. We don’t break, we just have a column for labor dollars, a column for materials, a column for subs. We don’t break it down into our plumbing side and our mechanical side. They can, we can dig into that in our ERP if need be. And then a couple other columns we’ve added to our wip, which I think are beneficial is it shows the change in the margin from the prior month to this month so that they can see that.

wow, I’ve got some fade going month over month. And then in the account that shows the profit fader gain since the job was set up. So they have a ⁓ constant visual right there of what’s going on with that job.

Rishi Srivastava (19:04)
I like a useful way to do it. Next section is here Jennifer on job setup, governance and billing discipline. Can you walk us through your no job opens until complete setup process? What documents and approvals are required and how did you get operations and sales team to buy in?

Jennifer Murphy (19:25)
So we have a really nice process now and it’s been a little painful when I started our president happens to own as a mechanical contractor just for you. You have to have a mechanical contractor of record license. You have to have a mechanical license and a plumbing and electric all these licenses. Well, not pulling proper permits and doing things before you start doing work and put those licenses in jeopardy.

And so when I started the company, what was happening is jobs were being set up without contracts, without pulling permits, without doing anything, because the sales team was in charge of setting the jobs up, selling them and setting them up. And so we developed, first we moved to that process under my area, and we came up with what we call basically a job setup form that the salespeople have to fill out that has multiple tabs that

It has to, they have to look through the contract. One, we don’t set a job up unless we have a contract or a PO or a letter of intent that gives us the ability. But they have to fill out, you know, what the billing deadlines are, who we’re billing, where submittals have to be sent to, what are the insurance requirements, is there owner supplied equipment, is it tax exempt? They kind of have a form they have to fill out, which means they’ve got to do some research into their project. And then…

They have to have all the permits filled out and completed. And I review those. They have to have the estimate done. They have to have the schedule of values done because we used to have where just the job set up and then for months and months our accounting department was trying to chase them to set up a schedule of values because we couldn’t bill until that. And so we now have this multi-faceted Excel spreadsheet that and then even all of the

quotes that we have from subcontractors and our vendors, they fill out a tab of the material P.O.s that have to be cut and I tie that to the estimate to make sure everything we have a quote for, one that quote ties to what’s in the estimate and also what ties to what’s filled out and then they do the same for subcontractors. And so when all that’s, when they say it’s all together, it comes to my area, we review it.

And the reason there’s some of the stuff that’s in there that as of known, mean, I don’t care about submittals. I’m not worried about where the insurance cert goes. However, we make sure that it comes in and then my team verifies that everything is there. So one, we’re not starting a job without permits, which doesn’t put any of our licensing at risk. We aren’t starting a job that we don’t have a schedule value so we can start billing right away.

We have all the material POS and subcontract POS so that the minute the job is set up, my purchasing agent can start cutting the POS and getting submittals. She’s not trying to wait for the salesperson to get her copies of who they’re buying what materials from. It’s all spelled out. And the same on the subcontract side. The project assistant knows all of the subcontractors we plan to use, has their quote, and is able to issue them their subcontract agreements for the amount.

so that we have them signed and we have their insurance in hand and we send with their subcontract our billing requirements. So they know the dates their bills are due to us so we can include them in our bills. And that’s the whole reason we have that the front end heavy job setup process is so the minute that job is open, every person from the PA to the purchasing agent to the project managers to the field foreman have everything they need and we’re not.

trying to chase it down later.

Rishi Srivastava (22:48)
So does this kind of process slow down the execution of job, maybe schedule a little bit?

Jennifer Murphy (22:54)
It can, it can. and so, but you know, in our business, you know, construction is not fast for the most part. And so, and we do a lot of, ⁓ I would call what’s called plan spec bid work. So, you know, well in advance, you’ve been awarded the contract, you were the red low or, and so if the sales team is, is doing their work and getting that whole, everything set up as much as they can, cause to no fault of our own, a lot of times the contracts, you know,

we’re battling to get the contract. They want us on site working and we’re like, we don’t even have a contract yet. And so, you know, sometimes that contract comes and they want us on site the next day. Well, that sales team can get that whole file set up so that we can verify everything other than maybe what the bill dates are, what retention is, where we send paperwork and that final stuff that’s in the contract. So a lot of times they’ll have that all filled out. We’ll do what I call kind of a pre-review.

So that the minute the contract comes in we’re ready to go, but it it has held it up But it’s you know for us It’s pretty easy to say to us a general contractor. I can’t go on site without a contract You’re asking me to go out and start doing work without a contract So you know when we do run into our sales team? Sometimes can put stuff off, and then they’re like well. need this done. I got to be on site tomorrow, and I’m like

well, you were awarded this a month ago. And so that’s, know, we sometimes have to play that hard love. What do they say? You know, piss poor planning is not my problem. Sorry, but that’s, but we’re, we’ve gotten really a lot better, you know, as a team. And it’s really, we try to make sure everyone understands how that job set up impacts every person on the team. And so by not doing it,

Rishi Srivastava (24:16)
Yeah.

Jennifer Murphy (24:32)
how you’re actually making that person’s job harder or you’re impacting your teammate because you didn’t do your portion.

Rishi Srivastava (24:38)
Yeah. How do you separate reporting and cash planning for construction projects versus service work and what key metrics differ between the two lines of business?

Jennifer Murphy (24:49)
⁓ so we have within our software system and our, ⁓ everything we do, we have people assigned, we have different departments. So they have their own P and L that we consolidate. know, we have an administrative department, which tends to be accounting, IT, HR, accounts pay it, you know, and then we have, ⁓ a service department and a construction department. And then we, ⁓ consolidate our financials at the end of the month. But.

Service tends to be one I like to say, you I came from a GC where we were a cost plus GC. So our only cash was when we got paid by the owner, we paid all the subs and we hoped that cost plus covered our payroll and then we had what cash left. So it was, we spent a lot of time managing our cash flows and our forecasts and who do we pay and what do do? It was a much different. ⁓

You know, I guess I feel I’m a little spoiled service is kind of a, call it a cash cow for us. mean, you’ve got, you’re out, you do the work, you get billed and most of our terms are net 30. You know what mean? And, so cash is, is coming in continually, which actually allows us, ⁓ on the construction side to, you know, ⁓ be out a little more on some payables with GCs be able to as a, as a ⁓

mechanical contractor, we have to buy a lot of equipment on the front end and don’t get paid for it until it’s installed. so service really helps us manage that, you know, helps with that cash side of it. But the biggest differentiators really are, you know, the margins. The margins in service can tend to be our gross margin can tend to be 40, over 40 to 50 percent.

construction we hope to get 20 to 25 percent. So the margins just you know even the bottom line net margins are significantly different because you know service work you can bill at a much higher bill rate because if someone’s without heat or air conditioning they’re willing to pay a lot more than that you know that new building going up that you’re installing their equipment before they occupy it. So

Rishi Srivastava (26:50)
Yeah, yeah.

Jennifer Murphy (26:53)
You know, those are some of our big differentiators. But we manage, I have an AR person who manages all of our receivables, construction and service. And so she’s following up. mean, to us, I think the position pays for itself. I talked to some of my peers in CFMA and their project managers are the ones following up and doing their collections. We run credit reports on anyone.

before we take them on as a customer because as everyone’s experienced in our industry, we don’t have enough workers. So we don’t want to take on people that aren’t going to pay us. And, you know, when we have a large standing book of customers that we need to make sure we can service them and we sure don’t want to be off servicing other people that aren’t going to pay us. So, you know, my my person is running all those credit checks, setting customers up.

full-time collections and it really allows our project managers to focus on what they should be focusing on. Even our service sales account managers, we may bring them in when we have one of their customers not paying us to maintain that relationship, but they also aren’t having to spend their time trying to collect money from their customers all the time. We have a person doing that.

Rishi Srivastava (28:02)
Yeah, come from a commodities trading background. one thing that strikes me here different is maybe the risk profiles of service versus construction, they’re different. And that’s why you have more return there. So could you talk about risk adjusted return a little bit here?

Jennifer Murphy (28:19)
Yeah,

I mean, so the risk on a construction, I actually think the risk on construction is less because you have lien laws, you you have the ability to lien their property and their title. And normally, you know, when you go to bid for someone, you, you, you’re bidding for a general contractor for us, at least we’re bidding to a general contractor who’s working for this owner. Well, if it’s a public work, there’s bonds involved. So there’s someone guaranteeing that payments coming in and ⁓

on private work, that general contractor is vetted out, you know, that owner as well, because they need to get paid. And like I said, and with lien laws, we have that protection of, of now other chances you don’t get paid. Absolutely. But their last word service, you know, you you’re doing, you know, we’re doing hundreds of invoices a week and it can be a mom and pop dentist office to a small retail shop to a

a Coca-Cola, you’ll play a very large manufacturing production facility. so the risk on the service side actually is more because I don’t have lien rights. My remedy is going to collections, which right away you’re paying 35 % off the top if you get any of that money back once you’ve sent it to collections or you get attorneys involved. So construction’s risky on the work we do and the contracts and the

the pay down but you know for us on the service side we have more bad debt on our service side than we do on the construction side.

Rishi Srivastava (29:41)
Yeah, so maybe that’s why they’re having more margin on service makes sense because there’s just a little bit more risk there. So the next section here is on service operations and mobile execution. Which KPIs do you track to ensure work orders are closed quickly and billing happens on time?

Jennifer Murphy (29:45)
Mm-hmm.

Yep. Yep.

⁓ So once we went mobile, which we did in 2016 on our service side of the business where we were mobilely dispatching work orders to our service techs and so they can see their dashboard, what work orders they have. The first thing it did is it stopped having our office full of service technicians on Fridays filling out three part…

work orders, you know, hand filling those out as well as for customers, because now you’re on site before you leave, you show them the work you did, they sign off and, and a work order ticket is emailed to them right away. You know, so that customer knows what was done. But some of the KPIs we look at is we look at open work orders. We look at the number of work orders that are what we call completed, but not billed, which means they’ve been completed by the technician, but they haven’t been billed.

We look at, we actually create a wip for each service technician on our dispatcher works with them to be, you know, so trying to ask why is this work order five months old? Why is this work order six months old? Because it’s really hard if you went out and fixed something for a customer and you don’t bill them for six months to get it paid for and that customer’s frustrated. So we, you know, we do.

We actually look at any work order that’s over 60 days. Those get extra attention. So we use a handful of items that way ⁓ to look at just maintaining because we do, like I said, on average, we could do 1,000 work orders a week. so having a way to track what ones are open is a big difference.

Rishi Srivastava (31:39)
Thank you for sharing those KPIs. What measurable improvements have you seen since adopting Sage field operations for mobile work orders and PO creation?

Jennifer Murphy (31:49)
A couple of things. One of the big ones is efficiencies. As I was mentioning, know, our service techs might work on, they could some days do five, six work orders, service calls, and they used to have three part carbon copy and they’d have to hand write everything that they did and they’d have to write the parts they pulled off their truck and the hours they spent on that and remember.

⁓ what supply house they ran to and they had to call into the office to cut a PO. Every PO they needed, they had to call the office to cut for those specific work orders. And so we lost a lot of efficiency in just filling out paperwork, as well as we had some technicians that would wait till Friday and then they’re trying to remember what they did Monday, what parts they used off their truck.

exactly how many hours they were there. And then, you know, we have a small office in Lansing, which is about an hour and a half from our Grand Rapids office. And so all those work orders would just get thrown in a bin in the office until someone drove them to Grand Rapids. So they didn’t, they could be done and they couldn’t get billed till they came here and we into Grand Rapids and our billing person had them in front of her to bill. And then she dealt with not being able to read handwriting.

She spent a lot of time on the phone calling back to try to figure out what they had done because she had to hand type those notes into the invoicing to send the invoice. And then for POs, what we’ve been able to do, our service department has grown by two thirds since, or almost doubled since I started 16 years ago, and we’ve added.

Rishi Srivastava (33:09)
Good

Jennifer Murphy (33:20)
to office admin versus the, because now our technicians can all cut their own POs to the work orders they’re working on. You know, they’re filling those, that paperwork out right on an iPad, they hit a button and it’s to my biller. So she has it in front of her and she’s not reading, handwriting, she’s not waiting for them to come in. And another big thing we saw was our, what I would call our truck stock inventory losses.

Rishi Srivastava (33:33)
Hmm

Jennifer Murphy (33:44)
Decrease because every year, you know, you buy everything to truck stock and then it gets relieved from inventories our technicians put it on work orders and charge customers and then at the end of the year they count their trucks and Whatever’s on their trucks versus what we have in our general ledger is a loss and I we had a significant losses because I think there was a lot of stuff not being written on Work orders simply because they didn’t remember when they filled that work order out five days later. We’re now

before they leave the parking lot of the customer, they’re supposed to complete the work order, pick all the parts, do everything. so we’ve seen a drop there for sure.

Rishi Srivastava (34:23)
Yeah, I the field people, the live stuff, they’re really difficult work. And I mean, someone like you is making their lives easy with these tools. You are very valuable to this industry.

Jennifer Murphy (34:27)
Mm-hmm.

Yeah, they’re, you know, our technicians are wildly talented at fixing stuff. They don’t want to do paperwork. And so what can we do to, you know, to help them out? They want to turn wrenches and fix stuff. you know, it was, it was honestly, was, it was what drove us to an ERP change. When I started with Pleune, we were on one ERP and they tried three times to get mobile. And after the third failure,

Rishi Srivastava (34:38)
Mm-hmm. Mm-hmm. Yeah.

Jennifer Murphy (34:57)
That’s when we said we’ve got to change ERPs because we identified that as one of the most critical things we needed to change in our business to pick up efficiencies.

Rishi Srivastava (35:06)
What ERP are you using right now?

Jennifer Murphy (35:08)
We use Sage 300.

Rishi Srivastava (35:09)
So the mobile and Sage 300 they work well right for you

Jennifer Murphy (35:13)
Yeah, SAGE has a SAGE, called, it used to be SSO, SAGE Service Ops, it’s now SAGE Field Ops. But what I would say we do in the home office and the service management module translates to SAGE, the field ops, and then what our technicians do comes back into the service management module for our payroll to get their hours for my billing person to see the costs and the POs they put on the register, the notes.

Rishi Srivastava (35:19)
Mm-hmm.

Jennifer Murphy (35:39)
that they put on and so yeah it’s been you know as with any software when you have integrations and they’re talking back and forth you get you get some bugs and hiccups but overall you know they they’ve worked really really well together.

Rishi Srivastava (35:50)
How did you train or equip technicians to capture parts, time and notes first time right in the field to avoid end of week memory gaps?

Jennifer Murphy (36:01)
We actually rolled out the field operations in phases. So we rolled it out with some of our most technical, technical as in IT technology based technicians first. And so they were kind of our guinea pigs where we worked through, here’s our process, here’s how we think it would work, but we’re not out in the field, give us feedback. And so we, we, you know, we developed how we

thought it would work, but then we had kind of that first group and then we worked through the bugs with them and then we started a second group. So we phased it in instead of going 100 % all the time. And what that also helped with is then the technicians that were on it already, technicians were more comfortable to call other technicians and ask how to do things than they were to call back to the office. So it was very much a phased approach, but it’s still learning. We’ve been on it.

and 16 and you know I still have technicians that forget to attach an invoice, a packing slip in service field operations. They take a picture and it’s attached and so because by chance we they didn’t cut a PO or they didn’t get the receipt turned in for you know that they bought something on their their credit card or their their personal my biller because that that work order comes in immediately.

she looks at all the attachments, the pictures. And so if there’s a receipt attached or a packing slip and she’s like, wait, I don’t see a PO or I don’t see this on the register for a cost, it can trigger her to stop the billing. And so we still have technicians. In fact, this morning she had asked me, hey, I’m looking for this receipt. I can see you put costs on a work order, but it’s not attached to an SFO. I don’t know what he bought. So, you know, it’s, it’s always an ongoing.

constant education, but that’s just part of anything we do.

Rishi Srivastava (37:49)
Yeah. The next section here is on tech stack, change management, and CFMA lens. Where does your Sage 300 plus Timberscan plus Sage field operations stack perform well? And where do you still see opportunities to improve?

Jennifer Murphy (38:04)
⁓ it works well in that, you know, because we’re a service and construction company, you know, there’s not a lot of ERPs that are really good at one and really good at another. find ones that are really good in construction and they’re weak in service or vice versa. And so, you know, is Sage an older technology? Yes. Are they updating the data? I mean, would it be wonderful if it was a cloud based, their new intact?

⁓ But the new Intek doesn’t have all the things that we do in house. We process payroll in house. and you know, the Sage 300 Timberscan is its product. SFO is its product. And as you move to some of the more, I would say cloud-based or updated ERPs out there, you have to purchase or you have to integrate all of those pieces and they’re all from third parties and.

I’m a firm believer, you every integration you have with a third party is one more that you have opportunity for breaking. so having everything we do within that one ERP controlled by, you know, they all are the same company and the way they talk to one another, if something breaks, it’s easier to get someone to figure out what broke because they’re all operating on that same database and API.

Now the other side of it, like I said, the opportunities, it’s an older technology. There’s some really new and neat things out there. But there’s also some partners that can help. I mean, we’re partnering with Antera, which helps us do some dashboards and we’re getting close to starting some wip forecasting out of it. And we can get some job position reports on our construction jobs on cash position.

much quicker and in those, as we talked about earlier, those ways that other people want to look at them. Not lots of spreadsheets with tons of number. It’s color-coded graphs. And then they can click down on information. so finding some partners to help do that has really allowed us to make Sage still work for us without having to worry about changing ERPs at this minute.

Rishi Srivastava (39:59)
Yeah, reporting is very important for someone like you and maybe your executive team too. What lessons have you learned about leading technology or process change that sticks in a mid-sized contractor with both field and back office teams?

Jennifer Murphy (40:15)
It’s painful. mean, even the software we bring in, it’s hard to get people to adopt it. mean, even now, we’ve been on stage since 2016, and I’ll have project managers or payroll come over to me, and I can’t get this information. And I go into the job cost module, the project manager payroll, and I’m like, you just play with some filters. I’m like, here it is. I think that no matter what technology, if the users don’t want to

play around and do some digging and searching, they’ll say that every software doesn’t work well. And that’s been a common theme for us, mean, especially being a very technical led company. mean, we are two thirds in the field, one third in the office. And so these guys are technical and they can fix stuff and they can install stuff and they’re brilliant, but technology is not.

necessarily their biggest forte. so getting them to want to dig into things and find it, they want it just kind of fed to them. And a lot of our office people, being a small company, being ESOP, mean, our president, our VP of service, ⁓ they were service technicians when they started for the company 30 years ago. And so now they’re much more adaptive to trying the technology, but they still

come from that mindset. So I think the biggest thing is if you can show them how it’s actually going to make them more efficient once they learn it and it’s easier for them, that’s when you really get the adoption. So I think, you know, it’s not trying to do it too fast. It’s got to be in slow little increments where you’re teaching them how to use it and how it will help them.

Rishi Srivastava (41:50)
Yeah, mean the end picture where their life is like beautiful, everything’s working perfect. You know, if you can paint that picture, they’ll probably be willing to learn, right?

Jennifer Murphy (41:59)
Right.

Correct.

Rishi Srivastava (42:02)
So last question here, Jennifer, is from your perspective as CFMA national chair, what are the top trends you see affecting construction finance right now? And what practical remedies do you recommend for CFOs and controllers?

Jennifer Murphy (42:18)
I think right now the trends we’ve touched a little bit, it is technology and it is AI and it is finding that right balance of what you bring into your company. Just like we have a skilled shortage in the trades, the people graduating with accounting degrees is dropping. Now, the one thing that I think is really amazing and that CFMA is a huge help to is

you don’t have to have an accounting degree necessarily. I mean, every company is different, most construction companies, I know a lot of people who are controls and CFOs that started out as AP or bookkeepers and through CFMA and through other things, they got the education and they got the understanding and they’re able to do the job as a controller or a CFO without that formal degree. But I think that…

For me, the trends, like what I look at in our company is what are the technology things I can implement to help the staff I have now be more efficient, be more accurate, not to eliminate roles, but to allow them to do other things. AI is amazing, but so is what all of us have up here. so using those

tools to take some of that tasking away to free our brains up and our time to do that analysis and the processing. And so I think that’s a trend that, even in our company, but across CFMA we’re seeing. even, you know, you go to the conference, the technology vendors that are at our conferences, it’s, and they just keep coming up. And, you know, I traveled to a lot of our regional conferences and I just was in Colorado last week and I met another AI and they were

they were a sponsor at a CFMA regional conference, I had never heard of them. And they were telling me what they were doing. I they’re just coming out of the woodwork. So I think all of us have to adapt and be open to figuring out how we want to phase it into our company and how we want to use it because pretending we don’t need it, you’re going to really get behind the eight ball. And then the other is start the succession planning.

Rishi Srivastava (44:20)
You

Jennifer Murphy (44:20)
You know, we are, especially even at CFMA, a lot of what we’re looking at is our demographics, what makes up our population, is that retirement cliff coming, just like we hear the baby boomers retire. It’s hitting CFMA as well, and it’s hitting construction companies from their owners who are trying to figure out how are they transitioning out. And so I think really not being afraid to start thinking early on.

I mean, I’ve been for over two years now, I had identified someone, don’t plan, I plan to semi-retire in a little over two years, but not fully retire for over five. And I’m already mentoring someone in my company and starting to transition and hand things off in a very slow growth because, you know, I see it coming. And so I think all of us, know, and CFMA has to do it, controllers and CFOs.

in construction companies and then even not being afraid to have that conversation with your owners. What’s your succession plan? What do you plan to do when you’re done? And what are you going to do with your company? So I think the technology, which is that front end and bleeding end, but then recognizing we’re aging out and what are we going to do for that next generation to keep this industry going.

Rishi Srivastava (45:33)
Yeah. Jennifer, thank you so much for your time. a great conversation with you.

Jennifer Murphy (45:38)
Thank you so much for having me. I appreciate it.

Rishi Srivastava (45:40)
Thank you.

Rishi Srivastava (45:42)
Thanks for listening to Finance at the Job Site. If you found today’s conversation valuable, share it with a teammate and subscribe so you don’t miss the next episode. You can listen on Spotify or watch on YouTube. Just search Finance at the Job Site. Until next time, here’s to building smarter, faster, and more profitable projects.