In all service industries, we talk about our backlog. As basic as it seems, having a backlog is key to a company’s success in many ways. And it is more involved than a list of sold jobs with estimated hours. As an owner or manager, it is important to hold your team accountable to creating, managing, and performing to a backlog. Let’s dig into what exactly this means for your team, and the benefits you can expect as an outcome.
“What qualifies as a backlog?”
Great question! As we already mentioned, it should be a little more involved than just a list of outstanding sold jobs with estimated hours. This is a great starting point, but you need to have a scheduling system that allows you to schedule jobs at specified hours on specific days. With this system in place, you can schedule out a detailed backlog with visibility on total hours scheduled. Only once you have this built, you can then have data driven information on your head count needs.
“But my schedule changes all the time!”
This is a common response from production managers. You don’t see the value in taking the time to schedule out your jobs, because the schedule constantly changes. And there is some validity to this concern! Perhaps an important client asks for a job to be done, and you decide to prioritize them over who you originally had scheduled. Of course, this is a scenario where it is excepted to shift the schedule. This is why it is important to not only have a system for building an accurate backlog, but also an easy way to adjust the backlog when necessary.
*For Aspire Software users, this looks like Bulk Moving work tickets, or Inserting Blank Days.
“So, what’s the benefit, if I might change plans anyways?”
Firstly, when you do shift the schedule, with a backlog strategy you can provide rescheduled projects with a new scheduled start date. Especially if you require down payments, it is important to have data driven job dates. Make sure to give yourself some room in case a job goes unexpectedly overbudget.
Secondly, is what we already mentioned: accurate headcount. No matter what changes are made to the backlog, you will always have an understanding of how many employees you need to get the job done within a specific timeframe. Perhaps as the season kicks into gear, you need to hire more hands. As it winds down, you can see the backlog slow down and you might be ready to move them to a different department or lay them off for the season.
Whether on Invoiced or Earned revenue, by building a backlog you can gain financial forecasting. If on earned revenue, you can see which months you’ll be working on the jobs and how much revenue will be earned. If on invoiced revenue, you can see when the job is expected to be done and ready for final invoicing.
On a similar note, by scheduling out in advance, you can also create a purchasing strategy. For example, we’d recommend creating PO’s or Purchase Receipts 30 days in advance. This doesn’t mean you have to order it 30 days in advance (although you might need to depending on the material type). The benefit to this is you can ask vendors for current pricing and anticipate actual costs on the job before the purchase is made. Outside of job costing, this can also help understand any potential hits in cashflow when purchases are made.
“Which departments is this applicable for?”
All of them! While it is most discussed for Construction or Enhancements, it is equally useful for Maintenance, Irrigation, and any other service you provide. While maintenance might be mostly recurring services, you can utilize these tools to schedule out additional services, such as chemical applications, spring and fall cleanups, etc.
While irrigation tends to be a Time and Materials division, leaving you without estimated hours to build the schedule – you should still consider scheduling 30 days in advance. It is common in the landscape industry for companies to sell their clients x number of irrigation inspections a year. Since inspections lead to T&M repairs, it is nearly impossible to complete all the inspections… unless you have a game plan. Perhaps you schedule each irrigation tech 5 hours of inspections a day and leave the remaining part of the day for repairs. By scheduling these out, you can quickly identify if you need to hire an additional irrigation tech.
“I am sold! Where do I start?”
Great! If you use Aspire Software, we have several recommended lists and dials to help implement these scheduling and purchasing practices. If you aren’t an Aspire customer, no worries! We can still help evaluate your current practices and identify detailed procedures to support your team in these changes. If you’d like to discuss further, reach out for a free consultation!