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Tips you NEED to know for using the new budgeting screens after the update

1. Setup/update your mix of work

None of your industry benchmarks will be accurate until you setup/update your work mix.  In the old LMN budgeting tool, there was nowhere to save your work mix (i.e. what % of your work is construction vs. maintenance vs. other).  So, your work mix is defaulted to 

  • 25% construction
  • 25% maintenance
  • 25% irrigation
  • 25% snow 

Your industry benchmarks will not be accurate until you open your budget(s) and update your mix of work.

 

2. Update your field labor budget for employee counts and OT hours

Previously, LMN had no field for # of staff, or for # of OT hours.  These fields are new.  Therefore, your old information may:

  • Have multiple staff counted in the number of hours (e.g. 8000 hours would represent 4 employees)
  • Have OT wages built-in to the average wage for each employee
  • See screenshot below for example...

Going forward, you don't need to group your labor like this, or try to calculate your wages including overtime.  It will still work, but it will make far more sense to:

  • Use the # of staff to enter the # of employees at that position
  • Enter the total field labor hours per year per person
  • Enter the OT hours per year, per person

Then LMN will calculate your labor budget and the numbers will be easier to enter, and more clear to anyone looking at them.  See the screenshot below to see the the same budget as above updated to use the new fields

 

3. Update your equipment budget to use the new calculators.  

There's been a few changes to the equipment budget that are critical to understand.

  • Each piece of equipment now has a QTY, so you don't need to do any math to work out 7 trucks that are the same type
    • Here's what it might have looked like before the update:
    • Her's what it should look like moving forward after the udpate
  • Equipment trailer calculator has now been built into the budget so you don't need a spreadsheet to do the calculations

  • The final cost displayed on the screen is now the Cost Per Year instead of the Cost Per Month in the previous budget.  Don't get nervous if that number looks bigger than before!  The equipment budget total is still exactly the same.

 

 

4. The Overhead Budget now has an equipment calculator for overhead trucks and equipment

Prior to this update, you had to do the math manually to put overhead vehicles and equipment in your budget.  Now you can use the new overhead equipment calculator to get accurate cost recovery.

  1. Go to your Overhead Budget
  2. Click the Overhead Equipment tab
  3. Choose whether the overhead equipment is either:
    1. Custom (you can enter whatever you want for annual equipment costs)
    2. Owned (used for equipment you own)
    3. Financed (used for equipment that you're leasing)
    4. Group (used for trailers or groups of smaller equipment)

 

 

5. Update the new budget analysis tab

The budget analysis tab is a brand new feature of LMN's budgeting software.  Here, we'll compare your budget to industry benchmarks and try to identify mistakes and make suggestions on how to make your budget more profitable.

  1. Open your budget
  2. Click the Analysis tab

Revenue Per Hour - this number represents the average revenue per hour each job must produce.  It's not the rate you charge for labor.  Revenue Per Hour is the total sales (including materials, equipment, overhead and profit) produced per field labor hour. 

  • To calculate revenue per hour on a job, divide the Total Job Price by the job's Total Man Hours
  • To calculate revenue per hour for a company, divide the Total Sales by the budget's Total Man Hours

The Revenue Per Hour on this screen is the average total revenue per hour your jobs need to produce.  (note:  construction-type work will have a significantly higher revenue per hour as its sales include a lot of materials)

Unbillable Hours % makes sure that your revenue per hour is realistic.  You're not likely going to produce revenue with every single field labor hour.  There's warranty work, driving, equipment maintenance, shop time and more.  We have to exclude those hours from the Revenue Per Hour so that we're only counting hours that you estimate to customers.  Estimate your Unbillable Hours % (typically ranges between 10% and 30%) and you will have an accurate Revenue Per Hour target for your estimates.  

Hint: note that if you have mix of construction and maintenance work in your budget, the revenue per hour is the AVERAGE revenue per hour.  Construction type-work should be higher than the average.  Maintenance-type work will be lower.  If you want/need specific revenue per hour targets, you'll need to build a budget for each division.

 

 

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