ABC Plumbing System Implementation Review & Agreement

Prepared by: Hannans360°

Contents Scope ....................................................................................................................................................... 3

Analysis of current system and processes .............................................................................................. 4

Current process breakdown with cost and time analysis ................................................................... 5

Process & Business Development ........................................................................................................... 7

Time and Cost Savings......................................................................................................................... 7

What does this mean for cost savings? .......................................................................................... 8

What does this mean for capacity? ................................................................................................ 8

Your return on investment ............................................................................................................. 9

Implementation Plan ............................................................................................................................ 10

Business Development and Implementation cost: ............................................................................... 11

Business Development & Recommendations ....................................................................................... 12

System Implementation Agreement ..................................................................................................... 13

Scope Hannans360° have been approached by ABC Plumbing to address the following:

- Business Development o Review current processes and make recommendations

Setup and implementation of new job flow system – JobSheetApp - Setup and implementation of new financial software – Xero

With this goal in mind, this report focuses on looking at:

- Current process and systems within the business and the cost to run these - Process and system development to decrease costs and improve efficiency - Cost of implementation of new systems including analysis on return on investment - Implementation plan that sets key implementation dates with go-live date no later than 01

July 2013 - Implementation cost and breakdown - Ongoing business development and recommendations currently identified by Hannans +

Associates - Implementation Agreement for acceptance and signing

Analysis of current system and processes Through our analysis, we have established the current workflow:

This process has been broken down even further into individual components, to determine the cost drivers. From here we can properly cost the process and examine where time and money can be saved.

Administration

Plumbers

Business Owner

Current process breakdown with cost and time analysis For the following analysis the following has been assumed:

No. Of plumbers Average job's per plumber Total Jobs

Jobs per day 3 5 15

The following breaks down the average time spent on each job from start to finish:

Administrator Minutes Accounts Manager Minutes Plumber Minutes Administrator Minutes

Acknowledge booking 2 Invoicing (enter into accounting system) 1 Assess scope of works 10 Admin 32

Contact tenant/owner to book in 10 Accounts Receivable (Collection) 2 Travel to/from job

location 30 Invoicing 25

Check job history (if relevant) 2 Bank Reconciliation 1.6 Complete work 50 Accounts 7.8

Book job in system 5 Accounts Payable 1.6 Travel incidentals 10

Look up address and check travelling time 2 Payroll 1.6 Prepare timesheet 2

Confirmation of booking 2 Invoicing (to send to customer) 25 Prepare job notes and billing 5

Prepare and send run sheet 3

Entering job into "Job Tracker" 2

File job folder 1

Collate timesheet 1

Check timesheet off against run sheet 2

Total 32 32.8 Total 107 Total 64.8

The following pie chart illustrates the time allocation by role:

7%

31%

6%16%

6%

6%

10%

6%

3%3%

6%

Administrator Time Allocation (Current)

Acknowledge booking

Contact tenant/owner to book in

Check job history (if relevant)

Book job in system

Look up address and checktravelling time

Confirmation of booking

3%

6%5%

5%5%

76%

Accounts Time Allocation (Current)

Invoicing (enter into accountingsystem)

Accounts Receivable (Collection)

Bank Reconciliation

Accounts Payable

Payroll

Invoicing (to send to customer)

9%

28%

47%

9%

2%5%

Plumber Time Allocation (Current)

Assess scope of works

Travel to/from job location

Complete work

Travel incidentals

Prepare timesheet

Prepare job notes and billing

49%

39%

12%

Accounts/Admin Time Allocation (Current)

Admin

Invoicing

Accounts

Process & Business Development After examination of the current processes, we have made the recommendation to implement Jobsheet App as an integrated workflow system. This will assist in simplifying and eliminating labour intensive processes.

Time and Cost Savings Adjusted process after the implementation of recommended systems - JobSheet App and Xero:

Stage 1 - Admin

Booking and confirmation

Allocated to

Minutes Unit Cost

Cost/ job

Cost/ day

Hours/day

Adjusted Minutes

Unit Cost

Cost/ job

Cost/ day

Hours/ day

Acknowledge booking

Admin 2 2

Contact tenant/owner to book in

Admin 10 8

Check job history (if relevant)

Admin 2 1

Book job in system Admin 5 3

Look up address and check travelling time

Admin 2 2

Confirmation of booking

Admin 2 2

Total 23 29 $11.12 $166.75 5.75 18 29 $8.70 $130.50 4.5

Stage 2 - Admin

Prepare run sheet

Prepare and send run sheet

Admin 3 0

Entering job into "Job Tracker"

Admin 2 0

File job folder Admin 1 0

Total 6 29 $.90 $43.50 1.5 0 29 0 0 0

Stage 3 - Plumber

Direct work

Assess scope of works

Plumber 10 10

Travel to/from job location

Plumber 30 30

Complete work Plumber 50 45

Travel incidentals Plumber 10 10

Total 100 42 $70.00 $1,050.00 25 95 42 $66.50 $997.50 23.75

Stage 4 - Plumber

Prepare timesheet Plumber 2 1

Prepare job notes and billing

Plumber 5 3

Total 7 42 $4.90 $73.50 1.75 4 42 $2.80 $42.00 1

Stage 5 - Admin

Post Job completion

Collate timesheet Admin 1 0

Check timesheet off against run sheet

Admin 2 0

Invoicing (to send to customer)

Admin 25 5

Invoicing (enter into accounting system)

Accounts 1 0

Accounts Receivable (Collection)

Accounts 2 1

Total 31 29 $14.98 $224.75 7.75 6 29 $2.90 $ 43.50 1.5

Stage 8 - Bookkeeper Per Week

Bank Reconciliation Accounts 1.6 0.8

Accounts Payable Accounts 1.6 1.6

Payroll Accounts 1.6 0.8

4.8 29 $2.32 $34.80 1.2 3.2 29 $1.55 $23.20 0.8

What does this mean for cost savings? The cost saving per job is: $21.61

The cost saving per day is: $324.12

Over the course a year savings of an estimated $78,000* could be saved

* Calculated as $324.12 x 5 days/week x 48 weeks a year

What does this mean for capacity? With time being saved across numerous areas, it has resulted in 10 hours and 22 minutes being saved.

A snapshot of the comparative costs and capacity is highlighted in the following graph:

Your return on investment This information on cost savings and capacity allows for a calculation on a return of investment being a conservative 2-3 months*.

* This is based on $78,000/12 months = $6,500 cost saving per month. The estimated implementation cost is between $10,000 - $15,000 and will take 2-3 months to recover.

-

20

40

60

80

100

120

140

160

180

200

Labour time per Job(min)

Labour time per Day(hrs)

Labour cost per job($)

Before

After

Implementation Plan With a goal to have Jobsheet and Xero running and with all staff trained by 01 July 2013 the following dates have been scheduled to assist in meeting this deadline. Our aim is to deliver the system and new processes as soon as possible and we are looking to implement in the next two weeks.

The following looks at the steps involved in the first phase of implementing Jobsheet.

Implementation Steps: Information Required Completion Date* Analysis of system requirements: These have and/or will be gathered through the process. Requirements will be identified in each of the implementation steps if they have not been gathered in initial discussions

Expected to be ongoing

Xero Software - Updating conversion of Xero for a 1 July 2013 start

June 30 closing figures in MYOB

05.07.2012

Setup of invoicing: - Research and understanding into Jobsheet App invoicing system - Liaising with owner in regards to requirements and capabilities of

Jobsheet - Setup and entering of required information into Jobsheet (with full

invoicing information not received quoting of hours may not be accurate)

- Liaising with Jobsheet up to understand invoicing and limitations

Invoice summary detail

Completed

Importing of Customers: - Export of 3872 records - Identification of records to be imported - Cleansing of records for importing - Liaising with administrative staff to understand field requirements

and gather required information for importing - Liaising with Jobsheet App to understand importing and limitations

ABC Plumbing Tracker Import file is with Jobsheet for actioning

19/06/2013

System Testing: - Full system testing for customers and invoicing to ensure system

meets requested requirements - Testing to ensure that there are no issues and system has been setup

completely - Expected to be ongoing in some respects with the majority of the

system test by training commencing

Customers and invoicing to be setup completely

21.06.2013

User Training: Training will occur over three stages –

- Training with administrative staff for Jobsheet (4 hours in totals) - Training of Xero (2 hours in total) - Training of plumbers with Jobsheet (3 hours in total)

We would look to complete training by end of June for all three phases. Training can commence once all above steps have been completed.

System Implementation signed off

Xero Training – 24/06/2013

Jobsheet Training –

02/07/2013

Adhoc items: - This will include meetings that occur with both/either Jacqueline

Hannan, Rachel van Duuren - Discussions on progress and clarification

Will be requested as required

Expected to be ongoing

* This is the expected completion date of each step. There is no guarantee that this date will be met if unexpected issues arise.

Business Development and Implementation cost:

Component Allocated Time (Hours) Cost ($)

Initial setup of JobSheetApp and Xero 12 $720

Training of Xero and JobSheetApp 9 $1,350

Business Development – Establish current processes, identify shortcomings and recommend changes, project management of implementing recommendations

30 $4,500

Building JobSheet Index report and intranet 15 $2,250

Testing of system and ability to meet clients requirements 5 $750

Implementation of JobSheet App and Xero 7 $1,050

Meetings, correspondence, and reporting 10 $1,500

Total 88 Hours $12,120

Business Development & Recommendations

The implementation of Jobsheet App, Xero and the ABC Plumbing Intranet opens the doorways to more efficiencies and process evolvement.

Other areas that we would like to highlight for future improvement include:

- Financial and management Reporting - Training and induction for staff - Human resource management - Purchase management and control

We encourage you to contact us to discuss ways that we can aid in addressing the above mentioned and look forward to the opportunity to assist your further.

System Implementation Agreement This is a Systems Implementations Agreement dated as of ______________ by and between ABC Plumbing, and Hannans + Associates.

Scope of Work

The scope of our engagement is set out below with any additions by the written agreement of both parties.

We will undertake the following: (a) Analysis of current business system process to identify system specifications and system process improvements; and (b) Evaluate and develop appropriate systems to meet process and business requirements; and (c) Produce and review business processes for new systems including any appropriate training material; and (d) Assist and implementation of new systems; and (e) Provide training and support to appropriate staff on new system; and (f) Provide business development and feedback to ensure that maximum savings and effectiveness of new systems is achieved;

and (g) Other work as agreed between the parties.

You are reminded that:

• Performance of tasks is limited exclusively to those set out in this engagement; • Unless we are/am otherwise engaged to do so, this engagement cannot be relied upon to disclose any irregularities (such as

fraud, illegalities or errors of other parties)

Professional Fees and Payments

Our professional fees for the services we provide will be based on the time and degree of skill and acumen required to complete the nominated tasks and will include as an additional item out of pocket expenses and statutory charges, unless otherwise agreed between the parties.

Cost of Implementation

Cost of implementation has been outlined and broken down separately and provided to you in this report for reference.

Cost of system implementation and business development: $10,000 - $15,000 + GST

Any additional work outside scope of works is to be billed at the following rates (subject to notification of any changes to the rates):

Accountant/Professional Advisor $150-200/hr

Administrator/Assistant Accountant $50-80/hr

Hourly rate is based on skill level of the employee and difficulty of the work performed.

For work undertaken for a period of less than an hour, the rate shall be charged in 15 minute blocks, or part thereof. All professional fees are GST exclusive.

Terms of Payment

Payment of the balance of your final bill is due on completion of works unless an arrangement of payment has been agreed upon. We will provide you with an account of professional fees, costs and disbursements that will be billed progressively on a fortnightly basis. If you do not pay your account by that date, we reserve the right to use a debt collection agency or other legal means to recover any outstanding fees.

Disclosure of other fees and commissions

We will disclose to our clients any commissions or other fees received as a result of work done for that client and will fully comply with statutory requirements in relation to the disclosure of such information.

Documents

Before we lodge any necessary documentation on your behalf, we will forward draft documentation to you for approval. We shall endeavour to ensure that documentation is lodged with the relevant departments by the due dates, provided all information and documentation is received promptly after the Financial Year End or other statutory date - to allow us adequate time for preparation and lodgement.

If you are late in providing information, we will do our best to meet the time limits, but we will not be responsible for any lodgement penalties incurred.

Responsibility for Accounting and Internal Control Systems

We advise that the responsibility for the maintenance of a business accounting system and internal control systems, including protection of and prevention against fraud rest with you the client. You will also be responsible for the maintenance of and keeping of the books of account. This includes any work produced by a third party not engaged by this firm that is sought to be relied upon. If any material weakness in the accounting systems or internal control systems comes to our notice, we will advise you accordingly.

It is important to remember that you are personally responsible for the information contained in any statutory return and that you must retain all necessary supporting documentation to substantiate your transactions. We do not take responsibility for any failure on your behalf to maintain adequate records or to provide us/me with all the relevant information.

Standards

We will provide the highest standard of professional service and we are focused on your concerns as the firms/my client. If for any reason you feel you have not received the service level expected or have an issue to raise, please, at first instance, contact myself to discuss how the problem may be resolved.

As registered Tax Agents we are obliged to have Professional Indemnity Insurance, and we warrant to you that our insurance cover is in accordance with the requirements.

Privacy Statement

We are bound by the provisions of the Privacy Act to maintain all your records securely and in accordance with the provisions of that Act. Any breach of these requirements should be notified to the Privacy Commissioner.

Ownership of Documents

The final documents which we are specifically engaged to prepare, together with any other original documents given to the firm, shall remain your property. Documents brought into existence by the firm including general journals, working papers, the general ledger, and draft financial statements, will remain the firms property at all times. However, the firm will always provide you with copies of any documents that you may require from time to time.

Client Queries

We request that any queries relating to the scope of works are addressed within 3 working days. This will ensure that your work is completed in a timely manner.

Lien over Documents

In relation to any subsequent termination of my services, you are advised that we may invoke a Lien over certain documents held until such time as outstanding fee/s have been paid or other satisfactory arrangements are reached. A lien is a right to hold certain documents or property until the debt incurred in respect of that property/document has been satisfied. The lien however may not be held over property that belongs to another, including if held jointly, and does not cover statutory documents (eg a Tax Return, BAS or refund cheque). We will provide you with a copy of all documents subject to my claim of a lien.

Acknowledgement and agreement of above listed agreement and cost: ABC Plumbing .................................................................... Owner Dated: .......................