Enterprise Resource Planning And The Construction Industry
Many medium to large-sized construction companies have moved over to using Enterprise Resource Planning (ERP) systems to efficiently manage all their company’s resources, such as labour, finance, equipment, material, data, and many more. In a competitive market like the construction industry, even the smaller concerns are looking to integrated systems to maximise project success and profits.
ERP for construction companies has two main functionalities – data management and workflow management. Both functionalities are work hand in hand to assist stakeholders to monitor multiple processes and manage data across the company in real-time to ensure the success and profitability of completed projects.
What Challenges Typically Face the Construction Industry?
Problem 1: Improper planning processes can lead to project failure
The old saying goes “If you fail to plan, you plan to fail”. Nowhere more so than in this industry where the ineffective coordination among clients, suppliers, subcontractors, architects can cause substandard completion of the project.
Problem 2: Inaccurate estimations can cost a company the bid
A lot of firms provide their services on a contractual basis. Before bidding for a tender, these firms need to provide as accurate an estimated cost of the project as possible. Failure to estimate accurately can lead to either not getting the tender as the estimate is way too high or the company having to carry the financial losses as their estimate was too low and they now have to fulfil their contractual obligations.
Problem 3: Workflow management
Project management processes like sub-contracting, assigning tasks and monitoring work progress across multiple departments are always complicated and challenging. Managers have to be able to have real-time data at hand to track these processes and, if necessary, make adjustments and use this information to then bill customers appropriately and timeously.
Problem 4: Tedious data sharing is inefficient and vulnerable
Sharing large amounts of information within departments can be time-consuming. Where there is not a central repository of information issues such as outdated information, time-lags, inappropriate access (internal and external) and version-control arise.
Problem 5: Time-consuming processes slow down the expected streams of return on investment (ROI).
Like all businesses, the construction industry is always looking for new ways to add to the bottom line. Time-consuming, tedious, and manual processes hinder development.
ERP solutions help construction firms monitor expenditures for materials and human resources, cut costs for technology, eliminate manual processes, and avoid downtime. All these factors affect the success of business and project implementation as well.
Problem 6: Lack of overall perspective can cause problems in accountability and coordination of projects
Especially when projects run concurrently, it’s important for the business to have a comprehensive view of the allocation of company resources at any given time. Without the use of an ERP system, they cannot get this view in one centralized place.
Core Features of ERP for the Construction Industry
A good ERP system for the construction industry should consist of features that ensure streamlined business operations. These usually include the following processes:
Tender and Bids
Tender and bid management modules allow the writing of tender documentation, making accurate estimations, and bidding. It is also useful for tracking any revisions to documentation. This feature can ensure that the actual expenses won’t deviate much from the allocated pricing. It also provides a useful repository of information to refer back to when tendering for similar projects.
Project Planning & Scheduling
After the estimate has been accepted, project planning is the first stage of any construction project management process. It can be of three types which are strategic planning, operational planning, and scheduling. The first type determines the project objectives. The second one develops a detailed plan including the steps to meet the set objectives. And the third type of planning sets schedules of concrete actions to meet the objectives. Any ERP for a construction company provides its users with the capability to organize effective project management and track the progress thereof.
Inventory & Materials
Managing construction materials and inventory is always a time-consuming and complex process that requires special knowledge and skills. ERP systems allow easy sourcing, purchasing, planning, storing and monitoring of raw materials. Besides this, the construction ERP module ensures secure control of stores and materials, timely disposal, tracking and tracing of inventory, etc.
Subcontractors
Managing data about subcontractors and work orders is one of the core features required of a good ERP system. Thus, modern solutions for builders and construction firms allow them to assess subcontractors and based on the pricing data or other selected criteria, hire a particular subcontractor. For example, one subcontractor may have a lower estimate for their section of the job but may only have the capacity to carry out the workweeks outside the desired timeframe which then has a negative impact on the workflow of the whole project.
Human Resources
ERP software helps recruiters and managers hire the right candidates and do lots of other useful things like managing payrolls, complying with HR regulations, training employees. Due to the fluctuating nature of the construction industry, it is very useful to have a skills repository that can be easily accessed to match employee skills to the work required.
Reports and Dashboards
With robust analytics, visual boards, reporting tools in place, data can be managed in real-time. Accurate reports and progress charts assist to keep a company on track and profitable during the running of a project. They are also very useful too in the post-analysis phase of a project to determine where bottlenecks or cashflow crunches occurred which can then be assessed and plans put in place so that operations flow more smoothly with the next similar project.
Supplier Relationship Management
Construction companies need lots of materials, machines, equipment, and other things to provide their engineering, architectural, building services. An SRM module for an ERP system is crucial. It ensures effective management of enquiries, quotations, orders, reports, lead times, and quotation comparison.
Accounting
The construction sphere is very mobile and the accounting module must provide the capabilities to track different types of expenses like packing tools and materials, travel expenses, cost of equipment, and clearing expenses when the project is completed. An ERP system with a strong accounting module will allow the company to accurately ascertain the profitability of a project.
Customer Relationship Management (CRM)
CRM module allows managers to easily track, process, edit, and share customers’ information within the company. This module facilitates the enhanced level of communication between the company and its clients.
Omni ERP Accounting software incorporates many of the above requirements. It is the Job Costing module is ideally suited to the construction industry allowing the allocating and tracking of stock, labour costs, services and expenses of a project from start to finish.
