• Home
  • Archive by category "ABIS Blog"

Category: ABIS Blog

  • Home
  • ABIS Blog
  • You're currently reading "The Benefits of an ERP for the Construction Industry"

The Benefits of an ERP for the Construction Industry

April 04, 2016
By Steve Wright
No Comments

The Benefits of an ERP for the Construction Industry

Are you using separate software applications for estimating, scheduling, risk management, and other activity? Does the estimating program talk to the financing program? Does scheduling talk to risk management?

How much duplicate data entry and updates take place every day? That’s a good way to introduce errors into the system and to waste time that could be spent better elsewhere. But what can you do?

Look into an enterprise resource planning (ERP) specilizing in the construction industry. It is the most advanced Construction Software you can expect to find. An ERP has all these applications and more to help you effectively control all the resources needed for your construction company to deliver its best product.

Defining Enterprise Resource Planning

ERP systems began in the manufacturing sector, another area where multiple departments all had a hand in a single product. Once a business gets to a certain size, it just isn’t possible to keep track of everything without software.

Manufacturing companies developed a template to support all the areas of transactional requirements within the enterprise:

  • Sales
  • Finance
  • Production
  • And more

ERP solutions have been customized for a number of industries and departments such as distribution, services, banking, healthcare, education, utilities and insurance. It can work for construction, too.

An ERP gives you a single system and database to integrate your construction company and your vendors, and to reduce the need to support a fragmented software platform as well as the often rudimentary custom interfaces that allow them to talk to each other.

Building an ERP

An ERP is comprised of three components: planning, execution, and finance. Here’s a breakdown.

Planning

Planning includes estimating, scheduling, and risk management. When you are planning you are not committing resources or costs, you are merely detailing them so you have a basis for determining the various requirements of a project.

In the planning stage, no contract has been signed, you have only been asked to bid on a project. If you can have a good preliminary schedule to help you with the projected timeline, labor, and resource requirements you will have a better feel for a competitive yet lucrative bid.

You also want to be able to draw on these same plans during the execution stage of the project. An ERP sends all planning information to execution without any data loss or need to update a separate software program.

Risk management must be used throughout the project; initiating in this phase guarantees all the information needed to rate risks and create a hazard plan will be available in one place. You can use the details and value assumptions make in the estimate and the initial project schedule to justify realistic cost estimates and schedule projections that are mutually supportive.

Better Planning = Less Waste

An ERP helps you spend time, resources, and labor wisely.

Execution

This occurs after a contract is signed. It includes details for:

  • Preliminary scheduling
  • Committing resources
  • Controlling tasks and resources
  • Monitoring costs
  • Managing contracts and documents
  • Engaging subcontractors

With a single, integrated system, all this information is entered into a common database where it can be shared with anyone who needs it. There are so many job and resource dependencies that require a certain level of detail it would be difficult to coordinate them without an integrated platform.

Much of execution portion is made up of scheduling and project management software, where it is imperative to exchange and share accurate information. Next, you need a contract management solution linked into the platform to monitor changes in the contract and to integrate the changes into scheduling and project management for continuously updated databases.

Document management is just like it sounds. It keeps track of contracts, subcontracts, and other important documents associated with the project. Each document will be assigned a revision level so you know you are using the most up-to-date version.

Another part contains cost management to monitor and properly allocate expenditures.

Finance

This is where you will find the financial “backroom” that:

  • Monitors cash flow – revenue from clients and outflows to vendors
  • Maintains financial records
  • And created ledgers to track profitability of both project and business

Cost management is the principle applications to tells you how all costs and revenue contribute to the completed project’s profitability. You should have the capability to produce profit and loss statements for each project.

Look for These Capabilities in Your ERP

A construction enterprise resource planning solution should have applications or suites for:

  • Purchasing
  • Reports and dashboards
  • HR management
  • Taxes and statutory year end financials
  • Vendor management
  • Materials management
  • Inventory management
  • Contractor management

The best systems integrate your construction accounting, tool management, and construction CRM software.

The Benefits of an ERP for Construction

An ERP, or enterprise resource planning, brings all information and the various tools needed to manipulate, store, and share it under one roof, so to speak. When you attempt to use individual software for each area of your business, much of which may not even be from the same vendor, you will find it difficult to pull together a cohesive picture of how each project is running and whether your company is actually making a profit.

ERP solutions make the same information available to estimating, planning, purchasing, vendors, scheduling, and every other area of planning and management you could possibly need. Each suite or segment will be interoperative and integrated so they all work together to bring the highest visibility and profitability to your construction company.

Steve Wright works for Whirlwind Steel Buildings, a manufacturer of pre-engineered steel buildings and components. Whirlwind Steel metal buildings are manufactured and designed to meet the highest quality standards. To learn more, visit http://www.whirlwindsteel.com.
Share:

About Author