Tuesday, June 28th, 2022
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ERP In Construction Industry

By Amrita Batra

Why does the construction industry need ERP solution?

In the construction industry where, the use of material resources and a high degree of flexibility in project management are important, the companies must be able to prove themselves in this competitive and challenging market environment. Those involved in the construction industry long enough understand the pressures surrounding a tight budget and a fixed deadline.

Intense national and international competition, increasing administrative requirements, etc. necessitate the support of advanced business solutions that can simplify complex and unique construction processes. Yet, unforeseen circumstances often arise, sending established plans out the window, requiring workers to set a new schedule and new margins for the project.

As a solution, the construction companies need a comprehensive Construction ERP Software solution that satisfies most requirements, while also offering the efficiency and risk mitigation that only a fully integrated construction ERP software solution can provide. Enterprise Resource Planning (ERP) software is a business solution that provides powerful analytics using data from various construction processes such as accounting/financial management, contractor management, equipment/inventory management, human capital management, project management, vendor management, bid management, customer relationship management, scheduling, submittals, asset management, and more.

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ERP solutions are among the most significant progress benchmarks in terms of development within the realm of software; they play a vital role in tech strategy of virtually every construction firm. ERP systems serve to also reveal an organizations’ technological savvy, since smaller trends in IT are quite often reflected in the deployment of the software.

It is only through a continuous process of evaluating and revamping, that the average construction firm can achieve a competitive advantage with ERP. Construction ERP software integrates disparate software systems into one comprehensive solution, so construction managers can have tools to effectively manage the full lifecycle of a project, including:

The connectivity of these modules is essential, as the use of improper accounting, scheduling, and document management software can greatly hinder the progress of construction projects and the growth of the company itself. As unexpected situations arise, the effects of having non-integrated technologies and software solutions become ever more detrimental to the construction project.

ERP software offers a variety of integrated solutions that support all aspects of the construction business, from planning, project control, to cost and revenue estimation. The following are six main benefits of ERP software in the construction industry:

  1. Optimizing Planning

Improper Planning in the framework of a construction company leads to the substandard completion of projects and the downfall of the company. Further, contractors can incur heavy losses in the form of labour costs and loss of clientele due to untimely completion of targets. Delay in the project delivery due to lack of planning also reflects poorly on the goodwill of the company. So, planning for the raw materials required, effective use of labour, architectural design, and schedules is critical for proper channelling of resources.

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Construction ERP software can be implemented to make provision for controlling expenses and budgetary allocation. It also helps avoid unnecessary downtime and contractual issues with clients throughout the duration of the project.

  1. Streamlining Project Management

Distributing assignments and monitoring project progress across several work locations has always been challenging in the construction business. With the help of an ERP system, construction managers can easily monitor the status of each project, create milestones, delegate assignments to the right staff, and keep track of staff timesheets with just a few clicks. Real-time data enables contractors to track the time each staff spends on each task, making it easier for them to bill clients.

  1. Facilitating Cost and Revenue Estimation

Most construction companies work on a contractual basis with their clients. Before acquiring the tender for a project, they are required to bid on the project with their estimated costs. Since different clients have different priorities, the most suitable bid is chosen based on the design proposed, the reputation of the company, and most importantly, the estimated costs proposed.

ERP software can be used to determine accurate estimation required for raw materials, designs, labour and the duration to carry out a project, so that the actual costs will not deviate much from the projected costs. In addition to cost estimation, the construction ERP software also allows contractors to find out how much revenue or how much loss and profit they get from each project. This way, they will be able to manage the time and costs used for future projects more wisely.

  1. Simplifying the Exchange of Information

Larger construction companies handle more than one client at a time, because of which the exchange of information within the company can become tedious and confusing. Moreover, managing and compiling data for many tasks in the form of Excel spreadsheets or PowerPoint presentations is very inefficient and impractical, not to mention this is also not a safe way.

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ERP software makes the data exchange easier through resources and firewalls that support optimal data security. Contractors can also provide restrictions on their data, which one can share with the client or which can be seen by the employees.

  1. Improving the Decision-Making Process

A centralized system helps improve efficiency by providing a comprehensive view of a situation prior to making decisions. Whenever staff are required to correlate information from different sources, the ERP software assists in extracting data and providing relevant criteria that require adjustments before fulfilling a request. For example, before making a purchase order for certain raw materials, the budget report must be submitted to the project manager, based on what they refer to the engineering team and the formulated construction design. Based on this design, the purchasing manager creates the purchase order, which must then be screened by the accounting department before getting approved.

  1. Increasing ROI

ROI can not only be measured in the form of money, but also in the form of other benefits. Regardless of how it is measured, contractors certainly want to increase their ROI from time to time. This can be achieved more easily with the help of ERP software. ERP software allows construction companies to eliminate manual, time-consuming, and labour-intensive processes, control expenditures for raw materials and employees, reduce IT costs, get rid of unnecessary downtime, and meet project deadlines.

Numerous construction ERP systems are available for purchase in today’s market. The custom ERP security protocols like Role-Based Access Control (RBAC), user provisioning, electronic identities management, real-time monitoring, audit trails, firewalls and network encryptions provide additional layers to protect and limit access to valuable business data. Further, the customizable dashboards with integrated data visualization and data analytics features are a daily necessity for construction managers and become even more vital during times of distress. However, not all these off-the-shelf products are easily customizable, which is necessary to meet the specific demands of each industry and company. So, proper implementation and customization of ERP systems is necessary for construction companies to overcome difficult or unexpected situations.

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