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6 Good Reasons to Use ERP for Construction Company

by Irina Kravchenko

During the last years, the majority of large construction companies all over the globe implemented Enterprise Resource Planning Systems (ERPs) to effectively manage and use their resources like human capital, finance, assets, materials, and others. ERP for construction company has two main functionalities - data management and workflow management. Both functionalities are equally important as they help all stakeholders monitor multiple processes and manage data across the company in real time. Let’s talk this thing over.

Benefits of ERP for construction company

What Problems a Construction Management Software Can Tackle?

Typically, it takes 1-3 years to implement any complicated software platform for the enterprise. Such systems like ERP cost from tens to hundreds of thousand dollars. To give you a sense of how feasible these expenses and efforts are, we would like to show you what challenges of the construction sector ERP implementation can address.

Problem 1: Improper planning processes can lead to project failure.

According to ConstructConnect, poor planning is one of the five reasons why projects of construction companies fail. Kendall Jones, the author of the article, considers that the more efforts and time are spent for planning, the better the workers of the construction firm will implement the project. The lack of effective coordination among clients, suppliers, subcontractors, architects can also cause substandard completion of the project.

Solution: Construction company systems are able to monitor budgetary funds and expenses. An ERP for construction company can provide accurate planning of raw material, human resources, design, and other resources required for the successful project completion.

Problem 2: Inaccurate estimations can cause a refusal to use the services of a certain company.

A lot of firms provide their services on a contractual basis. Before bidding for a tender, these firms need to provide the estimated cost of the project. As we know, different clients may have quite different needs and specifications, that’s why they choose the best-suited bid according to the proposed quotes, the firm’s reputation, and proposed design.

Solution: Construction project management software is able to secure accurate quotes needed for design, raw materials, human capabilities, and the time to complete the project. Additionally, ERP systems can determine how much profit or loss a firm may get from a given project.

Problem 3: Project management processes like assigning tasks and monitoring work progress across multiple departments are always complicated and challenging.

Solution: With a robust construction office software in place, managers are able to track the work progress, set milestones, assign tasks, and do lots of other high-value activities. ERP systems provide real-time data as well. On the basis of this data, managers can track time and use this information to bill customers.

Problem 4: Tedious data sharing is inefficient and not secure.

Usually, large construction firms deal with more than one customer. Sharing large amounts of information within departments is time-consuming. Using Excel or PowerPoint is in the past because such type of information exchange is no longer efficient.

Solution: A good ERP system ensures easy data sharing with the help of the tools providing high security. Contractors are able to set viewing restrictions for both their customers and workers.

Problem 5: Time-consuming processes slow down the expected streams of return on investment (ROI).

Traditionally, contractors reinvent their vision of ROI. From time to time, they seek for new ways of receiving revenue faster. Time-consuming, tedious, and manual processes hinder development.

Solution: Enterprise-grade 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: Chaos in the decision-making process can cause problems in accountability and coordination of projects.

Prior to making decisions, it’s important for contractors to get a comprehensive view of a given situation. Oftentimes, they don’t have such a possibility to get this view in one centralized place.

Solution: ERP systems allow managers to incorporate different types of information, process it, and sort out according to a certain number of criteria.

As you can see, an ERP for a construction company is capable to solve six main issues - improper planning of the project, complicated project management, inaccurate estimations, consuming exchange of information, inefficient decision-making, and slow return on investment. At the same time, you learned that to solve these issues, an ERP system should have a certain number of features and modules. Let’s figure out what exactly it should have to work efficiently.

Learn about ERP in finance.

10 Core Features of ERP for Construction Industry and Infrastructure

A good ERP for construction company should consist of features that ensure streamlined business operations which usually include the following processes: accounting, inventory management, contract and project management, human resources management, etc. Surely, there are a lot of ERP model views in the construction industry. Let’s focus on the core features.

Project planning & scheduling

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 construction company provides its users with the capability to organize effective project management and follow the plan.

Inventory & materials

Managing construction materials and inventory is always a time-consuming and complex process which requires special knowledge and skills. ERP systems allow easy sourcing, purchasing, planning, storing and monitoring raw materials. Besides, this construction ERP module ensures secure control of stores and materials, timely disposal, records 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 estimate subcontractors and based on the pricing data or other selected criteria, - to hire a particular subcontractor.

Human resources

Among the HR issues construction firms face, there are mainly the problems related to the ever-changing nature of builders’ work. 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.

Reports and dashboards

With robust analytics, visual boards, reporting tools in place, building firms can manage their data in real time. Here are some examples of activities which they can do with these tools - processing and analyzing Big Data with the help of user-friendly graphs and charts, building dashboards according to a certain number of criteria, exporting visual aids to different formats, assessing statuses and determining risks and lots of other.

Purchase

Construction companies need lots of materials, machines, equipment, and other things to provide their engineering, architectural, building services. A purchase module for ERP system is crucial. It ensures effective management of inquiries, quotations, orders, reports, and quotation comparison.

Accounting

It’s well known that construction accounting differs from regular accounting. Construction sphere is very mobile and 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.

Engineering

With a comprehensive engineering module for ERP, firms can manage projects, control, and share engineering data, write proposals, automate all the processes related to engineering.

Tender and bids

Tender and bid management modules allow writing tender documentation, making accurate estimations, and bidding. This feature can ensure that the actual expenses won’t deviate much from the allocated pricing.

CRM

Customer relationship management system for builders allows managers to easily track, process, edit, and share customers’ information within the company. This module facilitates the enhanced level of communication between contractors and clients.

These were the core features required to efficiently run the construction project. A construction company can get all these features as a part of a typical out-of-the-box ERP package or as a unique solution tailored according to your specific requirements and business needs.

Learn about ERP for banking industry.

ATTN Construction Business Owners: How to Choose the Best Construction Project Management Software?

To understand what software will be the most suitable for your construction business, you should be aware not only of core features but also of tendencies in the software development for construction companies.

Trend 1 - SaaS

Having an ERP system on the cloud means that your managers are able to reach any important information at any time from anywhere.

Trend 2 - LEED tracking

Leadership in Energy and Environmental Design can be of great use for companies dealing with green building. They can track if they comply with these regulations.

Trend 3 - Integration

Modern technology systems should be easily integrated with third-party applications which can be also required by workers to handle operations more efficiently.

Trend 4 - Scalability

Often, large construction firms have multiple contractors the number of which can rise rapidly. Consider this beforehand if you plan to scale up your projects.

Trend 5 - Security

Managing construction projects means that you deal with highly sensitive information. ERP for construction must secure documents flow and data sharing across the company.

As you can see, these trends are all about modern technologies, security, and flexibility. Unfortunately, free or paid open-source software can’t ensure all these aspects simultaneously that’s why most firms prefer building custom systems. The latter can be developed according to best practices of ERP development to comply with security standards and legislation.

Steps to Build ERP for Construction CompanyHow to Order the Development of Construction Company Systems?

Custom development is a good fit for those construction business owners who want to obtain a comprehensive system which meets their goals and needs. Before contacting a vendor, you should define the main issues your employees face while using legacy tools for managing construction operations. Make a list of these problems. It will help define the best-suited solutions.

Once you have a list of initial requirement, you can start searching for a reliable vendor. It’s no longer a problem today to find the information about a given company. Thus, check all the available information about the potential vendors. There are a lot of trusted sources and ranking websites over the Internet. These sources provide users with feedback, general information, customer reviews, and even portfolios of thousands of software development firms.

If you’ve already made up your mind on a certain vendor, feel free to contact them and proceed to project estimation and ERP system cost. Basing on your initial requirements, a vendor will be able to give you the first estimation. And if agreed, they can start building a minimum viable product (MVP) which is a product containing the core features only.

MVP can further serve a basis for final product development if you need any adds-on. During your first discussions, you’ll be also able to sign legal documents like contracts or NDA. Typically, custom development is more preferable when you want to use the benefits of using modern technology stacks and implementing the system which meets its users’ needs.

Construction Office Software From Diceus

If you run business in the asset-intensive industry like construction, feel free to consult with our experts. They can develop an integrated enterprise-grade platform for planning, managing, and delivering projects of any complexity. The procedure is quite simple - contact us, tell us about your problems or requirements, get initial specifications, and start collaborating with your dedicated team.

 

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