How to Choose the Best ERP Software for Your Construction Company
Construction has become increasingly complex during the past decade. Managing business processes, onsite projects, and construction data requires a solution that helps create efficiencies by eliminating repetitive, labour intensive, and time consuming processes.
ERP software helps optimise business operations for construction companies by providing comprehensive, integrated project and financial management.
What is an ERP system in construction?
ERP software for construction is a specialised enterprise resource planning system that’s made to account for the unique requirements of construction companies. These systems should include tools to manage General Contractors, Subcontractors, Financial Management applications, specialized construction job cost accounting, payroll, and service operations all in a central database.
Why Does My Company Need Construction ERP Software?
A better question might be: How Does Construction ERP software make my life easier. Here are six ways an ERP system can improve your business operations.
1. Workflow Visibility
Working within a single, integrated database best mimics the way that construction companies actually work. The same set of data should be accessible to multiple departments: for example, materials received and inspected at the job site can also be tracked by the project manager and accounts payable.
2. Collaboration Between Departments
Data is shared between departments instantly without having to import or export from separate programs, and without duplicating effort to rekey information. Shared data also means there is better integration between your finance and commercial teams.
3. Data Security
An ERP system allows you to exchange information with the departments that need to see it. Many systems allow you to set security levels of access to data that are dependent on the job roles of the people on your team., This allows you to exchange information with those who need it, while protecting more sensitive data.
4. Custom Solutions
Different construction companies have differing needs. Homebuilders need to pay attention to a particular set of data, while plumbing contractors will want to view different information. ERP for Construction can be configured to reveal key information in a dashboard, which will reduce the time you spend hunting for information and give you the information you need to make decisions when it matters.
5. Business Intelligence
Construction may be becoming more complex, but ERP systems are expert at providing data analysis to deliver useful updates on current projects. And your system can also shape the data to help forecast financial updates for ongoing projects. Organizing and categorizing your business information is the superpower of ERP systems. That means you will have better financial visibility and accountability so you can spot and correct issues immediately.
6. Job Costing
Managing cash and keeping in line with your project budget is essential for running and growing your construction business. Using an ERP system made for construction ensures that you can translate everyday business activities to an up to date job cost management system that helps you stay current and profitable.
How to Choose the Best Construction ERP system
To choose the ideal ERP software for your construction company, first you’ll need to identify where your business fits into the industry. For example: are you a general contractor with your own workforce as well as subcontractors? Your focus may be getting timely payments for owners and keeping up with the payments and costs that are forwarded to you from your subcontractors. Or maybe you’re a specialty contractor like a plumber or an electrician who needs a powerful system to help you estimate project costs and manage your job budgets. Most construction companies also need their software to help keep on target with project scheduling and make sure that paycheques flow to their staff on time.
Universal Requirements for ERP for Construction Companies
As we noted above the specific requirements for your business will vary depending on the types of projects you regularly bid on as well as who your customers are and which other types of companies you do business within the industry.
However, there are certain features that are non-negotiable for companies considering a purchase of ERP construction software.
- Your ERP system should have comprehensive, integrated job costing so you can track committed costs against the budget and keep ahead of any cost issues that could hurt your profits.
- Your system should have tools that help you to easily plan and manage projects. For example, scheduling and time management tools can help you ensure that you don’t add costs by missing your deadlines.
- An ERP system should help you track your inventory, equipment, labour, and other resources so you can forecast any potential shortages on the horizon.
- And it must include solid budget planning so you can assess and analyse project costs to meet your planned completion date.
How do You Know What You’ll Need in an ERP System?
It can be overwhelming to assemble the requirements for your ideal ERP for construction system. Here are some tips to make the process more successful:
1. Include key employees from each department on your team. Since ERP touches every part of your business, it’s critical to get a list of specific needs from every department in your organization. And be sure your management team is also part of the process, since nothing will proceed without their support.
2. Make a plan. How can you evaluate the relative importance of each request from your team without creating a too many cooks spoil the dinner effect? One way to assign relevance is to think about your existing company processes. How do you get new jobs? What are the steps in delivering that job successfully? Who is responsible for each of these steps and what order do the steps occur?
3. Identify any painful processes that need to change. As you list your current processes, you can begin to identify some processes you want to change. As you likely already know, one of the main reasons construction companies choose to invest in ERP systems is to make their construction business more efficient. One way to identify these pain points is to invite responses from people outside of the ERP evaluation team, like a questionnaire that goes to everyone in your company.
4. ERP systems are a big investment. Make sure you can measure how the system benefits your business. Once you have completed your list of requirements, you will want to think about how to measure the benefits to your business. For example, can you calculate the person hours saved by eliminating pain points identified above?
Hint: Don’t forget to review the ways your business excels in addition to identifying areas that could use some improvements.
For example, your wish list may include statements like these:
We are very good at managing inventory but need help with scheduling and other time management tasks.
When big decisions need to be made, it’s difficult to gather accurate, relevant information from various departments quickly and easily.
We know mistakes are costing us but lack the ability to identify where these mistakes are happening and why.
Essential ERP for Construction
To help with answering your wish list, look for the following essential features. If your system doesn’t have them, it might not be right for construction companies. Financial management and analysis is a must have. Budgeting and tracking ongoing job costs is an essential task for construction ERP systems. Your system should be able to calculate raw materials costs, labour hours, and any unexpected additions. You also want to be able to manage cash flow and handle finances for your entire business. Make sure your ERP system can report on and assess project finances as well as overall financial planning.
Construction businesses take on projects distributed across many areas, which means that mobile or remote access is another must have feature. If your team must wait until they return to the office in order to access key project details, then it’s not a system built for construction companies.
Nice to have ERP for Construction
Projects go over budget when they exceed their projected timeline. To improve your success rate and preserve your profits, you need tools for scheduling and managing your labour force. For example, integrated scheduling with project planner can help you flag upcoming conflicts such as when a particular piece of equipment is unavailable, and how to schedule work teams for the arrival of certain essential project materials.
And, as everyone knows, construction projects are notorious for producing a great deal of paperwork, and your ERP system should provide powerful Reporting and Analytics to help you organise all the information you collect. With this data available to you, you can make evidence based decisions to change or improve processes that can save you time and money.
The best construction ERP for your company will depend on your particular areas of need. If you take on the process of listing your needs, you will be able to find the best system to help you streamline your business processes and ultimately make you more efficient. You should always consider your plans for future growth when undertaking the implementation of an ERP system, so you can be certain that the system you select will be able to grow along with you.
Release date: 8th March 2023