How to Choose the Best ERP Software for NZ Construction
The construction industry is rapidly digitising and that has led to increasing complexity in managing construction businesses. To be successful, construction companies must track and manage business processes, onsite projects, and construction data. This complexity demands a solution that can eliminate repetitive, labour intensive, and time consuming processes.
The answer is ERP in construction, because it helps optimise business operations for contracting companies by providing comprehensive project and financial management.
What is an ERP in construction?
Specialised enterprise resource planning software, which is also called ERP software, is made to handle the unique requirements of construction companies. ERP in construction should include tools to manage General Contractors and Subcontractors; handle Financial Management requirements like job cost accounting and payroll; and track service operations in a single central database.
ERP in Construction helps you manage projects more efficiently because it helps streamline processes, make smarter decisions, and save time and money. Read our blog for more on ERP in Project Management.
How Does ERP in Construction Help Businesses Grow?
Here are six ways that ERP Construction Software can help your construction business thrive.
1. Workflow Visibility
Working within an integrated ERP database is the closest approximation to the way that construction companies work. Using a single source of truth means that different departments will be able to access the same set of data. For example: materials received and inspected at the job site can also be tracked by the project manager and accounts payable so there are fewer bottlenecks and smoother project deliveries.
2. Collaboration Between Departments
Data can be shared instantly without the hassle of importing or exporting from one software system to another, and without the effort of rekeying information. Shared data also allows for better integration between your finance and project teams.
3. Data Security
An ERP system allows you to exchange information with the departments and employees who need to see it. You should be able to set security levels of access to data dependant on the job roles of your employees. That means it’s easier to share information with those who need it, while still protecting sensitive data.
4. Custom Solutions
There are many different types of construction companies, and their needs can differ widely. A homebuilder and a plumbing contractor are not likely to be focused on the same types of data. ERP in Construction can be configured to reveal key information in a user’s dashboard, which will reduce time spent searching for information and provide data you need to make decisions when it matters.
5. Business Intelligence
While construction is becoming more complex, ERP systems are expert at providing data analysis or highlighting data trends so that you have useful updates on your current projects. An ERP 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 flow and matching your actual spend to your expected budget is essential for running and growing a successful construction business. Using a specialized ERP system that’s built for contractors will allow you to 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
Before you choose ERP software for your construction company, you’ll want 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, track your materials procurement, and manage your job budgets. Most construction companies also need their software to help with project scheduling and make sure that paycheques flow to their staff on time.
Universal ERP Requirements for Construction Companies
While specific requirements for your business vary depending on the type of project you bid on most often, as well as which customers you serve, and the other types of companies you engage with in the construction industry, there are certain must-have features for construction companies considering ERP software.
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- Your ERP system should have comprehensive, integrated job costing that enables you to track committed costs against the budget and keep ahead of any cost issues that could hurt your profit.
- You should ensure your system has tools that will help you plan and manage projects. E.g. Scheduling tools can help you avoid the additional costs associated with missed deadlines.
- An ERP system should help you track and manage inventory, equipment, labour, and other resources so you can forecast potential shortages on the horizon.
- And your system should also include budget planning features so you can assess and analyze project costs to meet your planned project completion date.
What To Look for in an ERP System for Construction
Identifying the requirements for an ERP system that works for your business can feel like an overwhelming process. 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 important 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 certain 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:
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- 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.
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Essential ERP Features for Construction Companies
Here are two essential features to look for in any ERP system you are evaluating:
Financial Management and Analysis – 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.
Mobile or Remote Access – Construction businesses take on projects located in multiple areas, and access to project data such as Inventory, Job Budgets, Timesheets and more are essential to allow work to proceed efficiently. If your team needs to wait until they return to the office to access key project details, then the system is not built for construction companies.
Nice to Have ERP features for Construction Companies
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. 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.
Conclusion
The best construction ERP for your company will depend on your particular areas of need. If you take the time to assess and list your company’s needs, it will be easier to find the best system that will 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