Last Updated on May 20, 2022 by Admin
Construction has become increasingly difficult and competitive. Construction companies are looking for any way to boost productivity, integrate operations, and maintain competitiveness. Construction organizations and their contractors can use an Enterprise Resource Planning (ERP) system to manage capital projects effectively and efficiently throughout the project lifecycle.
Enterprise Resource Planning (ERP) is an information technology (IT) solution that helps businesses and their suppliers to effectively and efficiently manage large projects throughout their lifecycle. An ERP system’s major goal is to standardize project development, delivery, and execution processes. ERP enables a uniform approach to project performance and implementation.
Construction companies now have numerous tools and approaches to reach their objectives thanks to recent advancements in the IT sector. ERP (Enterprise Resource Planning) systems are one of the instruments that have shown promise in improving the management of such businesses.
What is an ERP in the Construction Companies?
ERP systems are defined differently depending on the entity in question. ERP systems are comprehensive software packages that aim to combine all business operations and functions into a single IT architecture to provide a comprehensive perspective. In the construction industry, an ERP system is defined as an “IT-based computer platform that allows for the integration of diverse business operations of a company utilizing a single database in order to boost efficiency and consequently revenues.”
ERP, in greater detail, is a single unified program that is divided into modules that replace all standalone software packages in finance, HR, inventory, planning, and other areas. Each module acts as a stand-alone system in theory, yet they are all linked and share information and data. ERP software suppliers’ ultimate goal is to deliver adaptable modules with more flexibility to share corporate data and information effectively.
The ERP’s standardization and consistency will help to improve project reporting and documentation. Throughout the project life cycle, ERP provides the project management team with tools and features that streamline project data and reports. The predicted benefits of ERP implementation, such as increased project execution efficiency and improved project controls.
ERP solutions guarantee seamless business process integration across the organization. However, putting these procedures in place is extremely difficult. Organizations typically invest a significant amount of time, money, and energy in the implementation process with nothing to show for it.
In the literature, high failure rates in ERP implementation have been commonly reported. Given this context, it’s crucial to identify the critical success elements for ERP deployment. Quantifying their impact on the implementation process is also crucial. A thorough grasp of these aspects aids in the selection of effective implementation tactics.
What Is an ERP Implementation?
Implementing an enterprise resource planning (ERP) system is a difficult task that impacts many aspects of a company. A well-designed implementation plan is essential for any large effort. Organizing your implementation into phases with specific objectives might help you achieve your goals.
In contrast, jumping into an ERP deployment without first creating a defined project direction, scope, and structure increases the chances of subsequently facing major issues.
Financial administration, human resources, sales, and manufacturing are just a few of the operations that an ERP system integrates to provide benefits like enhanced productivity and efficiency. The process of planning, configuring, and installing an ERP is known as ERP implementation. The procedure usually takes a few months, and it’s complicated because an ERP system supports and automates a wide range of operations.
To achieve a successful deployment, the company must first establish its requirements, then find out how to restructure procedures to make use of the system, set up the ERP system to support those processes, and thoroughly test it before releasing it to users. To complete all of those procedures on time, proper planning and an organized, staged implementation method is required.
What are the Phases of an ERP Implementation Plan?
A typical ERP installation strategy is broken down into six phases, each with its own set of goals. Because each company is different, the phases may differ slightly and overlap. The discovery and planning phase of the ERP implementation lifecycle is followed by design, development, testing, deployment, and support.
Discovery & Planning
What is the first step in the ERP deployment process? This includes conducting research and selecting a system, forming a project team, and establishing specific system requirements. The project team will be in charge of a wide range of responsibilities during the implementation, including laying out the project plan and deadlines, ensuring enough resources are provided, making product and design decisions, and day-to-day project management.
An executive sponsor, a project manager, and representatives from the departments that will use the system are usually on the ERP project team. Senior management involvement is essential for ensuring that the project receives the resources it requires and for providing the support needed to achieve change across the business.
The team may also hire an outside consultant or ERP installation partner to assist with system design and configuration. Any internal specialists involved in the system’s implementation, such as an IT representative and a report writer who will provide customized reports for users across the firm, should be included. One of the team’s first objectives will be to gain a thorough grasp of present difficulties, such as process inefficiencies and ERP system requirements.
If the company has already produced an ERP business case, it may have already defined broad business concerns and goals for the implementation, such as a speedier financial close, better operational insight, or preparing for an IPO. These can be used to focus the development of the system and to direct more extensive study, including documentation of existing routines.
During this phase, the team may choose and purchase an ERP system when the firm gets a clear understanding of its needs. One important decision is whether to employ an on-premises or cloud-based ERP solution. You purchase and install hardware and software in your organization’s data centre for an on-premises solution. Cloud-based ERP, on the other hand, is typically delivered as a subscription service accessible via the internet, making it easier to adopt and requiring less in-house IT expertise.
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The design phase develops a detailed design for the new ERP system based on precise requirements and an understanding of present workflows. This entails creating new, more efficient workflows and other business processes that utilize the technology. Users should be involved in the design process because they have the most intimate knowledge of current business processes. Involving customers in the design process also ensures that they will accept the new system and use it to its maximum potential.
Gap analysis can be used to detect process complexities and peculiarities that may necessitate ERP software modification or workflow or process changes to better match with the ERP system. The team can show the gaps to their implementation partner or supplier and request that they come up with potential remedies.
The development phase can begin once clear design criteria have been established. This entails setting and, where appropriate, adapting software to support the revised procedures. It may also entail integrating the ERP system with any other existing business systems that will not be replaced by the ERP system. The firm will need to install the essential gear and software if you’re using an on-premises ERP system.
The team should provide training materials in tandem with software development to assist users in adjusting to the new system. It also has to start thinking about data migration, which is complicated since it frequently requires extracting, processing, and loading data from various systems, each of which may utilize different formats and contain duplicate or inconsistent data. During this phase, the project team should decide which data to transfer, rather than migrating all previous data, much of which is likely irrelevant.
Testing and development can happen at the same time. The project team might, for example, test certain modules and features, then design modifications or adjustments depending on the results before retesting. It might also be used to test one ERP module while another is being developed.
Initial software testing should be followed by thorough testing of the system’s full capabilities, which should include letting select employees use the system for all of their daily tasks. This phase should also involve data migration testing as well as first end-user training.
To begin user training, most manufacturers can provide pre-and post-deployment tools. However, the business should make effective use of the training resources developed during the development process, in addition to vendor support. Resources that are tailored to your end user’s day-to-day responsibilities have actual value.
This is the day you’ve been waiting for: the launch of the system. Be ready for problems because there may be a lot of moving pieces and some confused staff, despite your best attempts to prepare them for the transition. The project team should be ready to answer inquiries, explain the system to users, and strive to resolve any concerns. If troubleshooting is required, your implementation partner should be able to assist. Users may need some time to adjust to the system and realize the expected productivity advantages.
Some data can be moved ahead of time, while others, such as current transactions, should be moved right away before coming live. Some companies want to implement all of the ERP system’s modules at once, while others want to start with a few high-priority modules or procedures and add others later. To limit risk, some firms run outdated systems alongside the new ERP implementation for a period of time, albeit this might increase project costs and lower user productivity.
Support & Updates
After deployment, nurturing your ERP implementation helps to keep users happy and guarantees the organization obtains the anticipated results. During this phase, the project team may still be in charge of the ERP system, but its focus will shift to listening to user feedback and making adjustments to the system as needed.
As new features are added to the system, extra development and configuration may be required. The system will also require training for new employees. If you have an on-premises ERP system, you’ll need to deploy software updates on a regular basis and possibly replace hardware as well. If you’re utilizing a cloud-based ERP system, your provider may automatically update the program.
Best Practices for implementation of ERP system
Creating a staged implementation strategy by itself does not ensure success. Following ERP adoption best practices in each step is equally crucial. Best practices in general include:
- Don’t take planning for granted. While it may be tempting to jump right into design and development, the early planning and discovery phase should not be rushed. This phase should lay a solid basis for the entire implementation project by ensuring that it has high-level support, has a well-defined plan, and has appropriate funding and staff.
- Support and training should not be overlooked. Some members of the project team may believe that the deployment date marks the end of the implementation process and fail to pay attention to what happens next. However, for the system’s users, the deployment date is only the beginning; what occurs next is crucial to the project’s long-term success. It’s critical to plan and budget enough resources to provide technical assistance, resolve difficulties, and provide updates. End-user training is also important in this situation. Employees must be comfortable with the system and any new workflows, especially if an outside expert is no longer available to assist. Working carefully in these areas will help your company to reap the full benefits of the system.
- Carefully plan data migration. Occasionally, businesses make the error of simply moving all previous data to the new system. In practice, some of the data in older systems may be obsolete or redundant. Is order data from ten years ago really useful? Is every vendor on your list still in business? The switch to an ERP system is an opportunity to clean up and rationalize the company’s data, so make sure you have a plan in place. It makes sense to go over historical data thoroughly, eliminating old client accounts and checking for data inconsistencies.
- Communicate. This is critical throughout the entire implementation process. The team should make it a point to communicate the reasons for the ERP installation, the goals and advantages, and what to expect at each phase to everyone in the organization on a regular basis. Communication in both directions is critical: Before and after deployment, the project team should pay close attention to user complaints.
Top 5 reasons why the construction industry needs ERP solution
Construction ERP software assists project managers in developing complete plans for successful civil engineering projects from the start of work through completion, as well as throughout the construction life cycle.
ERP software supports all parts of the construction industry, from planning to project control to the cost and revenue estimation. Five major advantages of ERP software in the construction business are as follows:
- Improve Planning: Poor planning processes can result in project failure. Contractors may suffer significant losses in the form of labor costs and clientele due to the failure to meet deadlines. An ERP for a construction company can help you plan for raw materials, human resources, design, and other resources needed to complete a project successfully.
- Customizable to your Business Needs: ERP’s flexibility characteristics boost its return on investment. Because every business has distinct needs, numerous functionalities and configurable features can be added or altered in the application to make it the most effective solution that meets the needs of the specific business.
- Real-Time Project Tracking: The modern construction ERP software system generates trustworthy analytical reports from real-time data, allowing the project manager to monitor ongoing project progress and take appropriate action if any deviations occur. As a result, building ERP software assists in decreasing risk, wasting time, and increasing job efficiency.
- Streamline Operations: Any construction firm deals with a variety of operations on a daily basis, and managing multiple clients can be time-consuming and complex. One of the most important reasons for using an ERP system is to automate and track activities in order to save time, increase data accuracy, and eliminate human errors.
- Simplifying Information Exchange: Because major construction firms deal with several customers, cumbersome data sharing is wasteful and insecure. It takes time to share huge amounts of data between departments. With the support of solutions that provide a high level of security, a robust ERP system allows easy data sharing. Customers and employees might both be restricted from seeing by contractors.
Benefits of ERP in the Construction Industry
Construction ERP software stores all of the relevant data or information about projects, profitability, conversion, and revenue production.
- Cost Estimation: Construction ERP software can help you save money by reducing technical costs and streamlining your operations. ERP for the construction business is extremely beneficial in forecasting project costs and planning future work according to budget. Some construction companies work on a contract basis, and they bid on their projects before receiving a tender in order to better estimate costs.
- Real-Time Project Tracking: The modern construction ERP software system generates trustworthy analytical reports from real-time data, allowing the construction manager to monitor ongoing project progress and take appropriate action in the event of any deviation. As a result, building ERP software aids in the reduction of risk, unnecessary time, and job efficiency.
- Planning and Analysis: Proper architectural planning and analysis are always necessary to improve an organization’s reputation. Contract management, purchasing management, project design, and raw material analysis are all possible with construction ERP software, which is useful to financial budgets. It also aids in the avoidance of contractual issues with vendors and subcontractors.
- Increasing ROI: Construction ERP software allows construction and infrastructure organizations to avoid laborious, time-consuming, and labor-intensive operations, regulate raw material and employee expenses, eliminate unwanted operating costs, eliminate unnecessary downtime, and fulfill project deadlines. And assisting the company in maximizing its return on investment.
- Improve Project Management: To improve Project Management, a construction ERP software solution must be able to monitor information, store data, and perform accurate raw material, labor, and resource allocation analyses. Construction ERP software allows authorized clients to gain access to all information from anywhere in the world. It saves time, money, and effort over the project’s lifespan.
Limitations of ERP in the construction industry
The various limitations of enterprise resource planning (ERP) software include the following:
- Expensive System – One of the most significant disadvantages of Enterprise Resource Planning (ERP) systems is their high cost. Other requirements such as computer hardware, upgraded network equipment, and security software may entail additional expenditures in addition to the actual software and implementation. It is critical to carefully assess the various ERP and other related system options in order to select the one that will be the greatest fit for your firm in terms of features as well as cost.
- Inefficient training – In a manufacturing operation, skills, experience, workforce, and resource use are all critical. It is difficult to have your operation run efficiently and smoothly without these variables, which is why comprehensive ERP training is essential for the system to function properly. A large percentage of businesses try to save money by not allocating enough funds to staff enterprise resource planning training. This will lead to a lack of understanding of the Enterprise Resource Planning vendor package in use, as well as employee mismanagement of the technology, leading in the loss of vital information.
- Customization Level – Another restriction of ERP systems is their capacity to be adjusted to meet your specific business requirements. The degree of customization offered varies depending on the software brand used, with some systems offering more customization choices than others. Most ERP systems, on the other hand, allow little flexibility or charge extra costs for the extra functionality sought. When choosing ERP systems, it’s critical to think about your business needs as well as the typical features.
- Long Implementation Times – For any firm, implementing a new operating system can be a difficult undertaking. The total implementation and training period can take over a year, depending on the intricacy of the business activities. ERP software implementation timeframes and costs are critical to consider because the time required for implementation may disrupt the organization’s routine operations and result in a potential loss of business during that time. When comparing alternative ERP or other software that require implementation, it is critical to examine the implementation time to ensure that you will see significant profits once implemented.
- Departmental Interconnectivity – Although interconnection between diverse divisions within a business may appear to be a benefit, it can also be a liability. This is especially true if inefficiencies exist in one department because they will spread to other departments. If one department is harmed and becomes inefficient, it might have an impact on the company’s overall efficiency. To prevent producing problems in different areas, it is critical to select software that will optimize your organization and improve its productivity.
The best ERP solutions for Construction Companies
ERP is an indispensable enterprise technology solution for finance, accounting, risk management, and many more industries.
- Acumatica ( https://www.acumatica.com/industries/construction/ )
- CMiC ( https://cmicglobal.com/solutions/enterprise-planning/ )
- Computer Guidance Corporation (CGC) ( https://computerguidance.com/products/ecms4/ )
- Epicor ( https://www.epicor.com/en-us/industry-productivity-solutions/building-supply/ )
- IFS ( https://www.ifs.com/industries/engineering-construction-infrastructure/construction-infrastructure-industrial-services/ )
- MarkSystems ( https://www.ecisolutions.com/home-builders-land-developers/marksystems/ )
- Oracle ( https://www.oracle.com/industries/construction-engineering/ )
- PENTA ( https://www.penta.com/index.html )
- Procore ( https://www.procore.com/ )
- Sage ( https://www.sage.com/en-us/sage-construction/ )
- Viewpoint ( https://www.viewpoint.com/products/vista )
There are just as many factors for successful ERP deployments as there are for initiatives that fail. However, it appears that success is too often defined by whether or not a project was completed on time and on budget. Using the technology to its full potential to improve company procedures appears to be overlooked.
Implementing an ERP system could be one of your company’s most significant investments in terms of time, money, and resources. It will only be as good as how you put it into action. After your first ERP go-live date, develop a solid plan and continue to examine and optimize your business processes. This, together with incrementally increasing features and functionalities, can help you build a long-term profitable ERP product.
To summarise, ERP software includes numerous advantages and features that assist businesses in remaining competitive. As a result, the program is extremely important in the construction, real estate, infrastructure, and civil engineering industries. This learning ERP module can help to earn new opportunities in this field.