Considerations when choosing an ERP System

Outlining how they plan to work with construction firms to ensure public sector works are delivered faster, better and greener, the Government’s launch of the Construction Playbook back in December was certainly a defining moment for the industry.

As well as incentivising innovation, the government has encouraged the embedding of digital technology and pledged to introduce longer-term contracting. Finally, this gives businesses the certainty required to invest in new software designed to help improve productivity and generate efficiency savings.

But, when faced with the decision, how do you choose the most appropriate solution for your business? Here, Carol Massay, Head of Construction at the AccessGroup explores some of the key features construction firms ought to look out for when choosing their enterprise resource planning system – ERP System.

Continuing to build on the ambitions set out in Construction 2025 and the National Infrastructure Strategy 2020, the Playbook brings together best practice from across the public sector, recognising a need for continuous improvement in building and workplace safety, cost, speed and quality of delivery. As well as urging the sharing of better quality data, it also commits to increased investment in training the future workforce through upskilling and apprenticeships. So what are the key things to look out for?

Cloud-based

While the sector has long been plagued with a so-called ‘digital skills gap’, adoption of cloud-based technology has certainly accelerated in recent years. ERP system can allow businesses to scale-up, gain better insight into productivity levels, access more data, track spend and ultimately, ensure projects are completed on time and within budget.

Daily backups, security updates and operating system upgrades will significantly drive down overall business costs and vulnerability, as well as eliminating the need for costly hardware and maintenance upgrades.

Improved estimating

During the tendering stage of a new project, estimators will spend considerable time pulling together information on labour, plant, material, subcontractor and overhead cost required to deliver small, medium and large scale projects.

Traditionally, this information might have been collated on a spreadsheet or across various different spreadsheets and systems, only accessible to individual contractors or estimators. Not only can this create problems when it comes to sharing or collating information, it can also hinder the speed at which a project can be costed up and given the green-light.

Specialist software also enables estimate templates to be built, ensuring that any information or key data can be taken from one project and used for a similar client, avoiding unnecessary duplication of work.

To fight shrinking profit margins, estimators have been turning to digital solutions far more in recent years.

Bills of quantities, for example, are now generated electronically and in some cases with the same software the design teams used to create the asset. Where this isn’t possible, estimators can still use software to scan the drawings and produce bills of quantities – eliminating hours spent doing take-offs from the drawings before being able to price up a job.

In-depth analytics

In order to improve profit margins, speed and the quality of project delivery, it’s crucial the entire management team  have access to a wealth of key data to help inform decision making, as well as the ability to drill down into project costs on a per transaction basis.

As projects progress, analytic information stored on the system continues to evolve. The ability to provide an accurate and up-to-date representation of the project – as well as integrating client, supplier, sub-contractor and consultants financial information – will save hours of administrative work.

Increasingly, senior executives, managers and finance teams expect to access key information in real time, so it’s important your system is intuitive and easy to use. The ability to access weekly and monthly reports through a project lifespan will also help identify what is performing well and immediately identify any concerning trends.

Through the application of certain filters, most systems will also allow you to drill down on specific areas, opening up a whole new world of insight.

Capturing costs

With margins increasingly tight, contractors have to ensure that all costs are accounted for, making sure they remain aligned with the original estimate or budget. If costs begin to spiral out of control, the whole project and overall business performance may be jeopardised.

Software can help avoid this, ensuring that all costs associated with the project can be tracked, as well as offering improved visibility to enable more informed decision making. The cost valuation reconciliation (CVR) process, which is regarded as the “universal workspace” of the project ensures any overspend or under recover can be seen and dealt with before the end of the project when it’s too late.

This will become even more important following the introduction of Domestic Reverse Charge, with contractors urged to implement systems and software able to deal with the reverse charge and consider how it might impact cash flow. The EasyBuild CVR process allows project teams to track the monthly cost and monthly revenue, enabling project cash flow forecasting information to be shared with the finance director who is, ultimately, responsible for the financial stability of the company.

For some construction projects, the capturing of cost can be done at traditional levels such as labour, plant, material, subcontractor and overheads. However, there are some specialist projects that require a further level of detail assigned to individual cost transactions such as “activity codes” – also referred to as element or work breakdown structure (WBS).

If your new system doesn’t have the required features it may struggle to keep track of costs or, worse, mean you lose out on a contract if you are unable to provide this level of detail.

Construction businesses can now transform how they operate, and by embedding digital technology and incentivising innovation through the introduction of a specialist ERP system, they can finally provide employees with the right tools, on the right platforms. This investment will lead to an increase in productivity levels, facilitate better communication and help the entire construction cycle run more efficiently and smoothly. Those that understand their needs and requirements, and invest in the right platform for them, certainly won’t regret it.

Carol Massay is Head of Construction at the Access Group.

To find out more about the EasyBuild software, visit the website: https://www.easybuilduk.com

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