5 ways ERP technology is unlocking better margins in construction

November 22, 2022

5 ways ERP technology is unlocking better margins in construction

November 22, 2022

Construction workers

Enterprise resource planning (ERP) is an integrated software system used to manage an organization’s day-to-day operations such as procurement, accounting, human resources, compliance, project management, supply chain and more. ERPs are used across industries to integrate and simplify enterprise-wide processes.

Author
Tanner MacDonald

A Manager at MNP Digital, Tanner is an experienced and versatile information technology consultant with experience developing IT strategy and deploying systems. His focus is leveraging technology to generate financial improvements for companies with industry expertise and background in construction, supply chain, logistics, field service, and manufacturing.

Although many industries have embraced ERP technologies, the construction industry has been slow to adopt it because many firms in the landscape are unaware of its benefits and the solutions available to them given the sheer number of point solutions that have been developed in recent years. Most of them are accustomed to solutions like Microsoft Excel for managing scheduling, costing, analytics, etc. In addition, the dynamic nature of the construction industry makes it tough for the tech world to catch up. The industry is often tasked with difficult and complex projects such as building custom structures for unique clients in sometimes faraway locations.

More recently, construction companies are starting to see the benefits of ERP technologies and its ability to transform their business. They’ve started to realize that their current platforms and technology are holding them back, and by adopting this software, their business can increase competitiveness, grow sustainably, and improve profit margin.

Here are five ways these can be achieved through ERPs and questions you should ask your implementation partner:

Automation of repetitive tasks

Many tasks in construction are repetitive and time-consuming, such as managing contractors and subcontractors, inventory, project billing, hiring, and onboarding, compliance tracking, and many more. ERP technology can help automate these tasks so they can be completed more quickly and efficiently. This can free up time for field and office workers by up to 50 percent.

ERP modules such as finance, customer relationship management, inventory management, marketing automation, procurement, human resources management, etc., support various aspects of your construction company. You can pick modules based on the features attached to them and how they meet your company’s specific needs.

Questions you should ask:

  • What low-code or no-code tools exist within the platform to automate tasks?
  • How do modules interact (inventory, projects, equipment, etc.) to reduce manual data entry?

Improved communication

Good communication is essential for any business, but it is especially important in construction, where many different groups are involved in a project. ERP technology can help improve communication by providing one source of truth and a platform for all parties to stay up-to-date on the latest information about the project. This can help avoid misunderstandings and delays by efficiently capturing and managing all project correspondence with access for everyone involved so no one is left out of the loop.

With an ERP software, you gain access to a data repository that allows you receive documents from multiple sources and view them in one feed, extract data from various document types, and receive important notifications on transaction status. Some automation features also let you collect user information and manage external inquiries from within the platform.

Questions you should ask:

  • Can the ERP platform be extended to external users?
  • What is the cost of adding additional users? Is pricing user-based?
  • How are documents managed and organized within the ERP platform?
  • What tools exist for email/text notifications?

Reduced material costs

One of the biggest expenses for construction companies is the cost of materials. Technology can help reduce these costs by helping construction companies find the best deals on materials, analyze trends in the costs of materials, and provide better inventory visibility to reuse, return, or recycle materials that would otherwise be discarded.

ERP tools exist to manage your procurement workflow from identifying low-cost suppliers to invoicing, payments, shipping and managing vendor relationships. You can also access project-driven supply chain solutions to segregate and manage your inventory and generate project-specific invoices.

Questions you should ask:

  • What procurement workflow options are available?
  • How is general and project specific inventory managed?
  • What material cost analytics are available?
  • How is inventory controlled by location?
04

Increased safety

Construction is a dangerous industry, and safety incidents impact the business in many ways, none of them good. Technology can help increase safety by providing better tools for workers to understand, predict, and correct issues before they become a problem. The right ERP software lets you integrate a Safety Management System (SMS) to automate your safety procedures, monitor activities in the field and office, and transform information into an improvement plan, thus helping you meet the COR certification criteria.

Questions you should ask:

  • What tools exist to track safety issues?
  • Are analytics available?
  • Is the solution able to assist with COR certification?
  • What form building is available?
05

Improved project management

Project management is essential for any construction project, and ERP technology can help improve project management by providing better tools for tracking progress and quickly identifying potential issues and their impact to schedules and budgets. With an ERP software such as Acumatica, you can create RFIs and connect them to issues and change orders. You can also maximize features such as cross-device compatibility, markup tools for drawings, etc. It allows you to keep track of your project in real-time and in a centralized environment where all stakeholders can collaborate. You can also explore other tools such as Procore, Assignar, Smartsheet, etc.

Questions you should ask:

  • What project management tools are available?
  • How are drawings and markups managed?
  • How do project management tools work together (ex. An RFI linking to a change order)?

Conclusion

ERP technology is starting to play a bigger role in the construction industry, and there are many ways that it can improve profit margins. Automating repetitive tasks, improving communication, reducing material costs, increasing safety, and improving project management are some of the ways that ERP technology can help your construction company save money and improve bottom line

The technology offers many other solutions that can be beneficial to your organization and it is important to seek the expertise of a professional when deciding which solution is best suited to your business needs. If you’re not sure how to start, you can access our playbook detailing how to adopt an ERP and what to know about purchasing one.

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