The research shows that by adopting a comprehensive, single-database Enterprise Resource Planning (ERP) platform that incorporates the latest technologies and is purpose-built for construction, contractors can overcome the challenges that have been hindering their forecasting speed and precision. Such a platform allows contractors to compile complete, accurate and timely data from all essential sources to formulate a single version of truth. Here’s a look at how a single database platform solves 4 of the most common problems in construction:
Solving Challenge #1: Identify and Respond to Potential Cost Impacts
The key to identifying cost impacts is being able to combine historic project data and timely information from across the organization to predict expenses accurately. A fully featured, construction-specific ERP system leverages a single repository of enterprise data that is shared across the organization, giving access to the same cost-related details to everyone who needs them. With data that is automatically updated—and not subject to errors or delays from fallible humans—teams can stay on top of cost variances and make immediate adjustments to keep the financial picture of each project on track.
“If you want to take job costs seriously and actually be accurate with forecasting, you have to step up into one of the premier construction software systems.”- Scott Jennings, P.E., principal of SJ Construction Consulting
Solving Challenge #2: Improve Control of Cash Flow
Chet Kuchyt, Solutions Consultant at CMiC, says use of a single database system provides two advantages. “First, it allows better reaction to current scenarios because it includes real-time data. That allows you to adjust, pivot and move money around so that you can maintain adequate cash flow,” he remarks. “Second, it enables more accurate projection of ‘what if’ scenarios. You can enter information and then see the impacts on the different areas affecting cash flow.”
Richard Tregaskes, Senior Product Manager at Faithful+Gould, a leading construction project and program management consultancy, explains the connection between unified data and optimal cash flow: “Historically, cost data has been owned by the contractor, but today, the growing trend is for project owners to take ownership of cost data. From a financial as well as an efficiency standpoint, this shift in ownership makes sound business sense.
“As projects go live, owners provide access for the contractors into the owner’s system, rather than rely on a set of costs and schedules presented by the contractor (or multiple contractors) across multiple systems,” he writes.
“By tying the schedules and the costs into a unified system, the project management office can have an overview of the cash forecasting for both actual and proposed projects on a portfolio basis.”
Solving Challenge #3: Manage Resource Allocation
Working from a single database, schedulers and project managers can forecast allocation of all resources, including manpower. This more granular approach helps them better manage the challenges of seasonality, over/ underutilization and conflicting labor demands.
“Advances in ERP and project-management solutions are helping schedulers and project managers find more reliable methods of resource management,” asserts Jeff Weiss, Chief Revenue Officer for CMiC, in a Constructech guest column. “One such example is the introduction of visual resource planning tools that proactively enable the allocation of resources—including manpower—based on skills, availability and location for greater precision in meeting construction project needs.”
Solving Challenge #4: Gain Real-Time Visibility
Real-time, project-specific data provides construction-company owners, CEOs and project managers with information they can act on. The ability to marry historical data with the most current project data improves visibility even more.
When team members can access and update all relevant data through a central control dashboard, they can use that high-level information to make forecasting decisions that are thoroughly informed. Better-informed decisions can produce better operational outcomes and have a material impact on profitability.
Ideally, a single-database platform allows key players to quickly compile polished, big-picture financial reports on how the business is performing at any given point in time. This enables them to forecast and offset cost variances, such as subcontractor delays, unexpected safety inspections, potential overtime work or rush shipments of replacement parts.
Want more tips? Read part 1 and part 2 of this blog series or download the full eBook to find out more. Please visit our Resources section to view our consolidated library of industry best practices and success stories.
A recent Construction Executive article writes that “the construction industry has been plagued for decades with projects coming in over budget and behind schedule. There are many reasons this happens, but it ultimately comes down to just one thing—a lack of connected information.”
This fact about the construction industry is mentioned time and time again, and yet there are still firms out there who willingly continue to work in siloed data environments without realizing the direct impact on their bottom line. Although no one can predict the future, for those using ineffective construction forecasting techniques, it can be guaranteed that a firm is destined to face at least—if not all—of the following challenges:
Challenge #1: Inability to Identify All Potential Cost Impacts
Cost-to-complete forecasts are only beneficial if all potential cost impacts are considered. Contractors must be able to anticipate every possible factor that could cause a project budget to go south, and then budget accordingly. “The biggest risk is not accurately forecasting how much money you are expecting to spend,” Scott Jennings, P.E., principal of SJ Construction Consulting, LLC, says. “The first thing I tell my construction clients is that you want to become more responsible with job costs. However, many construction companies lack the tools they need to follow this advice to its fullest.”
Challenge #2: Inadequate Projection and Control of Cash Flow
Cash flow is the lifeblood of the construction business, where the funding for one project often comes from the revenue of another. Cash flow affects the ability to acquire and maintain equipment, purchase supplies, run payroll, pay subcontractors and invest for future growth. Construction companies need to be able to forecast and manage cash flow precisely and on a continuous basis. That requires tools that allow them to input costs and budget changes, execute other calculations, and anticipate and keep track of each project’s cash requirements.
However, not all construction leaders have the wherewithal to manage cash flow. According to a 2018 survey conducted by TSheets and Zlien, “one in five construction companies says cash flow is a constant problem. As a result, these companies sometimes have a tough time making payroll, investing in future growth, or even taking on new projects.”
Challenge #3: Poor Resource Allocation
The construction industry has a productivity problem. Over the last 40 years, the productivity of construction labor in the U.S. has fallen, according to the World Economic Forum. The organization is conducting a multiyear project to help the industry evolve to meet new challenges because it represents 6% of global GDP.
Labor constraints impact the forecasting aspect of resource management by making it difficult, time-intensive and, worse, fraught with errors. The effects are detrimental. If project managers cannot project future resource needs quickly and accurately on a weekly or biweekly basis, they most certainly will have trouble keeping productivity on track.
Researchers identified four factors that have the greatest negative impact on construction productivity: work that must be redone or repaired, lack of materials when needed due to poor planning or delays in delivery times, project changes during the execution phase and poor workmanship.
Challenge #4: No Real-Time Visibility
In order to forecast accurately, contractors need to see up-to-date information on every business aspect relating to project costs.
In a survey of more than 500 construction executives and managers conducted by TrackVia, 78% of executives and 89% of managers said data coming from their jobsites was important to their success, with the most critical jobsite data being quality of work, the cost of time and materials, and safety. Fifty-two percent of executives reported that four or more departments in their organizations relied on data from jobsites.
How can your construction firm solve the 4 common challenges of forecasting? Read part 1 or part 3 of our Forecasting with Confidence series, or visit our Resources section to view our consolidated library of industry best practices and success stories.
The ability to accurately forecast is the difference between having a profitable project and losing money—all while minimizing risk.
Contractors know that being able to predict and prepare for variances in costs or schedules is essential to the profitability, cash flow and—in extreme cases—the viability of projects. However, reliable forecasting is a complex and multidimensional process that is difficult, if not impossible, with manual or out-of-date systems.
“One of the main reasons why forecasting is not done well in a lot of companies is because collection of all the necessary information is such a big task,” says Steve Cangiano, Product Manager at CMiC. “The majority of the time that’s spent on the forecast is really about collecting that data and then putting it into a format that others can understand and access.”
Two of the reasons that data collection is not done well are (1) use of multiple software systems to store and manage data, and (2) use of traditional spreadsheets as a supplementary measure. This patchwork approach inhibits free flow of information and results in data redundancies.
Unfortunately, use of two or more systems is all too common at construction firms. “Even if firms are using [automated] systems, they still use Excel to some degree,” observes Chet Kuchyt, Solutions Consultant at CMiC.
Kuchyt’s assertion is backed up by the JBKnowledge 6th Annual Construction Technology Report. The functions within construction firms that are most dependent on software are accounting (85%), estimating (60%) and project management (56%), but those same three workflows are also the ones most dependent on spreadsheets, in a slightly different order: estimating (71%), accounting (59%) and project management (46%).
The spreadsheet method has inherent problems:
- Out-of-Date Data – Forecasting has to be done as close to real time as possible. A Carnegie Mellon University professor stressed this point in a construction-oriented textbook. “For the purpose of project management and control, it is not sufficient to consider only the past record of costs and revenues incurred in a project,” he wrote. “Good managers should focus upon future revenues, future costs and technical problems. For this purpose, traditional financial accounting schemes are not adequate to reflect the dynamic nature of a project.”
- Potential for Inaccuracies – Manual data entry (or re-entry) is error-prone; a single typo can throw off an entire set of data.
- Lack of High-Level Analytics – When much of a company’s data is stored in spreadsheets, extrapolations are problematic. “The forecast should be systemized,” Cangiano says. “It should state, ‘Here’s the data, this is what it’s telling us, this is what we should do moving forward.’”
Scott Jennings, P.E., principal of SJ Construction Consulting, LLC, has over 25 years of experience working with hundreds of contractors across the country. As we already know, “forecasting feeds the lifeline of the financial health of a company,” he says. “If owners and CEOs want to prevent profit fade during construction projects, they must equip project managers with sophisticated software tools that allow the managers to project costs accurately.”
In other words, don’t let your inadequate budget forecasting undermine your projects—instead, learn to get ahead with a unified ERP solution.
With the right software, “they also can know where their active projects stand at any time, in terms of profitability, by forcing the project managers to go into the software and actually update each of the line-item costs on a weekly or biweekly basis,” Jennings adds. “This brings tremendous confidence to the owners and CEOs and will allow them to expand their surety bonding for their backlog of projects.”
Want to learn more? Read part 2 and part 3 of our ‘Forecasting with Confidence’ blog series, or visit our Resources section to view our consolidated library of industry best practices and success stories.
If you could know what the future held for you, would you want to know? In our personal lives, this question usually requires a great deal of thought as surprises provide plenty of spice for life. In business, the answer is simple: Most leaders want to know everything they conceivably can about the future so they can anticipate and protect against construction risk that is on the horizon.
In today’s era of data-driven enterprise operations, construction firms can get more insights and projects than they could in the past. Enterprise resource planning systems provide visibility into operations that would have been unrealistic to obtain in the past, giving you a personal crystal ball that lets you engage in meaningful construction risk mitigation.
Using data to handle risk
A Construction Executive report explained that the amount of data generated within building projects is increasing quickly. As a result, organizations often run into significant overhead in trying to manage and communicate that data over different parts of the business. However, the companies that do get data to the right people at the right time are able to reduce risks by gaining greater visibility into operations.
When your data silos disappear, your various leaders can get a clear picture of what is happening in your business and minimize the risk associated with any decision that may be made.
This sounds great, but the benefits don’t just exist on a project-by-project basis. They also extend to big-picture business issues.
Getting ahead of risk
A successful project begins well before you break ground. You need to begin managing construction risk before you even commit to a build.
Picture this: You have a sales team developing a bid. They have access to annual reports on revenues, an accountant in place to provide insights into current fiscal capabilities and a project manager who knows your construction team there to ensure you have the skills to handle the demands of the project. However, the data this team is using to make a bid is spread over a bunch of spreadsheets, paper files and other sources of organizational knowledge.
As the team is preparing its bid, it becomes clear that you are dealing with a highly variable opportunity cost. On one hand, the revenue potential is significant because you know the customer will have more properties to build once they find a builder they can trust. However, you have a few projects scheduled for a similar time frame as the initiative you’re bidding on and aren’t sure you’ll have the available capital or human resources to handle the demands.
What do you do?
- If you decide that you lack the resources to make a competitive bid on the project, you risk missing out on significant future opportunities.
- If you bid even though resources will be tight, you’re left with little margin for error and risk having the project go poorly, tarnishing your reputation with the developer and costing you heavily as problems emerge on the project.
Solution: Getting better at using historic data alongside existing project information and near-future projections can empower organizations to quickly evaluate the opportunity costs of sales decisions.
Furthermore, this type of visibility remains valuable throughout a project as stakeholders work to respond to problems as they arise and make the best decision possible based on available data.
Taking full advantage of forecasting
Within this conversation on anticipating future resource availability to mitigate risk, it is important to keep the full scope of projects in mind. It isn’t enough to have a deep understanding of raw material availability, for example, while underestimating the staffing requirements of a project. You need to bring together data from across every part of your business if you want to forecast effectively, and enterprise resource planning solutions are especially important in these situations.
An ERP system will bring together data from the entire organization, letting you blend project-specific information with big-picture company data to help you identify potential risk in advance to prepare contingencies and avoid potential pitfalls.
Ultimately, effective project and financial planning begins with understanding and mitigating risk, and an ERP system gives you the combination of data visibility and accessibility needed to make better decisions across every phase of a project, from opportunity management out to constructing your bid, gathering resources and actual building.
Many construction companies are stuck in an endless pattern of responding to emergencies and scrambling to keep projects profitable. It’s time to end the cycle.
If you want to escape the repetition of facing an unexpected project event, enacting a construction resource management plan in response and hoping you can keep a project profitable, you aren’t alone. The rise of digital technologies in business has left many companies realizing they can use data to shift from reactive operational models. The construction industry may be behind some other sectors, but it isn’t too late to adapt.
Shifting from a responsive project resource management practice into proactive resource planning can empower firms to maximize their assets and get more value from projects. To start, you need to cement the distinction between the two into your mind:
Resource management vs. resource planning
We could go through a bunch of analogies and metaphors to tell you why management is different than planning, but let’s keep it simple. Here’s a hypothetical scenario similar to what builders face all the time, and how the situation varies in each setup.
Here’s the scenario: You have a team working on a multi-unit dwelling project that begins with demolition of an old building. From there, the plan is to analyze the site post-demolition, create the foundation for the new structure and construct the property. Demolition goes smoothly. With the previous home out of the way, you are able do a deeper site survey and find that the foundation will need stronger reinforcement than you initially anticipated. You find out you can tweak the plans to use a reinforced material in strategic locations to make the change with minimal disruption, but you have limited supply of that material on hand.
How to respond with resource management:
In a traditional operational model, a construction firm would respond to this problem by analyzing what’s available relative to what is needed. There may be assets available at another site, after all. Your site manager notifies the project lead, who then contacts other sites to see if they have excess supply available to borrow from.
From there, you’re looking at multiple projects from the top down, trying to identify which timelines can be tweaked and which supplies can be repurposed to solve this problem. You now have to scramble to project adjusted timelines, see how long it will take vendors to ship replacement inventory, recalculate project costs and adjust revenue expectations. All of this is further complicated if you don’t have the budget space to deal with the cost overage.
Sure, you could just order new supply and put your multi-unit residential development on hold, but if you do that while you have available supply unused at another site, you’re wasting time. A good resource management strategy can optimize what’s available at a given time, but it comes with a great deal of overhead and relies heavily on coordination across teams. The potential pitfalls are plentiful.
How to get ahead with resource forecasting:
In this same scenario, an organization engaging in forecasting will have analyzed past projects and anticipated potential supply or financial shortfalls in advance. Your team may know that a project involving demolition and rebuild can introduce complications, but until you dig into historic data trends, you can’t really project the precise cost and material bills that can come with those complications. Furthermore, the business will have visibility into company-wide resource availability at the project’s outset.
An organization that is proactive about resource forecasting won’t necessarily anticipate every contingency, but they will have created flexibility in the budget, project schedule and materials strategy to accommodate for reasonable unexpected issues. In this scenario, this could play out in having extra reinforced beams in place from the start, knowing that unused materials can be passed on to a future project anyway, for example. If the capital isn’t immediately available, creative scheduling and project management could help to sidestep the issue.
Embracing a proactive approach
Resource planning is often overly complicated for construction firms because organizations can’t easily see what they have available at a given time and report on historic data trends. Modern enterprise resource planning solutions are changing this by combining user-friendly visualizations with intuitive dashboards so site, project and business leaders can easily get the information they need to make decisions based on the entire organization’s resource plan.
When these organizational resource planning tools are combined with collaborative project management systems that extend to the field, all stakeholders are left with the ability to generate and access the information they need to get ahead of resource challenges. Shifting from managing emergencies to getting ahead of problems before they arise.
Picture this scenario: You look ahead at a planned project, consider the customer and think, “OK, we’re going to get delayed here. We’ll need to manage expectations and overtime throughout the effort.”
Sounds too familiar, doesn’t it?
In actuality, the lack of concrete data about those concerns means that you’re just on the lookout for problems, and not controlling the project with precision or establishing stronger schedule and budget forecasts.
With construction companies now having access to groundbreaking tools to help gather and analyze data, you can get the information you need to pinpoint potential project problems and enact controls proactively. Here are four tips to help you do so effectively:
1. Don’t just collect data. Build it into operations.
Establishing a construction plan and working to execute it has long been extremely challenging for the simple reason that organizations have lacked tools to get managers relevant information in a timely fashion. Now, users have mobile devices and apps that let them collect and create information with ease, but businesses lack the backend systems needed to organize that data and deliver it to proper stakeholders.
If a site manager is dealing with a staff shortage that is causing a delay, it isn’t enough to simply log that delay in an isolated system. Instead, you want your project manager to be automatically notified about the delay so as to adjust schedules, orders and other timelines right away, and get ahead of any future problems. This is only possible when data is naturally organized within workflows, so users not only can track information, but also use it in organic ways.
2. Take advantage of modern reporting
Creating a formal report on operational performance used to be a nightmare in construction—and it still is for many builders. You need to gather invoices, paper-based files, digital spreadsheets and similar sources of data, and compile them into cohesive reports with visualizations that make data more actionable.
The process was so clunky that you could really only do it for major reports at predetermined intervals. If a project manager was discussing a construction plan and thought, “You know what, this customer is asking us to go through a lot of approvals before building. How long will that hold back our project?” You couldn’t really do much to answer that beyond provide guesstimates.
Modern enterprise resource planning systems, however, can let you create a custom report with specific, user-defined parameters that help you identify delays based on various data types. In this instance, you could search the system for historical data on project delays caused by waiting on client approvals and compile a report that averages out the duration of the delay based on waiting times.
With that information, you not only gain a clearer estimate of what to expect, but identify specific projects where delays were especially notable and delve into your records to identify the root causes of those problems.
Having identified the specific issues that cause project delays during approval cycles, you can then create workflows and reminders in the ERP platform that will notify users to send extra emails to clients or vendors, create an extra internal approval for plans or adjust supply chain procedures to accelerate operations once approval is given.
Digital technologies make custom reporting easier than ever, and you shouldn’t neglect the options at your disposal for planning.
3. Establish automated alerts
Improving collaboration during projects is a starting point, but day-to-day control can still be difficult as details slip through the cracks. This is where automated alerts and notifications become invaluable. With an ERP system that has embedded project controls, you can set parameters for acceptable operational conditions and automatically notify personnel if they are breached. Similarly, you can create custom workflows that alert users when a task requires their attention.
For example, you’ve planned a project and you know it would not be fiscally viable if you exceed the materials budget by 5 percent. You want your site managers to be able to order what they need quickly to keep everything on schedule, so you eliminate approvals for each purchase order. However, you can set alerts to notify you when cost benchmarks have been reached so you can intervene and control spending. In the same way, you can use alerts and digital checklists to monitor regulatory and internal policy compliance.
4. Make controllable projects the norm
Challenges in project planning, monitoring and control are all widely accepted in the construction industry. But it’s time for that to change. Building Design and Construction reported that digital transformation is opening the door for stronger processes and data management in the sector. Similarly, a Dodge Data & Analytics study found that mobile capabilities are having a dramatic impact on data penetration in construction settings.
Technology is changing how you can plan and control projects. Contact CMiC to learn more about how and discover what we can do to help.
The situation is easy to understand: Construction firms are facing a crisis when it comes to project management. If you run a construction organization, chances are that you’re used to spending an inordinate amount of time handling project management tasks and issues.
At the most basic level, the unpredictability in construction makes project visibility, forecasting and managing changes difficult most of the time. But these are just the entry points to the frustration facing construction firms. The even bigger issue may be—simply—a lack of project management talent.
The scale of the project management talent gap
The Project Management Institute found that the need for project management professionals across a variety of sectors is skyrocketing. Between now and 2027, the lack of project management talent could lead to a $207.9 billion loss in gross domestic product across the 11 nations analyzed in the study.
What’s more, the lack of professional project managers is expected to hobble the growth of industries around the world. The gap is most apparent in manufacturing and construction, where approximately 9.7 million project-related jobs are expected to emerge from 2017 through 2027. The next closest sector, according to the study, is information services and publishing, with the job total at 5.5 million.
The situation is dire, as evidenced by well documented studies. Construction companies can’t find the skilled project managers they need to keep up with demands. Training, succession planning and similar strategies are useful, but, at this point, it might not be enough. The solution may instead be to improve project management processes and procedures to drive efficiency and ease the workload within your organization. Instead of needing more project managers, your current experts can get more done if they’re empowered with the right tools.
Of course, updating legacy project management procedures isn’t always easy, but here’s a look at three tasks that are in desperate need of change:
1. Field collaboration
Are your project managers spending as much time on the phone or driving between sites as they are actually solving problems? It’s time to change. Mobile devices are offering construction leaders an opportunity to get the information they need wherever they are, but many builders lack the backend data and workflow management tools needed to deliver relevant data to project managers in a timely fashion.
A construction-focused enterprise resource planning system can provide the data integration, notification and alert systems needed to help project managers stay ahead of big-picture issues while they’re in the field.
2. Project implementation
Working with siloed and outdated paper-based data is preventing managers from performing adequate planning and forecasting for a project. Getting an initiative off to a good start is key to creating positive customer impressions and meeting deadlines, but it’s a huge hurdle in the industry.
A Deloitte study found that funds lost due to inefficiency in the implementation portion of a project often amount to between 30 and 40 percent of the total cost. Better controls and procedures are needed. Organizations can map their processes and workflows in an ERP system, forecast costs using reports on historic data and create a clear construction schedule quickly when managers have the information they need integrated in one place.
3. Emergency response
Construction project management isn’t just about planning and scheduling. To minimize delays, leaders must act quickly and decisively to resolve immediate problems. However, the lack of data visibility in many field settings – not to mention poor data management in the back office – leaves many project leaders to perform guesswork as the best way to respond to an issue.
ERP solutions feature dashboards, reports and data visualizations that can empower managers to gather relevant information and make decisions quickly, changing how organizations respond when something goes wrong.
Efficiency is becoming an acute need in construction project management. Embracing digital technologies, including construction-focused ERP systems with project management capabilities, can go a long way in modernizing legacy processes.
You’re sitting in your office one day when you get a call from an engineer on your team. A new interpretation of a building code forced the team to change plans for one of the basic house blueprints you use as a foundation for a variety of projects. Suddenly, you’re looking at a logistical and communications nightmare, unless your document and content management systems are up to the task.
Digital document management technologies have the potential to resolve a variety of operational challenges, and document management that is embedded into ERP systems is particularly advantageous. With this in mind, here’s a quick look at why advanced document management capabilities are so critical and how you can get a system off the ground.
Understanding the role of document management
According to a Construction Executive report, businesses need digital document management systems that empower collaboration because the solutions allow users to interact more effectively and comply with regulatory standards more easily.
Let’s revisit our introduction scenario from this point of view. When an engineer calls, saying you need to update an essential plan for code compliance, you are forced to launch a variety of processes, including:
- Replace every existing version of the older blueprint with the updated version
- Identify which active projects are using those plans and get site managers revised plans
- Update marketing and sales collateral to reflect the new base blueprint and drawing relative to the change
It isn’t enough to update your primary source blueprint; you need to get the revised version out to all of your relevant teams. If you’re using paper records, this means printing, photocopies, courier trips out to project sites or field workers making extra visits to the office. The costs, delays and potential for project setbacks escalate quickly.
With digital document management, you make the backend change and ensure the apps and services that users rely on automatically pull from that source. As such, all you need to update is the digital source file; all your teams get automatically notified about the revised plans.
Establishing digital document management
Transitioning to a digital strategy may seem overwhelming, leaving you worried that you’ll have to scan lots of paper files. But think about it:
- Your engineers are probably working in CAD systems already
- Your field teams are relying on smartphones and tablets
- You are likely in a situation where the business is becoming natively digital
In many cases, companies are actually putting a great deal of effort into sustaining paper-based systems because they want to avoid the initial disruption of going digital. Don’t wait. You can keep some legacy drawings and blueprints in paper format if you need to, but take the time to scan what you use regularly and start leveraging your digital source files as soon as possible to begin a transition.
The real key to getting document management plans off the ground isn’t so much about going digital, but about organizing and distributing files in such a way that the system is sustainable over time.
Sustaining a digital document ecosystem
Digital document management strategies often fall apart when users have to jump into specialized apps or file sharing systems to get the information they need. The extra clerical work—even when it’s easier than dealing with file cabinets—leads to operational overhead. Integrating document management tools into your ERP platform—or better yet, deploying an ERP with embedded document management capabilities—builds access to all content assets into day-to-day processes.
The CMiC construction ERP includes ‘native’ content management capabilities, allowing your employees to integrate files into workflows, easily search your database and enact controls over assets. Furthermore, document management tools are extended out to CMiC’s field-specific solutions, providing integral connectivity between the office and project sites.
Digital document management can be transformative, and ERP platforms with embedded document management capabilities ensure that construction firms can maximize the value they receive from new digital technologies.
You have a site manager facing a dilemma: A shipment of supplies just arrived damaged, making it impossible to work on the next stage of the project. There are a few options: Order replacements and delay work, change the plans to allow for alternative materials that local suppliers have on hand or adjust project strategies to allow for alternative work to be done while the supply issue is dealt with.
How would your site managers go about deciding which choice is best for this specific project? If you’re like most firms, your decision-maker will spend a couple of minutes thinking about the problem and make the choice based on anecdotal experience. Maybe the site manager knows that the vendor has a tendency to respond quickly to supply problems, for example, and determines that an immediate delay would be short and lead to less disruption.
This kind of instinctual decision-making is workable in small scale, but when you have a portfolio of projects running at once, you need your leaders to be able to make choices based on accurate data. This is where business intelligence tools come into play.
How BI works
It’s important to understand where BI fits within a broader analytics strategy. Big data is often approached as the process of gathering large amounts of structured and unstructured data and finding ways to put that information to use in day-to-day operations. For construction firms, the structured data can be transaction records, vendor performance profiles, and estimated and actual costs. Unstructured information can take the form of plans, equipment handbooks and similar forms of documentation.
As organizations engage with big data, they need to develop strategies to organize that information effectively and communicate it to end users. An enterprise resource planning (ERP) system provides the backend database for all of this information to reside, making it accessible to users across teams. BI technologies then take the data within your ERP system and translate it into reports, visualizations and similar user facing formats that let individuals act on the data.
In simplest terms, BI saves users from having to sift through large quantities of information to find out what is relevant by automatically presenting them with what is most important.
Where BI fits in construction
BI enables stakeholders within an organization to quickly access the information they need to inform decision-making in real time. Going back to our hypothetical site manager, that user could leverage BI to:
- Create a custom report for vendor shipment records and prices to identify which vendor is best suited to provide replacements and pin down the timeline for the day. This can be done in minutes, combining data from across the business.
- Chart the average cost of supplies to determine if local hardware stores or similar sources could provide a cost-efficient alternative.
- View big-picture financial details on how the business is performing to identify whether the organization can afford delays, possible overtime work or rush shipment of replacement parts.
With “embedded” BI at her fingertips, the site manager can go beyond making an estimate on the optimal decision based on experience and use real-world data to make the best choice relative to the specific set of circumstances in play at a given moment.
While these benefits are powerful in the field, they’re also extremely beneficial at the home office, where leaders can quickly ascertain business performance, monitor potential impacts to profitability across all projects and perform similar analyses in real time. CMiC makes these capabilities particularly powerful by embedding our BI capabilities into our ERP platform, creating a unified system that provides complete and timely visibility into a full range of actionable insights.
The CMiC BI advantage
Most BI solutions exist as specialized software systems that are designed to integrate with your back end databases and pull data at intervals. In many cases, this leads to limited functionality in terms of both the types of information the BI system can gather and the frequency with which it can do so. CMiC overcomes these limitations by embedding our BI solution into our ERP and field operations platform, allowing for seamless and complete access to real-time data across the enterprise. This results in a variety of benefits, including:
- Greater adoption and usage of BI capabilities because users don’t have to jump between their ERP and a separate BI tool — BI exists within the ERP.
- Simpler — and more effective — automation because the ERP can trigger automatic processes when the BI system identifies prescribed data conditions.
- Better decision-making as BI is built into existing workflows, allowing users to make better- informed choices.
Choosing an ERP with embedding BI takes away the chaos of decisions made based on anecdotal evidence and creates a structured process in which choices stem from real data and established best practices. CMiC makes this possible by making BI “pervasive” — it builds data analytics into everyday processes, ensuring users get the insights they need, where they need them, and when those insights can have the greatest impact on decision-making. It’s a whole new way of thinking about — and using — business intelligence … and it’s only available from CMiC.
When you work in construction, you face problems that businesses in many sectors don’t have to deal with, particularly in change management. Change orders arise so often that you’re left always playing catch up, which only leads to more project changes and hoops to jump through. A standard enterprise resource planning solution isn’t going to naturally align to your needs. We’ve been exploring the signs that it may be time to make a move to a new ERP, and now we’re back with the final part of our series. The last major signal that your ERP can’t keep up with the demands of your business is that it lacks the workflows needed to respond to change orders effectively.
Construction Change Management: Beyond the Disruption
Experiencing change is normal. Projects can get out of line for numerous reasons, many of which are beyond your control. What’s more, a Construction Week report explained that large-scale projects are becoming more common than ever in the industry. Firms must grapple with environmental and labor regulations, fiscal uncertainty created by shifting material costs and ever-changing timings that can be influenced by anything from customer preference to site-specific problems that delay work.
You can’t entirely prevent change from disrupting your operations, but you can work to minimize adverse impacts. According to Construction Week, many organizations engage in basic training and change management procedures to establish a work environment in which employees understand what they need to do. However, organizations often end up lacking the data they need to make effective decisions. Because of this, builders often fall into common misconceptions that limit their ability to keep up with change. In essence, many companies still make their decisions based on gut feelings.
The reason for this problem is simple: Most builders are relying on a combination of spreadsheets and ‘siloed’ information to keep up with project changes. What’s more, the report said many manual processes combine with poor data sharing to lead to inaccuracies and failed projects. The limited ability to collect data and collaborate is undermining businesses as they work to adapt to project changes as they arise.
It isn’t enough to hire and train good workers. You need to give those employees the right tools to get the job done. If your ERP can’t support the kind of data collaboration needed to keep pace with change, your projects will be set up to fail at the outset.
The Implications of Poor Change Management
Consider a commercial building project for a multi-use facility. Any alteration in the project could have an impact on a variety of stakeholders. For example, if one future tenant realizes it will need a higher-capacity hot-water heater after construction has begun, you’re left to scramble. To handle this small change order, you must:
- Get word to architects and designers to identify options for adjusting the plans.
- Identify the financial implications of proposed changes by analyzing labor expenses, supplies and material costs.
- Communicate potential changes to site managers and any impacted customers for approval.
- Ensure work and purchase orders are updated relative to the changes.
One change order can create cascading disruption. Responding efficiently demands the ability to connect with a variety of both internal and external stakeholders.
If you are using spreadsheets, paper documents and similar tools to get the job done, you won’t be able to keep everybody informed easily. Designers will need somebody to deliver details on the new water heater. In addition, they’ll need to make updates in their CAD systems and email those plans to stakeholders hoping the message doesn’t slip through the cracks. If you’re using a general ERP software system, you won’t have access to the specific workflows you need.
These types of issues don’t just come up when project specifications shift. Instead, change is the norm. You probably don’t need the Harvard Business Review to tell you that, but the academic source confirmed that just about any business strategy will eventually lead to change. Any management activity involves dealing with changes, and companies must enact systems to maintain consistency and keep costs under control as they contend with the need for frequent adjustments.
A construction ERP system can go a long way in resolving issues. An ERP platform isn’t a cure-all, but it can serve as the infrastructure that lets you make the cultural and procedural updates needed to inform all stakeholders of change orders and enact the follow-up workflows necessary in the most efficient way possible. Change is constant in construction, but transforming operations around modern digital technologies through a strategic ERP software investment can provide the basis for operational advances as builders work to deal with constantly shifting project requirements.