Blog: Forecasting with Confidence—Solving Four Common Problems with a Single Database Platform [Part 3]

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.

Blog: Forecasting with Confidence—Four Common Challenges That Impair Forecasting [Part 2]

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.

Studies have shown that the most significant factors affecting construction productivity can be influenced and improved through jobsite management efforts.

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.

Blog: Forecasting with Confidence—The Trouble with Spreadsheets in Construction [Part 1]

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.

Forecasting With Confidence: How Contractors Can Solve Four Common Challenges

The right software can make the difference between having a profitable project and losing money.

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.

Scott Jennings, P.E., principal of SJ Construction Consulting, LLC, has over 25 years of experience working with hundreds of contractors across the country. “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.”

Can your construction firm solve the 4 common challenges of forecasting? Read this eBook to find out how…

Here’s what your future has in store: how accurate forecasts reduce construction risk

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?

  1. If you decide that you lack the resources to make a competitive bid on the project, you risk missing out on significant future opportunities.
  2. 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.

Product Highlight – CMiC Resource Planning

To run a profitable operation, your resource managers and schedulers strive to achieve as close to 100% utilization as possible. Estimating resource supply and demand with a high degree of accuracy is key to your success. When resource planning estimates are reliable, they materially enhance a firm’s ability to optimize utilization and to quickly adapt to changes.

5 Signs Your ERP System Doesn’t Have What You Need: Part 3: Budgeting and Forecasting

We’re back with part 3 in our series on signs that your ERP system doesn’t have what you need. In this edition, we’ll discuss how budgeting and forecasting shortcomings can limit your growth and highlight ways that an ERP solution that isn’t up to the task of supporting your operations will reveal itself.

Budgeting and Forecasting Problems are Entrenched In Construction

Many experts in the construction sector believe that budget overages are just part of the job. When discussing a commercial project that failed to control costs, one project leader told Stuff Limited, a New Zealand-based publication, that shifting economic circumstances and general unpredictability can easily cause budgets to escalate. As a result, forecasting is more of an art than a science.

A project management expert countered, telling the news source that poor budget preparation and forecasting is often the result of inadequate planning. In many cases, construction firms promote skilled workers from on-site jobs to project leadership, creating a potential skills deficit.

Who is right? It may be a little bit of both. While project management expertise can go a long way in addressing budgeting and forecasting challenges, the reality is that construction efforts do naturally involve a degree of unpredictability. In the end, the key to success is being able to use historic project data and timely information from across the organization to create a more accurate forecast of expenses. From there, effective communications that leverage a single repository of enterprise data—but that is shared across the organization—can ensure that budgets remain up to date at all times, helping teams stay on top of cost variances and their impact on the overall financial position of each job.

Solving the Budget Visibility Issue

A Healthcare Facilities Today report explained that digital technologies are helping construction firms get better at daily reporting and budget management. In particular, cloud services are empowering workers in the field to easily connect with the office and keep projects on target.

These technologies are great, but they are effective only if they mesh well with your ERP system. You can’t control costs in ‘near time’ if your project management apps don’t exchange data seamlessly and bi-directionally with your ERP setup. To improve budget and forecast preparation, many construction companies choose to undertake costly—and sometimes risky—integrations of back office and field systems.

At CMiC, we take a different approach. Our ERP platform has a modular architecture with components that are purpose-built for construction. Specifically, we offer a comprehensive project management & administration suite built on the same platform—and database—as modules that handle your project controls as well as all of your financials—budgeting, forecasting and cost tracking.

The result? This fully featured, construction-specific approach to ERP lets users gather all the data they need effortlessly. In turn, this sets the stage for budgeting and cost forecasting that delivers unsurpassed levels of speed and accuracy, while enhancing decision-making at all levels of the organization.

If your projects are being held back by a chronic lack of budget transparency and forecasting reliability, then it’s time for a new approach. Having helped hundreds of construction firms with their accounting, cost management and project controls for the past few decades, CMiC can help – contact us to learn how. And … don’t forget to check in next week for part 4 in our series, which will focus on the inefficiencies, risks and missed opportunities caused by enterprise systems that fail to deliver complete project visibility.

 

Don’t let budget forecasting undermine projects: Here’s how to get ahead

We’ve all been there. You’re trying to budget a project only to have one thing after another force you to change your plans.

You could find unexpected rock formations underground, messing with your strategy for the foundation. A small labor dispute a few states over could disrupt your lumber supply chain, forcing you to shift your bill of materials. You might be hit by an unexpected safety inspection, slowing work for a few days and forcing you to either hire more staff or pay for overtime to compensate. When you’re in the construction industry, you’re used to dealing with unpredictability, but you can get uncertainty under control. What you need is an enterprise resource planning solution built for the specific needs of builders.

If you’re a general contractor, the problem is simple: Projects have so many moving parts that any small change has a far-reaching effect on your spending. A simple roof repair could escalate because tearing up the old shingles reveals a larger structural issue, for example. Suddenly, the number of work hours in a project goes up, the bill of materials increases and you need to update the budget. Again.

In most cases, general contractors have had to deal with broad guidelines during budget forecasting. However, new technologies are available. Now, there are opportunities for precision and coordination that weren’t readily possible in the past. If a project leader goes to buy siding and the vendor raises prices, he or she can immediately update the ERP so you know about the change.

Why construction budgets tend to fail
As a small construction organization, chances are you’re running your business on a solution like QuickBooks or Quicken. If all you need to do is balance the books, that’s fine. But your growing business requires more. You need visibility into every part of a project so you can anticipate costs.

A project’s success often comes down to two big questions. Was it on time? Did you make money? If you can’t get ahead of your budget, the costs will get ahead of you. To do this, you need to get your whole team on board. CIO Magazine laid out the challenges this way:

  • Evaluate the needs and desires of all stakeholders and create clear lines of communication.
  • Explain the budget to the project team and provide regular updates.
  • Identify the types of surprises that are likely to arise and include wiggle room in the budget.
  • Evaluate the project on an ongoing basis and readjust the budget forecast accordingly.

Practically speaking, many construction companies lack the tools they need to follow this advice to its fullest. With so many moving parts depending on one another, it’s easy for project details to slip through the cracks when relying on communication between people using different technologies to manage the job. The good news is that this situation is changing. The cloud is bringing big-business functionality to firms in sectors that have long held off on major IT projects.

The budget forecasting answer has arrived
Small construction companies have avoided emphasizing IT for good reason – to focus on building things, not managing technology. The cloud lets you use advanced tech without having to take on too much overhead.

A Frost & Sullivan study found that digital transformation is beginning to hit the construction sector as organizations work to overcome challenges such as poor supply chain practices, limited automation efforts and a general lack of planning.

The research indicates that construction firms are embracing digital technologies to:

  • Increase productivity.
  • Use analytics reports to reduce unpredictability.
  • Reduce project overruns.
  • Establish visibility across platforms and processes.
  • Manage large amounts data.
  • Create a more collaborative workplace.

Cloud-based enterprise resource planning systems designed for the construction industry let you coordinate work across your teams based on interfaces designed specifically for the demands of building projects. This improvement in day-to-day project efforts then creates a data trail that can be used for more precise reporting on potential costs associated with any project.

ERP systems make possible the immediate transparency you need to create single sources of data truth. Inaccurate records and redundant documents are eliminated. What’s more, you can use this accurate data to generate reports that let you predict how much a typical problem will usually cost.

So let’s go back to the start. Budgets can go south fast. But if you run into a foundation problem, your workers can take photos, upload them in the system and add notes about the problem. You can use those details to look up past projects, see how much similar issues cost, and update the budget with precision. If your typical lumber vendor increases prices, you can go into the ERP to compare quotes from other providers and see if they can get you closer to your original quote. Very simply, you get the data visibility throughout the project to not only make a better prediction of costs, but also adjust budgets with precision along the way. Construction unpredictability isn’t going away, but modern ERP systems let you respond to change and optimize your budgets.

 

ERP Solutions to Common Workflow Challenges: Estimate to Job Costing

This post is part of the CMiC blog series ERP Solutions to Common Workflow Challenges. Check out the previous post in this series, where we look at how to streamline the job costing and subcontract creation process.

The process of turning an estimate into a job cost structure is complex and must be completed with total accuracy to avoid potential confusion, delayed work and lawsuits. There’s also no guarantee that the time spent on job costing will produce profit for a construction firm. Meaning, inefficient job costing workflows is extra time spent on a project before actually winning the contract.

Again, because job costing is an activity where the payoff is uncertain, leaders should seek out the best, most streamlined job costing software available. Unfortunately, there are still many firms not taking advantage of the technological advancements that have improved operations for countless firms. Let’s examine some common job costing workflow challenges and the industry-leading solutions that come with advanced ERP.

Storing Documentation

Many firms use an internal network or a generic application to store projects, drawings and other documentation. Because such applications aren’t built for the construction industry or equipped with smart data retrieval, firms must create time-consuming workarounds. For example, simple network databases don’t have the ability to transfer data across multiple documents or auto-populate new documents with project data. This means that when creating bid packages, RFIs or change orders, data must be entered manually into each new document created. Not only does additional manual entry increase the likelihood of mistakes, it also makes document version control more difficult and complex. At later stages of the project, this can make it hard to tell which version is the most up-to-date.

In contrast, advanced ERP software like CMiC’s platform is designed to streamline document management. Instead of entering the same data multiple times, CMiC users can “relate” documents to a given bid package or RFI. When creating documents for a particular project, all the relevant project data will be automatically added to the documentno manual entry, no hunting for the correct numbers.

And because every document contains a history section, anyone with the proper clearance can view all past changes. All the changes are made in a single document, which means team members don’t have to sift through multiple document versions or worry about using the wrong one.

Consolidating Estimate Data

Manually consolidating data is considered a necessary evil for many firms, especially when crucial estimate data is compiled in a cumbersome Excel document or computerized worksheet. The process can be a long one and introduces the risk of rekeying or copy-paste errors.

With CMiC, data only needs to be rekeyed once. As long as the initial input is accurate, the correct data will intelligently flow into the job structure. With the click of a button, all the estimate data trickles down to create the budget. No consolidation required.

Managing Subcontractors

Sorting through subcontractors effectively is crucial to creating an airtight bid. A single screen should be enough to display everything you need to know about a given subcontractorbut many non-unified systems have two separate profiles for a single subcontractor (for example, one profile in the financial system and one in the project management system). To get the full picture, you have to log in and out of two systems, repeating the process many times before making your decision.

A true single-database system that combines financial and project management operations solves this issue. ERP systems offer one source of data and one comprehensive profile for each subcontractor.    

Job Cost Structure & Budget Setup

Once the estimate is created and consolidated, financial data is typically emailed to accounting. Thenespecially in companies with non-unified systemsaccounting enters the financial data into separate systems used for managing billings and budgets.

Single-database systems have eliminated much of this process. Users can set up their project, import an estimate and hit the “update budget” button. The system takes care of the rest by creating the cost and revenue budget, including relating the set up cost codes and types to the schedule of values. Without moving or rekeying the data, users can analyze the sub-trade estimate and get started on executing subcontracts. Instead of sending the accounting department a to-do list of rekeying tasks, the platform produces a ready-to-go job cost structure.

Summary of ERP in Estimate to Job Costing Workflows

With CMiC, users can enter their bid in the same place they store all communications and documentation. On top of that, all the data entered in the bid can be sent to subcontractors and used to create the job budget. This means that once you’re awarded the project, you can immediately start contacting subcontractors and gathering quotes without rekeying information.

Let’s go over the key advantages of ERP for creating a budget from an estimate:

  • Each subcontractor has a single, comprehensive profile
  • Estimate data can be imported or manually keyed-in once
  • Documents only need to be uploaded once and can be related to other documents for smart data retrieval
  • Advanced workflows completely automate manual tasks such as data consolidation

Looking for more ways to transform everyday workflows? Check out a previous post in this series on how to streamline the change order process.

ERP Solutions to Common Workflow Challenges: Job Costing

This post is part of the CMiC blog series “ERP Solutions to Common Workflow Challenges.” Check out the previous post in this series, where we look at how to streamline the change order process.

Construction firms can be hesitant to modify their workflows. Because their procedures and processes have been successful in the past, they see no reason to make changes. But, as times change and technology advances, old strategies for construction management may not be as effective.

Job costing is a perfect example. While software technology has grown by leaps and bounds in the past decade, many firms are still relying on word processing and spreadsheet applications. They manually input vendor information into spreadsheets, compile project data in a word processing document and email these documents around the office for approvals and revisions. Unfortunately, firms using this outdated workflow may not realize how much this system is costing them in productivity, efficiency and human error.

Let’s explore some of the so-called “tried-and-true” job costing methods that are in serious need of upgrades.

Submitting Prequalification Data

Before the bid process can begin, firms need to sort out potential subcontractors and vendors. It’s extremely important to hire the right vendors, and there are a variety of crucial variables to consider. Using a spreadsheet program to track and submit vendor data is not only time-consuming, but it also opens the door to mistakes.

With advanced ERP software, vendor applications are received electronically and all prequalification data is immediately saved to a central database. Vendor data is stored with other project data, so that key players and stakeholders can access relevant information anywhere, anytime. This eliminates the need to search through email chains for attached documents and prevents the problems that come with document version control.

Tracking & Approving the Project Scope

The project scope must be detailed and precise. On top of that, it must be created quickly and streamlined enough to be easily approved by numerous project collaborators. Every round of emails and approvals can create bottlenecks, especially when the project scope, exclusions and inclusions are housed in a word processing document.     

On the other hand, with ERP software, scope data is intelligently extracted from the subcontract. There’s no need to key specific information into a separate document. Relevant information can be sent with the click of a button, all within the ERP system. Not to mention, the scope can be revised by project collaborators in real-time, while past versions are kept on record.

With CMiC’s platform in particular, approvals can be gathered quickly using the workflow engine, which pushes important data to relevant decision makers. It uses automatically generated emails and alerts to get all the necessary approvals in the shortest amount of time.

Creating the Subcontract

Once the bids have been negotiated, analyzed and awarded, it’s time to get to work on the subcontract. Unfortunately, firms working with older systems may spend time manually copying line items and scheduling data from the bid package to the subcontract.

Construction ERP systems, on the other hand, intelligently store project data from phase to phase. This eliminates the need to retype line items into the subcontract because all the relevant data comes automatically from the bid package. Every time you make a change, that change will be automatically reflected in relevant documents. For example, when you create a subcontract in the CMiC platform, you’ve already impacted your budget.

On top of that, ERP systems can track and validate certain values to cut down on human error. This means, for example, the system can alert workers immediately when they enter an invalid vendor code.

The Value of ERP

Not only can ERP software streamline job costing, bid approvals and subcontract creation, but it also supports operations across the entire enterprise. Here are a few of the overarching advantages of ERP:

1. In-Browser Login

Throughout the job costing lifecycle, different project actors will need access to important data. In traditional systems, key players would need to access the firm’s local network each time using a remote desktop login, Citrix connection or other workarounds.

Full-scale ERP systems shouldn’t force you to be connected to an internal network. Every project actor or stakeholder with security clearance can be given quick access to project data in their browser. No apps, complicated logins or local connections required.

  • Simple browser login
  • Secure access
  • Cuts down data-sharing time

2. Detailed Document Audits

In an enterprise system, documents organically move from phase to phase while gaining approvals and revisions along the way. Within the document’s detail section, stakeholders can easily look through the document changes to double check information.

  • Always-available audit history
  • Clear evidence in case of legal disputes  

3. Integration with Third-party Estimating Solution

CMiC is built to seamlessly incorporate third-party estimating systems. Customers retain their estimating procedure, and the CMiC platform intelligently imports estimate information for the job structure and subcontract creation.

  • Keep your estimating system
  • No re-keying

To learn more about the ways that ERP can eliminate workflow bottlenecks, check out ERP Solutions to Common Workflow Challenges: Change Orders.