Although there is no denying the fact that all businesses from all industries must deploy an ERP setup to improve their work efficiency and increase profits, there is a dire need for ERP for construction industry businesses.
This need for ERP is primarily due to the nature of the work in the construction industry. Multiple interdependent processes, strict timelines to adhere to, involvement of a manual workforce at each step of the construction process, and procurement of raw materials and other special equipment, all these things need to be managed properly to achieve optimal efficiency.
Whether you are a builder, a contractor, a real estate developer, or any other business owner from the construction industry, you can largely benefit from construction ERP software, also known as construction project management software.
In this blog today, we’ll not just understand the need for ERP for construction management but also look at the important modules, benefits, and implementation strategies of ERP for construction industry. Read till the end as we also answer the four most frequently asked questions about ERP for construction management.
The construction industry is globally expanding. Even in these times of radical shifts in the investment priorities of the masses, the real estate industry has continued to grow at a steady rate.
There are new and magnificent infrastructural developments taking place all around the globe. Owing to these developments, today the construction industry is a direct parameter of the economic growth of a country and a major contributor to the global GDP.
The only downside to this is the increase in competition and the ever-reducing project timelines. This has made it all the more necessary for real estate developers to use the latest technology to automate their business processes and take all necessary steps to achieve maximum operational efficiency.
This is not only necessary for you to survive in the market and beat your competition but to also continue to satisfy your client needs and make a mark for yourself in the construction industry. Construction ERP software is crucial for you to implement systems that will help you successfully overcome common execution challenges and manage your work processes better.
This is not all. There have been numerous changes in the work environment and systems after the pandemic. The Covid-19 outbreak and subsequent lockdowns have made all organizations rethink their operations. It has also given rise to the need of managing a business remotely, thus cloud-based SaaS solutions are no more an option but the need of the hour.
ERP for construction management is a comprehensive tool designed exclusively for the construction industry. This enables people, teams, and departments to function seamlessly from a common work tool.
It also enables your company to work smarter and faster by automating repetitive tasks and streamlining daily operations. This results in increased work efficiency and reduced business costs.
Also, the availability of a central database empowers infrastructure developers to make well-informed and data-driven business decisions that are crucial to growing their businesses to new heights.
Enterprise Resource Planning or ERP is an integrated software solution that is used by businesses to manage their day-to-day operations and increase their overall productivity.
Construction ERP software is a specialized type of ERP that has modules and features relevant to the real estate sector. Also known as construction cost management software, it helps construction business owners effectively manage their projects and construction sites at all stages of development right from blueprint design and planning to completion and final delivery.
ERP for construction management is designed to provide construction business owners with a 360-degree view of the project at any given time. You can also access all critical company and project data from within the ERP tool.
ERP for construction industry is built for the unique and special needs of the construction companies and allows the developers and contractors to manage contractors, subcontractors, building materials, finances, payroll, and service operations all through one central system.
This comprehensive tool also offers capabilities for project management, project financials, project and portfolio analytics, asset management, and payroll. All these are core activities of a construction business made available inside the ERP tool which is your one-stop shop to run your construction business smoothly.
Construction processes are labour intensive and require effective management of manpower, raw materials, machinery, and tools to cut down on project completion timelines and help the business make more profit.
Working without the use of ERP tools can be time-consuming, overwhelming, and not as efficient. There might not be many visible challenges in the short term but as your business grows, you’ll begin to notice lapses in management, soaring costs, and delays in real estate development projects.
ERP for construction industry offers a huge array of advantages, let’s look at a few of them here :
1. Efficient Planning – The first step for any project is to create a plan of action. This plan helps to make the best use of all the available resources and minimize business costs. Lack of planning can lead to inefficient work processes and higher costs that can not only reduce business profits but also cause the business to shut down soon.
Using construction cost management software ensures you are able to take all things into consideration before development work begins. You can then create an effective step-by-step plan to execute the project development for maximum efficiency. This involves planning for labour, raw material, material allocation, etc.
2. Tool for Project Management – Once you start the development of a project, it is important to effectively manage its different aspects to ensure seamless operations. ERP tools help with manufacturing process management and are capable enough to replace highly-paid managers.
ERP tools hold all crucial project and business data that can be easily retrieved with a few simple clicks on the application. These tools also make real-time data available from diverse site locations and offer ease of managing multiple projects from a single location.
3. Workforce Management – As a real estate developer and business owner, you’ll work with contractors, sub-contractors, plumbers, electricians, crane operators, and other skilled labourers.
The main job is to manage everyone involved in the project to keep the project moving towards completion on the promised timelines. ERP for construction industry aims to automate workforce management so that you don’t have to maintain manual records or use different software tools to ensure efficient operations.
4. Accurate Cost and Revenue Estimates – The cost of a project in the construction industry depends upon multiple factors. Also, in some cases, the developers have to bid for the tender and place their best bet to get the project.
ERP tools are smart software tools that use project details to calculate accurate costs, estimates of raw materials, labour tasks, and duration of the project. With an accurate estimate of the costs, you can decide the value of the tender and increase your chances of not only getting the project but also making profits with it.
5. Centralized Database – As a construction business owner, you may be dealing with multiple clients and projects at the same time. It can be a tedious task to maintain a list of their requirements, deliverables, and timelines manually.
Using ERP for construction industry can eliminate delays due to the lack of a real-time centralized database. ERP tools store all data that can be retrieved as and when needed and offer ease of managing multiple projects with a single source of truth.
6. Strategic Decision Making – At the time of taking crucial business decisions, we are likely to overlook important business data. This can result in poor decision-making and cause losses to the business.
Using ERP for construction management gives you access to detailed reports that can be used to study all business data and take well-informed and wise business decisions based on your goals and future needs. This is a superpower and very useful to grow your business.
7. Work in Accordance with the Regulations – The real estate industry has to deal with the ever-changing rules and regulations from the government and local municipal organizations. To avoid legal trouble and work without any hindrance, the infrastructure developers have to ensure compliance at all stages of the development process.
Setting up construction ERP software ensures you are able to follow all rules and work as per the latest government norms. This is a big relief as you can focus 100% of your efforts on to the real estate development work instead of taking care of the formalities and government procedures.
The specific modules of ERP for construction management will vary from vendor to vendor and tool to tool but here is a detailed overview of some of the most common construction industry-specific ERP modules and components that make up excellent construction ERP software.
1. Design and Engineering – ERP tool modules are designed to hold project designs in CAD and help with engineering for execution plans by proper budgeting and accurate estimation of work.
2. Management of Contractors and Sub-Contractors – Since construction is a labour-intensive industry, human resource management of contractors, sub-subcontractors, and other skilled labourers is crucial. ERP for construction industry has a dedicated module to make this effortless for real estate developers. This module also incorporates task management, and time and material administration.
3. Warehouse Management Module – For infrastructure developers, the construction materials and tools may be placed at one or more warehouse locations around the city/state. During the development phase, ERP for construction management helps manage warehouses and
4. Logistics and Transport – For infrastructure developers managing multiple projects at once, there is a lot of movement of raw materials, tools, and equipment. This ERP module helps you manage all work logistics and take care of the transportation of goods with a few mouse clicks. This is essential to manage cargo loading for maximum efficiency.
5. Fixed Asset Management Module – Some special tools and equipment and a few other fixed assets are used in all ongoing development projects. This specific ERP module helps to share these fixed assets across projects.
6. Inventory Management – The inventory tracking system or inventory management software is a core module in the construction ERP software. It helps keep a track of the raw materials, their quality, and available quantities.
7. Purchase/Procurement/Sourcing – The construction industry requires many different types of construction materials and tools. Keeping a track of orders, purchase history, quotations, and final prices is a crucial and extensive activity that is easily taken care of by ERP for construction industry.
8. Supply Chain Management – For the construction industry, it is crucial to have ERP for supply chain management. This particular module helps in purchase order management, material requirements planning, and maintaining a good relationship with your supplier.
9. Accounting and Finance Management – In the construction industry, project costs are dependent on many different factors and even a slight delay in work can shoot up prices exponentially. Construction ERP software helps real estate developers to keep a track of all expenses and execute projects without exceeding the budget.
10. Lease Management – Each license and lease has different terms and conditions and keeping a manual account can be very difficult. This module allows real estate developers to manage lease documentation and other related admin tasks.
11. Customer Relationship Management – This module is responsible for taking care of all leads, doing regular follow-ups, and scheduling available time slots for site visits. This also helps manage client data such as identity proofs, installments paid and due, etc.
12. Business Analytics and Intelligence – The business analytics module helps track, evaluate, and monitor the performance of various business departments to calculate important business metrics such as costs, sales, revenue, etc. AI technology is useful to derive insights that help forecast sales and predict trends.
A few other common modules include scheduling, quality control, and payroll management.
All these modules have a common central database and are integrated into the ERP for construction industry. This makes it extremely easy and convenient for infrastructure developers to manage their business in just a few clicks.
In case you opt for online construction ERP software or have a cloud-based ERP setup, you can manage all aspects of your real estate business from anywhere across the globe, all you need is an internet connection or your laptop or mobile phone to access the ERP application.
If you are interested in using construction project management software and keen on setting up ERP for construction industry, there are a few things that you must keep in mind.
Ensure to choose an ERP tool that is either exclusively built for the construction industry or can be customized for your requirements and can serve your purpose as a contractor, builder, or real estate developer.
As your construction business is likely to grow with time, you want to invest in a tool that is scalable and will help you manage mega-sized projects or even take care of the development at multiple different locations.
You must also speak to the ERP tool vendor to check for maintenance and updates after installation. As the real estate industry is constantly evolving, you would want to deploy an ERP solution that will be able to meet your ever-growing needs.
It is crucial to choose a tool that matches your business requirements and fits your budget. Also, ensure that the ERP software you decide to implement has been tested for its performance and has been proven for its competency by other businesses in your industry.