How can ERP software help construction companies?


How can ERP software help construction companies?

ERP for Construction Companies
Benefits of ERP for Construction Companies

A construction or a contracting company usually works on multiple projects. There are various challenges a company faces, for example, managing the projects, controlling the costs, managing the company assets, effective utilization of resources and budgeting. Each of these activities are managed by different business functions and a poor collaboration among them will have adverse effects on the profitability at both the company level and project level. 

A business software which can be used across all the departments is vital for a construction/contracting company. An ERP software will help by integrating all the business functions and enabling a smooth flow of business processes, and it will help in overcoming the challenges mentioned above. In the following list, I have mentioned how an ERP solution helps a contracting or construction company. 

Benefits of ERP

  1. Budgetary control: A project is considered successful only if its completed within the budgets set. A construction project has various milestones and tasks, and each has its own budget set at the beginning of the project. An ERP solution will help in proper allocation of budgets and capturing all the costs for a particular task or milestone, which gives accurate information of how much of the budget is consumed and at what stage the project is currently running. Moreover, the BOQ’s can be easily imported from excel for tracking the set budgets and the workers timesheet can be integrated with third party biometric machines for easy tracking. 
  2. Project Profitability: In an ERP software, the costs and revenue can be captured at project level. This will help management to check the profitability of each project. It can also track how much material is consumed, how much manpower is utilized, and the subcontractor’s costs for a particular project. Also, management can check whether the project is finished within the set budgets or exceeded it. 
  3. Multi Level Approvals: To have a proper control on the purchasing and expenses, certain controls can be used with the approval functionality of an ERP system. Depending on the role of the employee certain limits can be set in terms of purchases or expenses, when the limit is exceeded, the transaction will be forwarded to the next level of authority for approval. This will help in limiting unauthorized purchases and expenses. 
  4. Overhead Allocation: While the respective costs associated with a particular project can be easily allocated, however, to get an accurate profitability of a project, all the costs including the overheads should be considered. By predefining a cost basis, all the overheads can be easily assigned to projects using an ERP system. 
  5. Subcontractor and Vendor Management: A construction company has to deal with various subcontractors and vendors. It becomes easy with an ERP system to compare the quotes, prices, and PDC management for each supplier. 

At Dynamics Axis, we have a custom made FTA Accredited ERP software for the construction industry with industry-standard processes.