From the estimating software to the accepted bid and on through a finished project ... resource planning or automated pr
white paper
Construction Enterprise Resource Planning Solution for General and Building Contractors
written by Computer Guidance Corporation, Howard Shockey & Sons, Clark Construction Company, Skanska USA Civil and J.F. Brennan Company
Background
This white paper is intended for general contractors (GC) performing commercial construction and involved in building and managing structures for industries that span the public and private sector, including facilities used by/for health care, education, military, government, retail, entertainment, sports, restaurants, museums, performing arts, theme parks, housing, senior living, parking garages, pharmaceutical, biotechnology, and general use corporate offices and parks.
Challenge
Due to the size and scope of their construction projects, general contractors or building contractors are required to work very closely with architecture and design firms, engineering companies, owners, subcontractors, heavy highway contractors and even other general contractors. In many instances, multiple general contractors may be engaged simultaneously on large jobs and, in such cases, a joint venture is established. The biggest challenges for general contractors is managing costs across massive construction projects and delivering high value in every job, all the while being able to leverage, protect and build their reputation, integrity, experience, market presence and expertise. And, it all starts with an invitation to bid.
Invitation to Bid
Bids will signal the start of a project or the beginning of a relationship with some of the parties listed above. To expedite their activities and create the greatest efficiency, savvy general contractors rely heavily on an estimating software package, which must be seamlessly integrated with an enterprise resource planning (ERP) solution in order to be effective.
Contractor Award
Once the general contractor is awarded a job, a project plan can be designed that includes timelines, costs, billing schedules and more. The most critical element of this plan is project funding, which must be secured immediately for the job at hand. At the same time, the general contractor also needs to acquire the appropriate permits, as well as the associated funding, which can be prepaid or set up on a payment cycle as the project owner is invoiced. Additionally, the general contractor must be prepared to source, secure and pay for subcontractors and materials. None of the aforementioned activities could be accomplished without the automated processes and tracking capabilities of an enterprise resource planning solution. ERPs allow all contracts to be set up, monitoring and managed from a central point or from the field, 24 hours a day in real time if necessary. The applications, including critical financial modules, are integrated and can reflect actions and outstanding activities alike. From the estimating software to the accepted bid and on through a finished project, enterprise resource planning systems are an invaluable asset for every general contractor. A large project with multiple subcontractors or a joint venture with a number of general contractors and subcontractors can transform an ERP solution from a nice-to-have into an imperative. General contractors will find such systems to be the only viable means to managing labor, scheduling, planning, completing payment cycles and establishing POs for materials. Enterprise resource planning solutions are critical for management and powerful tools to support and facilitate collaborative efforts.
Project Collaboration
Just like there are two sides to every story, there are two sides to every general contractor’s business or every construction company. And, if these two sides can not communicate and collaborate, all is surely lost. First, there is the field, where the actual building or construction takes place. The job site hosts the workers and crews, as well as the project managers and crew managers. Behind the scenes, there is the office, or the second half of the construction equation. The office features CFOs, controllers, payroll personnel, AP clerks, AR clerks, HR personnel, administration and finance, all of whom are performing accounting, job cost activities and much more. Without ERP, the constant concern or deep dilemma is lack of field access to mission critical data. Without an online enterprise resource planning solution, personnel from the field is constantly calling and waiting for information regarding job costs, change orders, purchasing data, etc. And, with every call, profit is lost and expenses go up, because field workers are on the phone and office staff is searching for answers. Focus on tasks at hand is lost and all parties involved are doing everything else but their job. Instead of watching project managers getting frustrated by office personnel or the accounting department and wondering what they do all day, or listening to office staff getting annoyed by the field for constantly asking for what seems to be the same information, a general contractor should implement and utilize an ERP solution. Such systems foster a highly efficient and functional work environment for both sides of the project. Information is always up to date, accurate and accessible. When time is money,
Computer Guidance Corporation
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project collaboration or integrated financial and project management solutions can literally save the day. For example, information captured from the field can be shared with a project management solution, including submittals, meeting minutes, RFIs, issues management, reports, letters, punch lists, daily reports, transmittals, drawing logs and dunning letters. At the same time, accounting information can also be readily available, including change orders, purchase orders, budget transfers, forecasting, job cost and equipment locations. Moreover, this information can be viewed and used by owners, subcontractors and other general contractors as needed. “Having invaluable project data on hand when and where it is needed eliminates unnecessary risks and expenses while enabling the delivery of high standards of quality and safety,” says Gray Farland, Director of Project Controls for Howard Shockey & Sons. “Schedules, resources, job costs, change orders, contracts, and project updates are seamlessly managed, documented and communicated among our stakeholders with ERP. We rely on an integrated solution to get our projects completed on time and under budget.” Furthering the communication and collaboration process, mobile devices empower workers in the field by providing them with direct access to mission critical data. It also allows job site employees to enter information that can be utilized by home office staff. With real-time information close at hand, decisions can be made instantaneously, keeping projects moving forward on time and on budget.
Subcontract Management
Effective subcontract management depends upon efficient payment flow. It truly is a pay-when-paid process, and enterprise resource planning or automated project management solutions are critical. Both help with the approval of checks and payment processing from owner to general contractor and on to the subcontractors. In addition, integrated and automated systems facilitate subcontract compliance, including management of required documents, license checks, insurance needs, and general liability and risk management. Depending upon how the general contractor has agreed to invoice the owner and the owner’s financial institution (AIA Billing, Progress Billing, Cost Plus Billing, T&M Billing), the specifics can be entered and configured in the core financial applications of the ERP and then processed per invoice.
Human Resources
General contractors and construction companies of all types and sizes rely on enterprise resource planning software solutions to manage human resources processes and information. Organizations without a specialized HR department find it even more important to have a comprehensive human resources management application, especially those with a remote workforce, where such modules provide employees with immediate access to vital information and save time for both employees and their managers.
Clark Construction Company, a full-service general contractor providing planning/pre-construction services, general contracting, design/build, and program management services, was recently engaged in the design and construction of the FireKeepers Casino for the Nottawaseppi Band of Huron Potawatomis in Michigan. The project, including a new casino, an offsite utilities facility and a large parking structure, was to be delivered within a 15-month timeframe and a conservative budget. As an added challenge, one of the conditions of the contract required that 20% of the workforce be tribal, yet some of the trades were very specialized and required experienced workers. Clark worked closely with tribal members and leveraged an ERP solution to manage all of the accounting, payroll and human resources transactions and reporting functions throughout the project. Because of the systems resource tracking and diversity compliance features, Clark was easily able to track the use of tribal labor and ensure that the contract requirement was met. Further, with its comprehensive and integrated job cost application, the software allowed Clark Construction Company to monitor job cost on a daily basis on a very detailed level keeping the expenses within budget.
Computer Guidance Corporation
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Enterprise Content Management
A general contractor can have hundreds of AP invoices per week for a single job. Enterprise content management (ECM) allows contractors to set up shared services, so regardless of job site or construction firm location, invoices can be routed, approved and processed expeditiously leveraging streamlined electronic workflows and digital imaging systems. Thanks to digital documents (or scanned paper documents), online storage and electronic routing workflows, construction companies can reduce waste, eliminate space-consuming file cabinets and provide immediate access to critical records, both now and as required in the future. ECM systems also allow general contractors to reduce expenses by decreasing the utilization of paper and toner/ink associated with hard copy workflows and an overabundance of printing. Enterprise content management also serves to increase general contractor efficiency by supporting online collaboration, and digital workflows. An example of an ECM process could include the receipt of hardcopy documents, which would then be scanned and digitally stored in a database and/or attached to communications or records. Once in digital form, these documents can be easily routed for viewing, approval, processing and archival.
Skanska USA Civil, a division of one of the world’s leading project development and construction groups employing 52,000 workers to service the civil, mechanical, industrial, marine, foundation and environmental sectors, recently implemented an imaging solution to streamline their accounts payable processes. Just six weeks into the initiative, the firm has seen no dip in productivity and now processes 490 invoices per week [previously averaged 350 invoices per week manually]. In fact, the intuitive ERP solution has eliminated 9 days from the invoicing process and will enable Skanska to be completely paperless in accounts payable moving forward.
Business Intelligence
With an enterprise resource planning solution in place, general contractors can view reports and dashboards anytime, anywhere. General contractors can get an immediate understanding of project profitability, and see where employees, equipment and jobs are at any given moment. Leveraging integrated business intelligence applications, general contractors can gain insight into cash flow and job margin, as well as subcontractor performance, budgets, change orders pending and much more. At the end of the day, good intelligence makes for great success on every project. And, with easy access to a wide variety of reports, compliance audits and liability requirements are easily addressed. J.F. Brennan Company, a full service marine construction contractor, had an accounting department plagued with calls from field. Project managers were seeking job cost and project performance reports to evaluate status and make adjustments. Lack of a robust reporting solution and single data source made it time-consuming to pull together the necessary information and provide the desired summaries. The solution was an ERP system that could gather information from across the organization into a central repository which would be easily accessed and supply automated, customized reporting tools. The result was immediate visibility into project costs, streamlined banking and bonding activities, and simplified distribution of information across the organization to support fact-based decisions.
Summary
There is no question that an ERP solution can improve every business process associated with working as a general contractor. From streamlined bidding and job costing to managing the jobsite and subcontractor relations, enterprise resource planning systems make things easier and more efficient. And, while there may be questions on the merits of on-premise versus hosted solutions or browser-based versus client-based systems, there is no doubt that implementation is a must. The key is to select the most appropriate provider to ensure the unique needs and objectives of your company can be addressed.
Computer Guidance Corporation
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white paper
About Computer Guidance Corporation
Since 1981, Computer Guidance offers the most complete, proven and reliable construction management solution for architecture, engineering and commercial construction companies. Computer Guidance’s eCMS solution provides financial accounting and project management applications supported by advanced business intelligence and innovative productivity tools. eCMS is recognized as the solution of choice for top general and specialty contractors in the CFMA Information Technology Survey and has been selected by the Associated General Contractors of America (AGC) as the construction management solution of choice for its members nationwide since 2010. Computer Guidance customers are recognized among the Top 400 Contractors and Top 50 Contractors by Engineering News-Record (ENR). Computer Guidance is a strategic technology partner with IBM Corporation, providing a solid technology foundation for both its hosted and enterprise solutions.
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