Construction ERP: Why do construction companies need ERPs?

Construction companies have complex accounting and operational needs that can become very difficult to manage with basic accounting software and disconnected business applications. An enterprise resource planning (ERP) system brings together all business information in one database, providing complete visibility across the company. 

This guide outlines the benefits of construction ERPs and how to choose ERP software – let’s jump in.

How do construction companies benefit from using ERP software?

Here are 5 key benefits of implementing a construction ERP: 

1. Connect all aspects of your business

Contractors typically use six to 10 software applications in tandem with their main accounting system. If these applications are legacy systems, they probably aren’t very well integrated—if they’re integrated at all. 

As a result, staff spend too much time jumping between applications just to perform routine tasks. Meanwhile, the finance and management teams lack the visibility they need to analyse the profitability of each project.

With cloud ERP software for construction, you can connect all aspects of your business, including sales, job costings, document management, project management, payroll, finance, and compliance. This not only increases everyone’s visibility into business processes, but also reduces the need for tedious data entry. 

Every decision made onsite can incorporate finance data, and every back-office decision can consider what’s happening onsite. The result? Smart, strategic decisions that drive the business forward towards profitable growth.

2. Manage cashflow more effectively

Problems associated with cashflow can easily mean life or death for a company. Even the largest construction business may face struggles in this regard. And a shortage in cashflow affects timely job completion, which is a problem for general contractors as well as subcontractors.

With cloud ERP software for construction, you can bring together bank balances, billings, and invoices into a comprehensive view of cashflow that enables you to make contractual commitments, meet payroll, and manage your business. You can respond in real time as business conditions change, updating your cash position and providing immediate access to the details behind it. 

You can track all aspects of a project, including active and completed tasks, time by employee, and project profitability. You can also drill down to see budget versus actual, change orders, subcontractor commitments, compliance issues, and payroll details.

3. Establish tighter project controls

When systems are disconnected, business processes become more complex than they should be. For example, if you pull reports from multiple systems to collate them into one report, you’re not only wasting time but also leaving your business vulnerable to errors.

A cloud ERP gives you total visibility into your business. Real-time dashboards enable you to keep projects on track and on budget by logging in from anywhere at any time, helping you increase profitability. 

Using a dashboard with drill-down capabilities, allows you to identify and share changes in project costs. By defining key project metrics, making them visible to your team and measuring them as each project progresses, your firm can reduce risk, increase productivity, and improve customer satisfaction.

4. Enable remote connectivity 

In the past, teams had to complete paper-based processes (such as timesheets and project tasks) in the office. This resulted in inefficiency and misalignment among project stakeholders. Today, a cloud ERP for construction can enhance the flow of information between your teams in the office and out on job sites. 

Changes made in the mobile app to items will be updated and synced automatically in the cloud. This helps ensure your business runs as smoothly as possible. Cloud ERP software for construction can also proactively alert your team to any issues and enable effective collaboration as everyone can have access to the same information at the same time. 

5. Reduce the cost of multiple systems

An integrated, purpose-built ERP system may seem like an investment, but it could be more cost-effective in the long run. Running several disparate systems adds up and paying an internal IT team or external vendor to maintain and integrate those systems isn’t cheap either. That’s before you consider the cost of errors and issues caused by an ad hoc solution. Add up all the costs, and a smart, integrated system may start to look pretty affordable.

How to choose construction ERP software

Here’s the process you may go through to implement ERP software:

1. Scope and requirements

When deciding on a new deployment, you need to conduct detailed business requirements analysis. You need to engage all relevant stakeholders early to understand current issues and process inefficiencies and decide exactly what you need your software to do. 

Gathering and documenting these business requirements in the initial stages of the project means you’re less likely to confront scope creep, cost blow-outs and delays down the track. By the end of this phase, all involved parties should have a clear understanding of the project, alongside its scope and requirements.  

2. Appoint project team

This project team typically includes leaders from across your organisation who know your business inside out and will act as change champions. The team usually includes an executive sponsor, a project manager, and functional leads. It may also include external consultants or an implementation partner. 

3. Design phase

You need to decide on the infrastructure for your ERP system. Cloud ERP systems have lower initial costs than on-premise ERPs and are subscription-based so you pay a monthly or yearly fee per user or pay according to the bandwidth you use.

In this phase you develop a detailed design for the new ERP system, streamlining workflows and business processes to maximise the solution’s functionality. By conducting a gap analysis, you can identify any processes that might require changing to work with the new ERP, or what customisations you may require to better fit your operations.

4. Development phase

Now the team starts installing, configuring, and customising software to the business requirements and developing integrations with other applications, as required. The team also develops training materials to help users get the most out of the system.

5. Data migration

This is the data clean up stage, which is an important part of the process as migrating poor data will not lead to the best user experience. So, before importing any data into the new system the business must ensure it’s clean and formatted correctly.

6. System testing

This phase starts with basic functionality testing and then progresses to integration, system testing and finally user acceptance testing (UAT). The implementation team makes any changes required by the business.

7. Go live

The business goes live on its new system. During this phase, the implementation team fixes any issues, answers questions and helps users understand the software. Deployment can be a ‘big bang’, a phased deployment, or the new system can run in parallel with the old one to make sure all is working properly before the legacy system is turned off. 

8. Training users

Training is an important part of the implementation process, so users get the most out of their new system and the software achieves its objectives for the business.

9. Business as usual

The implementation team hands over the day to day running of the ERP system to the support and maintenance teams. However, the team remains involved with any development and configuration of new features.

Build a competitive advantage with MYOB

MYOB Advanced Construction is designed to meet the holistic needs of your business. Built on the cloud and part of the MYOB Advanced Platform, you can manage your projects with ease anywhere, anytime and on any device. 

Improve collaboration across teams, streamline time-intensive processes to avoid delayed projects, and have access to complete project visibility. Speak to an expert today to learn how MYOB software can help your business achieve its next level of growth. 

Disclaimer: Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.