Be honest – do construction companies really need ERP software?

Be honest – do construction companies really need ERP software?

Be honest – do construction companies really need ERP software?

So let’s be honest, do construction firms really need this type of software? And what even is “ERP”?

Digital technology is all people talk about nowadays, especially in the current economic climate. But digital tools, especially office-based digital tools, aren’t so common in the Kiwi construction industry.

Do you really need new technology to run a modern construction company?

New Zealand is growing rapidly. Of course, from an economic standpoint this is a good thing. But as the workforce at the front lines of such growth, the construction industry is facing pressure to keep up – Auckland alone needs about 320,000 new dwellings by 2050 if it maintains its current population growth.

So, that means we as an industry need to balance the seeming oxymoron of increasing productivity while reducing costs, without losing quality.

Construction is not a fast digital technology adopter

In construction and infrastructure, we’re great at adopting new building methods and investing in the tools and machines that help us do a better, faster, more cost effective job on-site. However, when it comes to technology that supports these endeavours (i.e. digital tools in the office), we’re not always as fast to adapt.

But if the sector is to keep up with demand, it needs to increase its productivity levels – BRANZ highlighted in a report that construction productivity has grown only 1% in the last 20 years, compared to that of, say, manufacturing, which has grown at over triple the speed. The gains to be had from investing in digital tools such as enterprise resource planning (ERP) could be critical in the coming years to help lift the construction sector into the modern age in-office as well as on-site.

But we should acknowledge that there are barriers to adoption in construction

We’re about to explain key reasons why digital tools like ERP are vital for even small construction firms. However, we recognise that the construction sector is unique compared to other industries and there are key barriers that must be acknowledged and overcome if the industry is to meet its true, modern potential.

1. Lack of digital talent: Digital talent is a key skills shortage across sectors and finding digital talent that also has construction experience is an even greater challenge.

2. Inadequate resources: 86% of firms in the New Zealand construction industry are small businesses – fewer than five employees (BRANZ). Quite simply, most SME owners feel they don’t have the resources to make investments in unfamiliar technology.

3. Legislative requirements: Construction firms must adhere to the country’s raft of legislative requirements and building code standards, and they’re not always easy at the best of times. Any tool that cannot support that adherence, or where a business owner may feel they aren’t familiar enough with a tool to feel confident that they’re adhering, will always seem like a risky purchase.

So what kind of technology can overcome those barriers?

If we examine those three barriers for their common trends, we can see that any piece of digital technology that will be useful to a busy construction company needs to be:

  1. Cost effective.
  2. Suitable for the construction environment.
  3. Above all – simple to use!

Basically, it has to do a good (and compliance-friendly) job as quickly and efficiently as possible, without being too complicated for even someone unfamiliar with technology to pick up. If it can’t hit all three marks, it won’t be of any use.

This is where we pitch ERP

We recognise our own bias when it comes to the benefits of enterprise resource planning software, but this type of technology more than hits all three marks and there’s a reason we believe so strongly in it. MYOB Advanced Construction Edition is designed to be used by the people that need it: It provides advanced features well-suited to the industry’s day-to-day needs, and won’t create a compliance risk to any business trying to stay well within the regulatory environment.

What is ERP?

Essentially it is a piece of software that integrates all the vital back office and project management functions of a company together in one place. By plugging accounting and finance, customer, project, compliance and supply chain data into this one system, you can build a dashboard that shows you every arm of your business, in real time, in order to make critical business decisions based on real, tangible data. This dashboard is then designed to be easy to use with minimal training, ready for professionals who may not have much experience with digital tools.

5 benefits of ERP for construction firms

1. Gain real-time visibility into all areas of the project life cycle

When it comes to making big decisions, visibility is crucial. To get it right, you need to be able to call upon historical data, real-time information and predict future requirements all at once, so having access to a system that can help you do that – because all the information is collected into this one location – can greatly increase your decision making power.

Quotes, schedules, historical costs from past work, communication with stakeholders, project information, progress reports – it’ll all be right there, updated in real time as new information comes to light.

2. Better control costs

Immediately you’ll start to see how that visibility we just talked about could help you better control costs. When you can quickly compare subcontractor costs, plant and equipment payments, internal and external resources, and other elements that impact your costs over time, you can start to see how each individual element impacts the bigger picture, and where your greatest money pits (and money makers) are.

Of course, you’re not just comparing costs to costs. As you set your budgets, you can also compare them to other factors like schedules, project reports, client communications, etc., all there in the same system.

3. Improve communication of vital information

The whole point of ERP is to integrate different arms of your business together in one place, with the aim to speed up the accessing of all of this information – and the communication of it from one party to another.

When your entire business is working with a single ‘source of truth’, there’s far less risk that different people will be working with different information. Even on-site staff can use the same system for their field reports and other data, so on- and off-site workers share the same information in real time.

Anyone involved in compliance may find their lives made much easier by this integration. Collecting lien waivers and releases, insurance certificates, status updates, expiration dates and other important alerts (i.e. changes of supplier) into the same pot means they are always at hand, and can also be quickly compared to other factors (such as scheduling and budget).

4. Make your project managers’ lives easier

This fast communication of information and easy accessing of the same data gives project managers a complete view of their projects no matter where they are, and who is involved.

ERP can provide an instantaneous flow of information between the project management team, back office staff and management, to help them track their activities, account for sudden changes and predict future problems.

5. Enhance productivity on the job and in the back office

ERP tools like MYOB Advanced are built on what’s known as the ‘cloud’. If you aren’t sure what that is, it’s basically a server – a location where digital information is stored – that is purely online, which means you don’t have to be in the office plugged in to access it. You can, theoretically, access it anywhere provided you have an internet connection.

Of course, these days everyone has a smartphone. That means your on-site teams can contact the ERP system from their devices, or hotspot their laptop and work on-site from a computer, still using the same dashboard.

This can have huge productivity benefits. Instead of needing to go back to the office and complete paperwork after finishing a job, staff can make changes as they go. There’s no double handling of information, no mucking about with Excel spreadsheets, and less endless printing of documents. It can all be done and hosted in the cloud.

So let’s be honest, do construction firms really need this type of software? And what even is “ERP”?

Ready to give ERP a try? Let’s get you started

At Aztech, we’re experts in MYOB software for construction firms and have helped over 130 Kiwi companies across sectors set up and gain real business benefits from this type of cloud-based technology.

To find out more about how Aztech could help your firm, get in touch with us today and let’s see what we can do for you.

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