Necessary & Sufficient features to look for in Construction ERP
Item number lead-time is the expected time between the recognition of need and receipt of supply.
This can be broken into a number of different lead-times such as ordering time, processing time, vendor time, inspection time, stocking time, and transportation time.
Depending on the functionality of the ERP system, these individual components may be broken out separately or there may be only one field available where a sum of the parts would be entered.
Typically the ordering time, inspection time, and stocking time are fixed for the organization and do not vary by the quantity of parts needed. The processing time for make parts and the vendor time for purchase parts typically varies by part number, as does the transportation time.
Having a conservative estimate of the lead-time is essential for the ERP system to do its planning. At the core of the ERP system is the calculation that examines what is needed, currently available, or coming in to determine what is needed and when. Determining when is the real secret to ERP success through the reduction of inventory and improvement of response time. Information replaces inventory.
The 3 Core Elements your Construction ERP Must Have
Contract management. Traditional ERP systems are product based whereas a construction ERP must be focused on Capital Assets contract management. The peculiar challenge for a construction ERP is on managing a scope of work that can be fluid relating to a complex asset. Contract management needs to allow for multiple changes (sometimes hundreds of changes from initial design) and be structured to handle workflow approvals, contract changes and revisions.
Valuations within contract management. Unlike product based systems where there will often be a defined cost base, the construction industry needs to measure and account for work completed (Valuations). This is commonly done on a progressive monthly pattern and forms the basis for payments being received or remitted to sub-contractors. These valuations are often submitted by the Quantity Surveyor (physical measurement against the bill of quantity) and used to form the basis of applications for payment submitted to the client.
Cost control.The complexity of cost control in construction goes far beyond the abilities of a traditional ERP. A construction ERP must be able to handle such diverse elements as resource allocation (internal and external), payments on milestones, sub-contractor costs and plant and equipment. The ability to set a budget for the project as a whole and adapt to changes are key in addition to the ability to provide scheduled and up to date reports, business intelligence and revision of the project forecast based on actual spend. This will assist on maintaining control of costs and, of course, margin.