20 November 2018

Techvantage

Soft ware, hard battles

CONSTRUCTION OPPORTUNTIES sought views of leaders in the project management software space for an understanding of the challenges and solutions for construction firms that use ERP systems in a fast evolving business environment.

 

Even as construction companies face pressure from mounting costs, many are bidding for even bigger projects or venturing into property development to improve profits. With roles in the building industry changing, the players are demanding more analytics and insights from enterprise resource planning (ERP) software. Construction firms that use a traditional ERP system are today facing challenges in the fast changing environment which are not addressed by most software solutions.

What is the way ahead? Read on to find the solutions offered  by our experts.

On the critical challenges faced by construction companies/builders that use traditional ERP systems:

Peter Cheney, Managing Director, CCS: The notion that information systems used in the construction environment are basically the same as those used in any other industry is flawed and borders the dangerous. The construction industry, with its associated challenges, demand a set of information tools designed specifically to address the unique nature of the flow of information through the enterprise.

At Construction Computer Software (CCS), we firmly believe that the three tenets on which construction information policy is rooted, takes the form of pre-tender budgeting using resource based techniques, cost management with due regard to the ever-changing construction phase, strict reconciliation with the books of account. Should the information flow between these three components be disturbed or broken, meaningful comparisons cannot be possible. This begs the question, what comparisons ?

Bids are won or lost based on the application of productive and non-productive resources to the principle contractual document, in the British methods of measurement, the Bills of Quantity. Without an accurate and detailed application of these resources, the bid process becomes more of an allocation of money, than an analysis of the method of construction and its associated production and resource budgets. Therefore, should the bid be successful the organisation is obligated to provide the asset at the rates provided. Given the fact that the basis of measurement is quantity, and variable at that, the production of budgets throughout the life cycle of the project relies on an accurate measurement of the quantities of work done.

Without the software application to produce this information, one of the essential components of the process is either incomplete or non-existent.

The management of the construction process relies on the comparison of the budget, derived by the measurement of work done, and the actual costs accrued daily on-site. It follows therefore that the aggregation of costing information is required daily, from all sources, labour, material, plant and equipment, sub-contractors and more. The information system employed needs to be able to facilitate this generally not what standard systems are capable of.

The actual cost information is required to be compared on the day the measurement of completed work is undertaken to get an accurate variance (if any) against the budget.

Coupled with this, an overriding necessity is that the costing figures so produced need to form the basis of the data that flows into the accounts process and must be fully reconcilable. Should this not be available, the cost information cannot be verified and as such is suspect with regard to its accuracy and relevance.

In summary, the construction organisations needs are very different to any other standard information system and has to be designed specifically for the industry.

 

Kalyan Vaidyanathan, Co-Founder & CEO,Nadhi Information Technologies Pvt. Ltd.:
One of the key issue in construction projects is the number of stakeholders that belong to different companies (and business units within a company) that come together to form a virtual organization to deliver a project. This implies that information is with different stakeholders who are not necessarily with the same organisation. And typically ERP systems get installed at each or atleast the biggest stakeholders in the project individually! And where ERP systems do exist, the core focus of ERP solutions has typically been finance and finance related processes. Typically, when people speak of ERP, they are talking finance, procurement, and payroll (HR). The most well intentioned ERP implementations fail the "site test". From the small and medium firms to the large ones, the project sites for these companies and projects largely still operate on Excel spreadsheets, email, phone calls, and paper and pen. Which means data needed for the ERP is entered and re-entered multiple times. In most cases, the only reason people use the ERP is because finance controller has made it mandatory and they cannot pay (or get paid) unless data is in the ERP. Inspite of that, ERPs are typically utilized only about 50 to 70 per cent. Almost all sites that we have encountered are coming up with schemes and methods to work around the ERP rather than work with the ERP. ERP systems become a handicap rather than an enabler in a lot of scenarios.

 

 

KV Daniel, Founder, Wrench Solutions: Wrench is a project management and a collaboration solution. According to us the major challenges are ensuring the projects are delivered on time within budget with assured quality. As this industry need to co-ordinate work with over 50 vendors ensuring all of them delivers on time is challenging and monitoring them on their activities is very critical.

 

 

 

 

 

 

 

 

 

Vijay Gupta, Founder & CEO, SoftTech Engineers Pvt. Ltd.:

IT Technology seems to be changing at a faster pace than the acceptance. This is more significant to construction companies. Technology change poses a greater challenge to construction companies, as a construction project varies between 6 months to multiple years of execution, which is not the case with IT. Investing in traditional ERP systems entails higher investments – not only in the form licenses but also recruitment and training of relevant professionals, maintenance and up gradation of the system and customisation. Traditional ERP systems are built with a generic applicability in mind. At times the processes are not relevant to a construction company, rendering the traditional erp’s useless. This obviously has a negative impact on ROI and overall profitability of the company. The need of the hour is to implement niche specific ERP systems.

 

 

On the solutions being offered by your firm to address these issues:

Peter Cheney: We at Construction Computer Software (CCS) have an active development and research team of highly qualified construction industry experts concentrating on producing focused and tailored products that ensure the integrity of data in all phases of the construction process and beyond. From the production of quantity take-offs from 3D models, estimates, cash flows and budget production to the timeous daily cost information and right through to the final books of account the systems at CCS address the issues in a unique way.

Kalyan Vaidyanathan: Nadhi recognises that any construction project is a loose association of multiple stakeholders that belong to multiple organisations or business divisions of the same organisation who come together to form a virtual entity to deliver a project. We also recognise that construction stakeholders are mobile and hence solutions have to be mobile enabled, and information has to be “pushed” to them in a device of their choice based on triggers of their setting. Our flagship solution nPulse is built with these assumptions in mind.

  • nPulse provides plug-n-play connectivity to existing systems rather than replacing them. In that sense, nPulse becomes the central repository of all project information and the glue that connects them so that each stakeholder can take advantage of the benefits of their individual solution as well
  • nPulse is mobile enabled and relies on both push and pull of information. Information is pushed to stakeholders on a device and medium of their choice. Information can be retrieved and updated in nPulse using a browser or mobile devices, be it smart phones or not.
  • nPulse is a collaborative solution that encourages all project participants to provide and retrieve information on a project from its platform. It is built on the principle that if a few people spend 5-10 minutes every day in inputting information, the entire project organization can be kept aware of current statuses and changes, and key decision makers can make meaningful decisions to prevent or reduce the domino effect of time and cost overruns before they happen.
  • nPulse is a learning solution with a proprietary predictive analytics engine that uses past project performance and trends to prioritize and provide lead indicators to future potential delays. These lead indicators is pushed to relevant stakeholders as alerts or reports
  • nPulse is a decision support solution that prioritises issues and helps decision makers navigate through the project from the most risky and important issues to the least.

All this makes nPulse a central platform that holds significant project information and their interrelationships to dramatically improve the quality of decision making and execution, while at the same time leveraging existing investments in technology. Unlike traditional solutions that provide project monitoring which is backward looking, the entire solution capabilities are centered around providing lead indicators to potential future missteps based on trends and past performance. Once adopted, businesses can identify process and vendor bottlenecks in their projects that they can they streamline to make their construction operations more efficient. Its data driven quantifiable vendor and business process performance implies that for the first time, clients can use that data to setup relationships at the supply chain level based on vendor (and consultant) performance rather than simply gut and trust and relationship.

 

KV Daniel: Our solution is platform in which you define all deliverables, its schedule with responsibility. Wrench automatically notifies the responsible person on their activities and when the person does the work the system automatically captures the status. It also captures the outputs which is available as evidence. Our solution uses earned value based monitoring of project deliverables that provides predictability that prevents delays and budget overrun.

 

Vijay Gupta: SoftTech Engineers Pvt. Ltd. has been involved in developing IT tools specifically for the Architecture- Engineering- Construction (AEC) vertical. With 750 + man years of experience and in-depth client study our firm has developed e-governance and construction ERP products keeping in mind specific needs of the vertical. OPTICON™, a ready to implement construction ERP allows a bird’s eye view of construction projects. With intelligently built in modules for projects, finance, plant & machinery, projects are assured of positive returns. Innovation and integration being our major thrust factors, we have already taken our construction ERP- OPTICON™ to a new level. Mobility and Project virtualisation is the need of the future. OPTICON™ is integrated with Revit software, becoming a complete ERP tool; supporting the complete building life cycle process right from design stage to complete execution. We all know the inroads made by mobile technology in the recent years. OPTICON™ is also available on smart phones, allowing complete flexibility and the ability to take informed decision anywhere anytime.

 

On what is required to be done by in relation to the following:

  • Tracking projects from start to finish,
  • Detecting mismanagement and corruption in procurement of raw materials and excessive manpower billing
  • The need for a unified and centralised system for global assets
  • Real time collaboration and integration with third parties for increased productivity
  • Mobility to facilitate quick decision making in remote locations.

 

Peter Cheney: A set of policies, procedures and tools designed to achieve upstream control of projects by integrating Budgets, Critical Path Analysis, Cash flow Projections and then tracking Cost information from source, daily and of course the analysis of variances and timeous corrective action.

With an integrated approach and systems designed to disallow procurement of goods and services not catered for in the estimated list of resources, the system stops rogue purchasing and disallows over ordering, ordering goods not in the budget and then insists on a full reconciliation of all the documentation back to payment. A crucial element of this process is a work flow of approvals throughout the process.

With the necessary organizational structure and global flexibility with respect to the identification of valid cost centers, albeit offshore, the system will cater for the phases of feasibility, construction and asset life costing.

This is a necessity as our organisation cannot be expert in all fields and as such have taken on product partners for a number of modules.

The system is totally cloud based and therefore transcends geographical boundaries. There are sites in The Himalayas exchanging data on a daily basis with their head office in Mumbai, Mauritius to Johannesburg with ease. The future is almost certainly in cloud based computing, we have simply pre-empted its use.

 

Kalyan Vaidyanathan: For effectively handling the list of the above, there is a strong need for the construction industry to develop construction supply chain management solutions (CSCM). By CSCM, we are not talking about material management and/or logistics management, but information management for seamless end-to-end visibility of the construction project from engineering through procurement and construction. The CSCM solutions need to evolve the same way they did for manufacturing. This means rethinking business processes, organizations, contractual relationships, and enabling technologies for that new world of possibilities. Owners and EPC contractors need to acknowledge the inefficiencies in their operations inspite of existing systems (and processes) and attach a value to that inefficiency. Those inefficiencies will justify investments in newer solutions (and processes) that ultimately will lead to more efficient delivery of construction projects. We need examples of industry players who have attained leadership positions process innovation like lean construction (like Toyota in automotive), technology driven efficient supply chain management (like Walmart in retail) or end-to-end automation from design to delivery through engineering design automation solutions (like Intel in semi-conductor). We need examples like that in construction to prove the effective use and value of technology and associated business processes.

 

KV Daniel: Wrench does real time tracking of the project deliverables and the overall project. By using Wrench procurement workflow processes can be enforced and all documents captured during procurement are attached to it and hence it helps bring complete visibility. This can prevent any potential mal practices as there is total transparency of the transactions. The complete drawing and documents from the concept to completion are captures in Wrench and the final as-build documents can be electronically transferred to the Asset management system. The Wrench platform enables real time collaboration with all third parties and vendors. This will help communicate the responsibility and monitor the deliverables in real time. Wrench can be used from mobile devices and thus can be used to capture the status of the deliverables and also notifications can be sent to the device to push the resources to get their responsibilities completed on-time.

 

Vijay Gupta: Tracking projects from start to finish is of importance for any kind of projects. For a construction company it is crucial as various factors are dependent on the completion of a project. The need is to implement an intelligent ERP tool, which has the ability to effectively divide the stages of construction project and replicate the same into the system. Also, the ERP needs to provide the right tools for the purpose of project tracking e.g. OPTICON’s Project Monitoring & Control module which handles activities like: Activity assignment, site requisitions, daily reports at a click of a button, site progress photos. In the case of detecting mismanagement and corruption in procurement of raw materials and excessive manpower billing I would suggest the following: Regular reports with effective data mining and a strong query engine helps in generating information immediately. Such reports can help in pinpointing anomalies at the budding stage itself. Of course that is not enough, there also has to be a provision for recording and collecting relevant data in real time. Additionally by implementing proper access rights to all levels of professionals in the construction project hierarchy, will help in empowering professionals to enter proper data; thereby improving operational effectiveness and transparency in the long run. This also provides for the need for a unified and centralised system. Mobility is the future, which goes without saying. It especially applies to construction project managers, they need information to be available at all given time. OPTICON™ which is available on mobiles too, has been developed considering exactly the said situation. Accessing reports, accepting requests, conveying decisions immediately is the need of the hour. It not only helps in improving the effectiveness of operations but also has the potential to positively impact the profitability of a project. If time is money, so time saved is money earned. A construction ERP has to be made available on mobiles.

 

On the future of ERP solutions for property management:

Peter Cheney: Property management has most of the elements related to construction, except the emphasis now lies with maintenance as well as revenue collection. The systems at CCS are flexible enough to accommodate the analysis of real-time cost as it was in the construction phase of the asset.

 

Kalyan Vaidyanathan: ERP systems will always have a role in areas of their core strength. Typically that implies finance, procurement and HR or payroll. For property management, CRM solutions is another component that is needed and essential. These are typically available (and in several instances from vendors who sell ERP solutions). But for effective use of ERP systems, the characteristics of the construction project and its federated and distributed nature of stakeholders needs to be taken into account. As McGraw Hill noted in its recent Smart Market report, despite the advantages of ERP systems, companies are finding it difficult to collaborate and are looking for better tools for intensive data sharing within and beyond individual firms.

 

KV Daniel: Wrench is not an ERP. However we see the need for property management companies to have systems that help them to prevent delays and budget over runs to stay profitable.

 

Vijay Gupta: I perceive a very strong future. For any construction project a major challenge is to avoid cost overruns and delays. These challenges can be well addressed by use of an effective ERP system, wherein all the stake holders work together on the processes, challenges and the solution by capturing all the transactional data to generate intelligent reports resulting in effective decisions. With the cost of land and material escalating it is required to be more organized and concentrate on internal process management for better efficiency and cost control. A construction ERP like, OPTICON™ fits the bill perfectly.

 




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