What is Construction ERP?

The construction industry is one of the world's largest and most complex industries, with a wide variety of products and services delivered to customers. The construction process involves many stakeholders, including architects, engineers, contractors, subcontractors, suppliers, and others, who must work together efficiently to deliver projects on schedule and within budget. 

Construction enterprise resource planning (ERP) is software that is developed specifically for construction companies. It is designed to help the company manage all the processes related to building, such as project management, production scheduling, materials procurement, inventory control, and accounting.

The focus of construction ERP is to automate the entire construction process. For example, it allows the company to track all the activities related to a particular project—all project information is stored in one place.

Furthermore, the software enables the company to monitor the performance of each employee and even provides reports regarding the same. In addition, it allows the employees to view the progress of projects remotely.

ERP for Construction

According to the 2022 Global Construction Management Software Management Software Research Report, the "Global Construction Management Software market size is projected to reach USD 6520.8 million by 2028, from USD 2146.2 million in 2021, at a CAGR of 17.0% during 2022-2028." Similarly, the Global ERP Software Market "was valued at USD 37.53 billion in 2019 and is predicted to reach USD 68.34 billion by 2030 with a CAGR of 5.6% from 2020-2030."

With the construction industry being one of the most complex industries in accounting and finance, the expectation is for the targeted Construction ERP market to grow at a similar pace.

The complexity of this sector makes it difficult for companies to manage their finances efficiently. This complexity is why many construction firms are considering integrated ERP software solutions. However, organizations in the construction industry need to navigate a multifaceted and complex business environment that traditional ERP platforms do not wholly serve.

Partnering with an industry-focused ERP gives your company a purposeful, integrative, secure, and scalable platform for growth. A cloud-based construction ERP system allows you to connect every aspect of your business, from budget planning to project tracking, purchase orders to inventory, and field services to sales.

Construction companies face many challenges, including managing risk, compliance, quality control, and regulatory requirements. They must do all this while still meeting deadlines and budget constraints. Additionally, small businesses are impacted by the pressures of inflation, rising costs, looming recessions and labor shortages.

Therefore, to address these issues, small construction firms often use a combination of manual processes and spreadsheets to manage their operations. However, these methods don't scale well, are prone to errors, and can make it challenging to identify and respond to problems quickly to improve bottom-line growth.

Engineering firms face similar challenges. These include managing risk, compliance, product development, quality control, and customer satisfaction. In fact, according to Gartner, 75% of engineering firms say managing risk is one of their biggest challenges.

To solve these problems, construction and engineering firms must adopt modern technology solutions that automate critical functions such as monitoring and reporting. These technologies enable businesses to manage risk effectively, comply with regulations, improve productivity, and meet customer expectations.

Construction companies are facing many challenges today. From rising labor costs to increased regulations and prices, there are plenty of reasons why it pays to invest in an enterprise resource planning solution. For example, construction companies must discover opportunities to improve efficiency and reduce costs. 

According to Gartner, over 90% of large businesses use ERP systems today. However, many small businesses don't realize how much they could benefit from an ERP system.

Here are the most common characteristics of ERP for the construction industry. It is critical to understand what an ERP system can offer and map it to your construction business.

1. Accounting

It would be best to understand what accounting support an ERP solution offers. For example, do you need to integrate with spreadsheets? Industry-focused construction accounting software can track, record, and analyze your construction company's financial data, including cash flow, inventory, sales, and expenses. It can also help manage taxes, purchase orders, and auditing. A sound accounting system will streamline tasks and reduce the time to complete monthly financial statements and reporting.

Construction Accounting Best Practices »

2. Financial Management

Most ERPs offer essential financial functions such as accounts payable, receivable, cash flow, and general ledger. However, an industry-specific and full-featured finance module can help you better forecast sales and expenses. For example, a Construction ERP should include budgeting and forecasting tools, allowing you to plan future projects and prepare budgets based on historical data.

3. Integration

ERP systems can combine with various other applications to create an integrated solution for every aspect of a company's operations. These include accounting, CRM, supply chain management, manufacturing, inventory control, human resources, customer service, marketing, sales, purchasing, shipping, and more. Bringing data across these disparate functions and centralizing it within a single ERP system will provide visibility into the financial and business operations. These technologies will drive a platform for smarter strategic business decisions to improve productivity.

4. Automation

Successful enterprise resource planning systems should additionally streamline different processes within your construction firm. Automated repetitive business functions such as payroll, inventory management, customer service, and accounting no longer require manual data input. By automating these processes, project managers can spend more time with high-value activities.

5. Order Processing

A robust ERP can automate order capturing by eliminating manual data entry and paper routing to streamline order processing. By facilitating faster order fulfillment and bringing together operations, finance, sales, and customer service, businesses can move quickly progress orders through your value chain. Automating the business supply chain saves time and optimizes order processing. 

6. Payroll

Construction payroll systems must provide a seamless way to manage labor and material costs at the job sites. Additionally, companies need to be able to connect job-site data with the back office for efficient payroll management. Construction and contractor businesses need the tools to manage payroll, be it certified, union, or non-union, and ensure employees are paid on time. 

Construction Payroll Best Practices »

7. Human Resources

Construction companies are facing a significant challenge—they need to attract, engage, and retain talented people to keep pace with change in our industry and address the labor shortages. Through HCM solutions, construction can attract and retain talent, engage employees, and retrain talented workers. At a minimum, HR departments need to access employee information and update documents online through integrated ERP and HR solutions.  

Boost Employee Satisfaction »

8. Customer Relationship Management (CRM)

With integrated ERP, CRM, and commerce solutions, companies gain complete visibility into their clients' buying histories, allowing them to develop better marketing campaigns and sales pitches. Marketing organizations can build multi-channel and personalized campaigns. Businesses can also track customer fulfillment and receive notifications to intervene at various points in the customer lifecycle.

9. Business intelligence and data analytics

Construction ERP software needs to analyze the project's performance and generate reports on its financial status. Give your project managers the ability to access the data to make crucial decisions on the job. Additionally, the financial model must be auditable and available for further investigation and analysis to help construction companies and clients stay on top of their finances. 

Construction businesses are unique because they require specialized software tailored to their industry. With the industry constantly changing, growing, and evolving, finding a single ERP solution that works for every type of organization is difficult. But some key features will set generic and industry-specific ERPs apart. 

Much like Deltek's Project-ERP, solutions need to offer construction companies a comprehensive set of features to streamline operations and improve efficiency throughout the entire lifecycle of a project. A robust financial management solution designed specifically for construction enterprises gives firms everything they need to run their businesses efficiently.

Additionally, deploying these solutions in the cloud helps construction companies track and report on job-site activities and inventory. Any Construction ERP needs to enable you to:

1. Optimize planning
2. Streamline project management
3. Simplify the exchange of information
4. Improve the decision-making process
5. Increase ROI

Shelby Erectors is an industry-leading bridge rebar contractor that connects communities throughout Florida that recently received the 2022 Project of the Year for Miscellaneous Metals, Class II, Craft Training Excellence, and Safety Excellence Award from the Steel Erectors Association of America.

As a growth-minded company, Shelby Erectors focuses on adopting new back-office solutions to enhance company culture to help the firm overcome industry challenges.

By implementing labor-saving technology, Shelby Erectors has used Deltek ComputerEase for more than 15 years to manage their construction accounting needs. This industry-specific solution manages data and systems within a single solution. By reducing the use of multiple spreadsheets, they have eliminated human error and driven their paperless journey through crucial aspects of the business. Their ERP solution has helped their company overcome inflationary pressures and remain committed to a profitable bottom line. 

Shelby Erectors and Deltek Partnership

Deltek ComputerEase is the leading construction software for job cost accounting, project management, and payroll services—delivering solutions that help customers connect and automate the project lifecycle that fuels their business. Deltek’s dedicated team is committed to providing service excellence and product innovation, adapting to the evolving construction compliance requirements.

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