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Every construction project comes with a specific budget. To ensure the project is within the budget, you need to prepare an estimate of costs that are involved in the project. ERP for constructions empowers businesses with the systematic project costing, ongoing cost management, performance tracking and vendor management.

An ERP solution for the construction industry mitigates risks related to the budget and does a lot more by taking care of the following 4 business functions:

1. Project cost estimation:

Project estimates have to include the anticipated cost of unexpected scenarios that lead to project delays and add to expenses. All direct and indirect costs including expenses related to manpower and materials have to be considered. Cost of outsourced work is also part of project estimates.

Earlier, there were manual processes to gather estimated costs that took time and effort.All the components required for automation of the entire project cost estimation are incorporated in an ERP software for construction.

2. Running costs

Although you have estimated the entire project cost using the project cost estimation feature, you need to keep track of the day-to-day expenses to monitor your budget.

An ERP software such as OMNI ERP offers a complete overview of the inflow and outflow of the project through a user-friendly interface. Each and every cost can be entered in an ERP along with applicable taxes and discounts. The greatest benefit here is that you’ll be able to keep your cost under control.

At present, you may be using several tools to manage your project costs such as a project planning tool, project estimation tool, excel sheets, accounting software etc. ERP integrates all these software into a single platform so that you don’t have to save several files.

You may be creating project analysis reports using a presentation software such as MicrosoftPowerPoint.

But, all the required financial reports can be automatically created in an ERP system. You can directly mail the reports or print them using the system from cloud storage. The time saved with automation can be put to better use in more critical activities by your managers.

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In the fast-paced, globalised world of today, you need a solution such as ERP for constructions to take care of your purchase management. Slow purchase order processes can affect your business and impact your profitability.

Let’s take a closer look at how purchase management works in the construction industry and the ways purchase automation can benefit your business.

Significance of purchase management in construction

If you are an experienced construction management company, you will be having a purchase policy in place. For small businesses where purchase is managed by a single purchase manager, the complications are less. The reason is there are not too many people involved in the purchase process and projects are less.

However, for an organisation with multiple projects, there is a purchase process for ordering, buying and receiving materials. The purchase department determines the quantity and quality of materials to be purchased. They maintain the records and perform quality checks as per the organisation’s policies.

The purchase team is critical for smooth operations in a construction business. If material of the required quality does not reach the work site on time, then workflow is affected. Workers may not have the sufficient materials to start the work or complete the work on time.

If workers do not have materials, they will be serving idle time on the site which adds to the loss of time and money for the business.

Different aspects of purchase management in construction

Generally, the purchase management process in construction-based businesses involves the following aspects:

• Purchase Order

Materials, machinery and other resources are required by various teams in a construction business on a regular basis. Bigger the size of the business more will be the consumption of resources. Imagine if every team’s request for resources is immediately approved without a control system in place.

The entire business will soon be financially unstable. To avoid such a situation, the purchase team evaluates the request and releases a purchase order. The purchase order is an extremely important document for an organisation as it is the official confirmation with the quality and quantity of purchase to be made.

• PO Creation

Although a team has requirement of resources, the approval manager or a team of managers verify the requirement and approve the quantity. If changes are to be made, the approval manager/s modify the quantity and quality before approval and send it to the purchase team.

Earlier, the Purchase Order (PO) creation was a long and tedious process. To and fro of documents led to wastage of time. Also, purchase orders were created using document processing software such as Word or Excel. With the best software for contractors, the whole process got automated.

Every relevant person on the team gets updated with the status of the requirement and approval. Nobody has to follow-up or run from one department to another to get the work done. If the purchase is pending then the platform clearly indicates the stage of approval. Notifications help the team members to review the purchase-related tasks that are pending for the user.

Once all the approvals are done, the purchase team can generate the order automatically on a document with the company’s branding. Secure digital signatures can be used for document approvals.

• PO Dispatch

Many companies still use emails to send out purchase orders to vendors. With an automated ERP platform, the purchase order can be mailed automatically on approval. But another critical feature in an ERP is the vendor portal.

Vendors can submit quotations, receive purchase orders and manage invoices through the vendor portal. What this means is, the purchase teams do not have to keep mailing the PO to multiple vendors again and again. If there is a requirement, the selected vendors can be given access to a vendor portal.

Also, vendors can bid for new requirements. The ERP dashboard can be used to see a quote comparison and analysis by the purchase team. Once the quote is approved, the PO order is created after necessary approvals.

For repeat orders, the automated approval process in the organisation can be used to generate more purchase orders. Here, the best part is every purchase from a vendor can be easily accessed by the purchase team with the status of their payment.

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Today, every business is data-driven. Are you ready with an automated workflow to take advantage of the enormous data your business is generating? Several businesses are already ahead of their competitors by implementing the best construction management software suitable for their organisation.

The construction industry is diverse with several verticals.  The key areas that operate in the construction industry are civil engineering, carpentry, tunnel work, roofing, bridge construction, scaffolding, industrial furnace construction, structural work, general construction etc.

Futuristic designs lead to more specialised construction departments such as green building solutions, prefabricated 3D components etc. Construction work isn’t final till all the finishing work is done. To provide necessary finishing to the constructed buildings, services required can be ventilation, floor and tile work, gas and water lines, interior decoration and more.

The various verticals of the construction industry add to the complexity of the operations. An automated ERP platform can make it easier to manage business processes. Let’s understand why your business may need an ERP to grow.

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In the construction industry, businesses can save millions or even billions by reducing
inefficiencies related to labour. Systematic planning and management of labour through
an intelligent ERP for constructions can be a suitable remedy for improving labour
productivity.

Impact of poor labour productivity

Engineering, Procurement, and construction (EPC) contractors and construction companies require labour services to complete various tasks. Software such as ERP for EPC contractors can help to estimate the exact labour requirement and fulfil the requirement adequately when a project goes live.

Inadequate labour planning leads to poor labour productivity.In such a scenario, here’s what will happen:

• Projects may get delayed as project managers are unable to match the project timelines.
• There will be a cost overrun if tasks are not completed on time.
• Adjusting labour factors will be difficult if an automated software to track and manage labour is not in place.

Let’s find out more about the possible factors that hamper labour productivity in the construction industry.

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