8 min read
How to Implement a Construction ERP System: Steps and Best Practices to Succeed
Published 29 May 2024
Although the benefits of ERP solutions in construction have led to increased adoption of ERP systems, many have cited failures during the implementation process.
Although 50% of ERP implementations fail for the first time, with the right plan and guidance at every stage, you can succeed.
This guide explores some common challenges you might face when implementing an ERP system and offers helpful strategies to successfully overcome them.
Contents
Top Modules Construction ERP Must Include
Top Modules Construction ERP Must Include
Among the primary advantages of implementing a construction ERP is its array of functionalities tailor-made for contractors and the intricacies of contract management. An all-encompassing ERP system encompasses vital components like:
Finance & Accounting
VAT
Project costing
HR & Payroll
CRM
Corporate income tax
Sales
Purchasing
Each module plays an important role in a particular project. for example, project costing will make it easy to track the life cycles of your project, leaving it viable.
Purchasing function will allow you to create a procurement system for your project to meet your specific needs. It tracks material prices, controls additional costs, and provides scheduled procurement based on your requirements.
Inventory management in construction ERP system enables users to manage multiple warehouses, track inventory, place orders, and handle invoices across various warehouse locations. Effective warehouse management is a crucial strategic component for the construction industry, allowing users to easily control all materials with a single click and stay informed about stock levels at specific bin locations.
Purchasing function will allow you to create a procurement system for your project to meet your specific needs. It tracks material prices, controls additional costs, and provides scheduled procurement based on your requirements.
Inventory management in construction ERP system enables users to manage multiple warehouses, track inventory, place orders, and handle invoices across various warehouse locations. Effective warehouse management is a crucial strategic component for the construction industry, allowing users to easily control all materials with a single click and stay informed about stock levels at specific bin locations.
Guide to the ERP Implementation Phases
As with any other technology, implementing construction ERP requires following the proper steps. Here are the four significant stages of implementing the system successfully.
1. Choosing the Appropriate Software
Choosing the perfect software for your implementation is key to its success. It's all about finding the right tools and modules that fit your industry and specific location, making sure everything runs smoothly and meets your company’s unique requirements.
The industry in which you choose to implement the system will also play a factor. When implementing a specific system in the construction industry, it is important to consider the needs of your project and select the most suitable software accordingly. In construction, ERP systems are typically preferred.
A slight checklist for making your right software even righter:
The industry in which you choose to implement the system will also play a factor. When implementing a specific system in the construction industry, it is important to consider the needs of your project and select the most suitable software accordingly. In construction, ERP systems are typically preferred.
A slight checklist for making your right software even righter:
Collaborate with the project team and an expert ERP consultant to identify or prevent any challenges during the implementation process. The project team should understand the company’s unique challenges well, while the consultant can offer an objective third-party perspective.
Produce a scope of work document. It helps to outline clearly how the construction ERP system will address each challenge and ensure deep understanding and meet the project’s needs.
Establish the budget and timeline before commencing the implementation process. It is necessary to avoid unforeseen circumstances.
2. Сustomizing the ERP System
During the construction ERP system implementation, it is essential to customize it according to your specific requirements. The implementation also involves creating training materials for your team to ensure they are familiar with the new system and its features. Try to involve key employees and process owners during this phase to gain valuable feedback and improve the system's functionality and user experience.
As part of the development process, you may need to carry out the following activities:
As part of the development process, you may need to carry out the following activities:
Create training programs to assist users who may require additional support in learning to navigate the new software
Determine the integrations that are necessary for the system to function effectively
Import data from your current systems into the new system
Develop test cases for different functions of the system
Test and evaluate the results of each function to ensure they are working as intended
3. Deploying of New Construction ERP Software
The deployment stage is where your new system starts working. Here are some crucial things to do during deployment:
Validate imported data. Review all your data files and ensure their accuracy and up-to-dateness. If there are any issues, fix them right away.
Set a “Go Live” date. After validating and fixing any errors, it’s time to set an official date for everyone to use the new system.
Train employees on the new system. Employees should learn how things work to do their jobs quickly and efficiently. This aspect helps you realize your ROI faster than without adequate training.
4. Maintaining the System
After setting up your construction ERP system, consider its maintenance to ensure it runs smoothly for years. Unfortunately, many companies overlook this crucial aspect during the initial implementation phase because they are too busy setting everything up.
To maintain your ERP system, you need to:
To maintain your ERP system, you need to:
Install new patches or upgrades promptly
Verify that all applications are running with the current versions of their software components
Take regular backups to prevent disruptions
It is crucial to have the software team’s support on the phone. Furthermore, you can gather feedback from your employees on how they use the system to optimize the processes further and improve efficiency.
Challenges in Implementing a Construction ERP System
Several notable challenges accompany integrating an ERP system within the construction industry.
New Technologies Barrier
One of the main challenges is the reluctance of employees to adopt new technologies. You might also think that new technologies can negatively affect productivity, and in fact, you will be partially right. It will take time to learn and set things up. However, in the long run, you will increase it much more than you lose it now.
Many workers may be afraid that ERP systems will replace them. However, the main purpose of using construction ERP system is not to eliminate jobs but to make the organization more productive and efficient. By automating repetitive tasks and combining different functions, ERP systems allow employees to concentrate on more important activities. This helps improve the overall performance of the organization.
Educating your employees on the ERP system and its benefits could help break the barrier.
Many workers may be afraid that ERP systems will replace them. However, the main purpose of using construction ERP system is not to eliminate jobs but to make the organization more productive and efficient. By automating repetitive tasks and combining different functions, ERP systems allow employees to concentrate on more important activities. This helps improve the overall performance of the organization.
Educating your employees on the ERP system and its benefits could help break the barrier.
Business Structure
In the past, businesses used different systems for tracking attendance, planning materials, and storing documents, which led to fragmented workflows. Now, construction ERP systems have changed this by combining all these functions into one digital platform, making things more convenient and efficient.
However, adapting to this new system can be difficult for organizations used to their old ways. This transition requires not just learning new software, but also rethinking business processes and data management practices.
While ERP systems offer benefits like reducing errors and improving transparency, it takes time and patience for employees and organizations to adjust to the new way of working.
However, adapting to this new system can be difficult for organizations used to their old ways. This transition requires not just learning new software, but also rethinking business processes and data management practices.
While ERP systems offer benefits like reducing errors and improving transparency, it takes time and patience for employees and organizations to adjust to the new way of working.
Project Management
When integrating a new software system, employees who collaborate closely typically shift roles and responsibilities. This phenomenon becomes more pronounced when these employees are engaged in projects necessitating cross-departmental cooperation, potentially leading to heightened challenges.
For example, an architect wanted to make the lobby of a commercial building bigger from 2000 to 2500 square feet. They forgot to tell the contractor about this change. The contractor started building based on the smaller plan. They realized the mistake after building 1500 square feet. Now, they had to take down 500 square feet of the lobby, costing USD 10,000. Building the extra 500 square feet cost USD 25,000. Because of the mistake, they also had to pay fines of USD 15,000 for being 30 days late. In total, the mistake cost an extra USD 50,000 and delayed the project by 30 days.
However, that shouldn’t be a challenge when implementing ERP. A good system will only make collaboration better. It will allow you to manage each process, ensuring that all tasks are completed, even if they require the participation of workers from other departments.
Employee Training
Employees may not have the time or interest to attend training sessions, which could potentially slow down ERP systems’ return on investment.
By teaming up with First Bit, you will access top-notch support from experts who can efficiently train employees on the system without disrupting their schedules. This ensures that employees learn how the software functions and how it will impact their work.
By teaming up with First Bit, you will access top-notch support from experts who can efficiently train employees on the system without disrupting their schedules. This ensures that employees learn how the software functions and how it will impact their work.
ERP Implementation Effective Practices
Merely adopting a phased implementation approach does not ensure success. Here are some of the best practices our team recommends for successful ERP implementation.
Thorough Planning
Rushing the implementation of construction ERP system can lead to failure. That is why you need to focus on integrating the software and aligning it with your business objectives and department needs:
Ensure all necessary adjustments are made and provide comprehensive training before going live.
Carefully evaluate the relevance and accuracy of the previous system's data before transferring it.
Develop a methodical approach to data migration to enhance the efficiency of the new system.
Detailed planning at the beginning is crucial for a successful implementation, along with strong leadership backing, a well-defined action plan, and sufficient resources.
Prioritize Support and Training
When getting a new ERP system for your company, make sure that your ERP vendor offers comprehensive training and support using different communication methods like emails, meetings, and workshops to reach everyone.
Consider employees' feedback both when choosing the right ERP for your company and after the system is set up. Involve users from different levels in the process through Q&A sessions and focus groups.
Consider employees' feedback both when choosing the right ERP for your company and after the system is set up. Involve users from different levels in the process through Q&A sessions and focus groups.
No High Expectations
ERP systems for construction take time to show results, so it's important to be patient and realistic. Make sure to set achievable goals and lower expectations in the beginning. When introducing a new system to a team, communicate clearly about the reasons for the change, goals, benefits and possible challenges. Regularly update stakeholders on the ERP implementation’s rationale, objectives, and anticipated outcomes to foster transparency and alignment.
Get Started with FirstBit ERP Software
Choosing the right ERP system is important, but getting good support during its implementation is just as crucial. And the success of an ERP system implementation also depends on the support you receive. At First Bit, we take pride in offering superior support as you set up our ERP system for construction. This ensures the switch is smooth, efficient, and fits your needs perfectly.
Our Support During ERP Implementation
Dedicated team. You'll have a team of ERP experts helping you through the process, giving advice, solving problems, and making sure everything meets your business needs.
Customized planning. We tailor the implementation plan to your business processes, challenges, and goals, setting clear timelines and milestones for a well-organized process.The process involves implementing a statement of work, which serves as a roadmap for the project. This keeps the project on track and facilitates the management of any unforeseen changes that may arise.
On-site and remote help. You can choose to get support in person or online, making expert help available no matter where you are or how complex the issue.
Training sessions. We provide hands-on training to make sure your team knows how to use the ERP system effectively, tailored to different roles and needs.
Communication and feedback. We keep in touch with you regularly, updating you on progress and gathering feedback to keep everyone on the same page.
Post-implementation support. We offer ongoing support after the system is live, providing troubleshooting, updates, and additional training as needed.
Scalable support. As your business grows, we can help with any changes or additions to the ERP system so it continues to meet your needs.
Phases of Implementation
Scope of work preparation
Customization and database preparation
Master data preparation, upload, and setting
Final Testing and Adjustment with customer
Opening Balances Upload
Training
Go live
Signoff
At FirstBit, we are committed to providing support and guidance throughout the process, helping you transform your business for the better. Let's work together to make this transition smooth and beneficial.
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