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January 05, 2021

Why Your Construction Firm Needs a Cloud-Based ERP Solution

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Today, the construction industry benefits immensely from various advancements in technology. New projects to build “smart” homes and offices are on the increase.

However, the internal management of construction workflow and project management still involves manual processes in many companies. Using outdated construction project management systems will make a company less competitive.

Intense regional and national competition with higher demands to innovate requires the automation of business processes with cloud-based enterprise resource planning (ERP) software. ERP software provides a wide range of integrated solutions to support every construction business aspect, from takeoff to cost estimating, bid management, accounting, and project control.

Before we delve into the benefits of cloud-based ERP software for construction companies, let’s take a brief look at ERP software’s function in the construction industry.

What Is Construction ERP Software?

A construction ERP solution is a suite of software applications designed to meet construction businesses’ specific needs. The system uses a single database to store and manage data for accounting, estimating, inventory management, project management, contractor management, and other service operations. It also provides insightful analytics with pre-built and user-defined reporting formats.

Unfortunately, the adoption of ERP by construction companies in the U.S. is still relatively low. The 2018 ERP report by Panorama Consulting shows that only 3% of the ERP software users were from the construction industry.

However, with the increase in the deployment of SaaS and cloud-based models, more construction firms should gain the benefits of ERP software soon. This means that contractors who deploy cloud-based ERP solutions for their business are likely to beat competitors who still use manual processes.

What Is a Cloud-Based ERP Solution?

Currently, there are three main deployment options for construction ERP solutions:

  • On-premise
  • SaaS
  • Cloud-based

Cloud ERP makes communication and collaboration easier on any building project. ERP solutions like Sage Intacct Construction easily streamline updating work orders, recording time, tracking project schedules, and generating reports without visiting the project office. Employees can efficiently perform record-keeping tasks from any location using their smartphone or tablet.

Data reveals that more contractors are now turning to cloud-based solutions. A survey by the Associated General Contractors of America showed that 85 percent of the respondents are using or plan to use cloud-based construction software. About 49 percent of the companies surveyed said that their ERP solution had improved their business processes.

Data from the 2018 Panorama ERP survey report also showed that the number of respondents who adopted the cloud-based ERP model rose by 37% from 2017 to 2018. The primary reason for this is the lower cost of implementation when compared to on-premise ERP solutions.

Benefits of a Cloud-based Construction ERP

With the low-margins in the construction industry, the relatively low cost of deploying cloud-based ERP software is a big attraction to contractors. But the business advantages of this option go beyond financial gains and touch every aspect of workflow processes and productivity.

Other benefits of using cloud ERP include:

Effective Collaboration

A robust ERP application makes it easy for many workers to enter data about the same project or task simultaneously. While site workers share documents and drawings and report daily activities and tasks completed, those in the project office can review and edit project plans.

Effective collaboration eliminates delays, minimizes errors, and improves data accuracy. It ensures that everyone is using the most recent project documents.

Efficient Project Management

Managing a construction project involves monitoring inventory, equipment, and personnel. That’s why keeping accurate records is an essential aspect of effective management.

Construction ERP software stores all project data in a single database and makes it easy to track for error-free analysis of site drawings, material inventory, resource allocation, and available human resources.

The project management portal allows authorized employees to gain access to vital information from any location without sending scores of emails.

Improve Cost and Revenue Estimation

Construction companies need to bid competitively on projects using estimated costs. Most clients choose the bid that can deliver the required building design at the lowest price.

That’s why it is essential to have the most accurate cost estimates possible. ERP software is an indispensable tool for obtaining estimates of project costs for labor, materials, equipment rental, and labor for the project’s duration.

ERP software can pull in data from real-time price feeds and assist contractors in creating accurate bid estimates for projects in any region of the country.

Simplify Information Exchange

Contractors may need to manage multiple projects in different locations. Dealing with numerous clients requires an internal exchange of information. Without an automated system for compiling and managing data, the process can be tedious and time-consuming.

Managing data in Excel spreadsheets is error-prone and inefficient. Miscommunication can also lead to poor decision making and costly construction errors.

To solve this problem, cloud ERP software like Sage Intacct Construction offers seamless data exchange tools securely and efficiently. Contractors can assign user privileges and restrict access to information so that sensitive data is only handled by authorized personnel.

Improve Business Performance

In the Panorama survey mentioned above, the most crucial reason respondents deployed ERP systems was boosting business performance.

While return on investment may not always be measurable in monetary terms, the cost reduction, improved efficiency, higher productivity, and the ability to bid more accurately all contribute to improving any construction company’s profitability.

How to Identify a True Cloud-based solution

If you plan to migrate to a cloud ERP solution, you need to know how to differentiate between a real cloud solution and one that looks like it. Both SaaS and cloud-based solutions are hosted on remote servers, but the SaaS model does not give you full control of your data.

While the SaaS model may offer some cost savings, it puts your data in the hands of the software provider. This contrasts with the cloud computing model that gives you full control over your data and other sensitive business information.

A cloud-based solution is appropriate and affordable for a construction company that does business worth millions of dollars annually.

Get a Free Demo of Sage Intacct Construction

To see a free demo of our Sage Intacct ERP solution, contact us now. We will schedule a free virtual appointment for you and show you how you can implement and customize this solution for your construction business.

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