Power of Digitisation – Andrew Skudder, CEO of CCS
Accelerating digitisation is one of the main trends for the construction industry in 2020. This means construction companies need to find software solutions that serve them best.
While they may consider investing in generic software that spans multiple industries, this type of software will not address the many unique aspects of the construction industry, for example, the practice of using multiple subcontractors.
In this respect, project managers and construction companies should be looking for best-of-breed software that embraces the nuances of the industry. The software they choose should be backed up with excellent implementation, training and support.
A critical aspect to consider is the industry expertise that can be found in the software provider’s team members. Are they mere techies or are they people who have come out of the industry and capable of applying their industry knowledge to help construction companies embed best practice into their operations?
In addition, the accelerating pace of software development and technological change means construction companies need to find software vendors that have local scale or are part of a group of companies that have innovation at their core.
Importantly, good construction software must offer the following benefits to ensure construction companies maximise their profitability and efficiency:
- Cost Projection
Successfully delivering construction projects within the critical factors of time and budget relies on being in control of costs and performance management.
The real benefit of cost management software is its ability to forecast costs throughout the lifecycle of a project. The only way to forecast is to get an accurate view of how much has been spent to date and how much will be spent going forward.
This is difficult to achieve without software because of the enormous amount of data that needs to be considered and the numerous moving parts that make up a construction project. Software that does this in real time is the most effective. It allows costs to be accrued as soon they have been incurred. This means no waiting for an actual invoice to be delivered for the cost to be recognised.
By way of example, when readymix concrete is delivered to a construction site, it arrives with a delivery note. The construction company has accrued the cost even though it may only receive the invoice several days later. By this time the project will have moved on and readymix concrete needs may have changed, possibly resulting in too much or too little readymix concrete on site if projections are inaccurate.
Construction software should fully integrate all aspects of a project from estimating right through to handover and should provide access to detailed reports and analytics at any stage.
- Management of Subcontractors
Subcontractors are playing an increasingly prominent role in construction projects globally. With lead contractor’s adopting more of a project management role, they often have to manage multiple subcontractors.
This has prompted the need for particular tools to manage subcontractors, which is a much more complex process than, for instance, procuring materials. Good construction software offers supply management solutions covering tenders, quotes, job allocation and full invoicing (factoring the specific requirements of milestone reporting, completion certificates and payments/invoicing).
- Cost Value Reconciliation
Construction software mitigates risk and manages both cost and time by intuitively constructing valuations and cost reports relevant to the cost value reconciliation (CVR) process. Monitoring and measuring actual expenditure against budgeted and forecasted project expenditure provides a running account of the project’s profitability by comparing cost and value throughout the entire project lifecycle.
- Financial Operations (FinOps) Management
Effective software ensures business intelligence is fully up to date and available for reporting on all operational and financial aspects and at company and project level. This is critical in today’s modern business environment where management need to be fully appraised of the status at any given time while allowing companies to manage and adapt to obstacles and challenges effectively and without unwelcome hidden surprises.
- Plant Management
Getting the most effective use of resources, whether rented or owned is essential in cost efficiency. Not many Enterprise Resource Planning (ERP) systems incorporate a purpose-built plant module to deal with the management of construction equipment and small tools. Industry-specific tools are needed to deal with industry-specific nuances, for example, in the construction industry, a project manager has two choices – to hire from a third party or to use internal resources. This requires the consideration of cost and availability. When it comes to cost, capital and operating costs need to be factored in and this requires information.
Software creates the environment to effectively make the right decision, allowing the project manager to factor in trade-offs, conduct analysis and determine what the best option is.
Ultimately, a full plant management system allows project managers to know exactly when equipment is available – especially if there are multiple projects on the go – and how it can be allocated more effectively. All equipment can be tracked and reported by resource type, current location and cost (charge rate) to plan and forecast its best utilisation.
By embracing digitisation and investing in software that offers these compelling benefits, construction companies will be better placed to reduce risk, streamline processes, improve efficiencies and increase profitability.