By the very nature of their business, engineering, construction and infrastructure (ECI) organizations have to tightly and effectively manage critical, multi-million dollar assets and a large network of staff and subcontractors in order to complete complex projects. But the economic impact of the pandemic, fierce global competition and changing demand make this is harder to do than ever before. This requires excellent information management and enterprise software capable of carrying out complex and precise planning, profitably.
As we head into the second half of 2020, construction organizations are bound to find intensifying financial pressures forcing them to invest in technologies and capabilities that can guarantee quantifiable results for managing projects on time and on budget. A recent IFS-commissioned IDC study1 asked ECI companies what they needed their enterprise software to provide in order to overcome what they considered to be the biggest barriers to profitability and to take advantage of the key value-drivers. Drawing on the findings, I have identified four key quantifiable deliverables that enterprise resource planning (ERP) should offer these organizations.
1IDC White Paper, sponsored by IFS, The Business Value of IFS Enterprise Application Solutions with Industry-Specific Use Cases, August 2019.
1. A holistic 360-degree view of the business – information management is key
Construction businesses often operate amid a complex systems landscape comprised of departmental silos and an abundance of Excel spreadsheets. This means that by the time information arrives at the hand of decision-makers, it becomes inaccurate, out of date or not useful at all. Up-to-date, detailed information about projects and challenges are key to making informed decisions on current or future projects.
IFS ECI companies achieved this 360-degree view through enterprise software. When surveyed, they reported increased availability of information – including visibility into work processes – which previously would have taken them time and effort to piece together. This information has not only enabled them to make more informed decisions but also improved their ability to deliver high quality projects. They were able to repeat and reuse project information and use templates within the enterprise solution to boost the predictability of delivering projects. This in turn lead to higher overall quality in the final asset. Taking advantage of standardized modules and components, project delivery became 14% faster.
ECI customers also reported gains in competitiveness. With the metrics and data to hand, Business Development and Sales teams could manage up to four times as many opportunities as before, resulting in organizations bidding for four times the number of projects. Businesses saw a 20% reduction in the time required to close deals and an improvement in win rate as a result of being more competitive in terms of price, delivery performance and reputation.
2. Productivity improvements start in the supply chain
Supply chain management is key to successful construction projects. Delays in the arrival of key project components can cause costly setbacks—avoiding these requires knowledge of the source and estimated arrival of components, modules and raw materials, equipment and subcontract packages and labor throughout the project. Manual supply chain processes add a further layer to this, consuming of both time and staff resources.
Automation can lead to major improvements in supply chain operations, even if it only involves totaling up purchases. IFS ECI organizations saw a large productivity boost as a direct result of the supply chain-optimized enterprise software. The study found a productivity increase of 17% for supply chain and offsite manufacturing teams within construction organizations—manifesting in faster delivery times. Prior to employing the software, one interviewed organization’s on-time delivery was 85%—with software in place, this has risen to 95%.
3. Improve transparency – bring clarity into projects
Construction organizations are run on a vast network of teams scattered around the many areas of a project, each usually only working with a small sub-segment of information on the overall project and with little transparency. For projects that work on interdependencies, these siloes can hinder productivity and compromise the likelihood of projects being completed on or ahead of schedule at the lowest cost possible.
One interviewed organization in the study noted that its primary reason for choosing the enterprise solution was rooted in the transparency that it would bring to teams and projects. ECI organizations rely on their workforce and subcontractors to complete projects to a high standard, which means their workforce is their most important asset. ECI customers highlighted the importance of a platform that is designed around people—enabling employees to work more efficiently and enhancing productivity across teams.
4. Do more with less – how digitization improves resources
Transferring paper-based processes to digital or automated platforms enables construction organizations to solve customer pain points and business bottlenecks in a fraction of the time—relevant information is readily available. Previously, notifications for issues would take days to report, and even longer to respond—a capable system can have a response on the day of the issue notification.
Putting a fit-for-purpose enterprise software in place can help businesses break out of the cycle of building and delivering assets, and focus on other business areas, too. Increased productivity as a result of better planning means organizations have more resources to work on other projects, business initiatives or concentrate on the service they can provide to their customers and other critical staff tasks. Other back-end operations have improved due to the use of IFS solutions. Finance and Project Commercial management teams require half of the staff resources and they can close a project and company financial month end in a matter of days rather than taking the entire month.
Software success quantified
The measurable outcomes IFS ECI organizations achieved demonstrate that even in difficult circumstances, tight time frames and complex networks of staff and subcontractors there is scope to increase profits through employing enterprise software solutions. On average, the value of staff time per year among surveyed ECI supply chain and offsite manufacturing companies increased by almost one and a half million USD—with average increase in revenue for all participants in the study close to 26 million USD per organization.
Flexible enterprise-wide software can provide solutions for every part of the business from a single source of truth—and the value-adds translate into clear indicators of success.
About the Author
Kenny Ingram is the Global Industry Director at IFS for the Construction, Contracting, Engineering, Infrastructure and Shipbuilding industries. Ingram's main responsibilities are to promote the IFS solution to the external marketplace and to educate the IFS workforce on business issues and challenges these industries face.