A TO Z of construction software
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This guide has been compiled based on feedback from 96 Australian construction, engineering and service contractor companies to assist others from their industries in choosing a software and services provider for maximised, long-term return on investment. Each page contains information on a topic that the 96 companies felt was important.
aUSTRALIAN MADE
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BUSINESS PROCESSES
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COST/BENEFIT RATIO
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DOCUMENT MANAGEMENT
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eRP
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fINANCIAL & PROJECT MANAGEMENT
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GOOD GOVERNANCE
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helpdesk
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iNFORMATION SECURITY
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JOB FORECASTING
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kNOWLEDGE BASE
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LEGISLATION
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MILESTONE SCHEDULES
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nETWORKS
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ONGOING DEVELOPMENT
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pAYROLL
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QUALITY
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reporting
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support
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training
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USER-FRIENDLY
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VARIATIONS
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wip
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x-factor
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YOUR REQUIREMENTS
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Australian made The Australian construction, engineering and service contractor industries each have their own peculiarities and differ to their counterparts in other countries. Legislation changes, reporting requirements, plus your implementation, ongoing training and helpdesk needs will usually be better catered for by an Australian vendor with a track record of success in your industry. To get the most out of your system, your vendor must not just think they know your industry, they need to live and breathe your industry.
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Good business processes can be a real competitive advantage. The way your business operates and the processes you follow ultimately determine your efficiency and profitability. It is of utmost importance therefore that your processes be as streamlined as possible with duplication and error near non-existent. A good software choice should enhance your current business processes, making you more efficient, reliable and profitable. Further to this, a good vendor will be able to review your business processes to ensure success. Your chosen vendor should be able to demonstrate their industry knowledge and business analysis skills as these will be critical to improving your business.
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Business processes
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The purchase of any software system will likely be a significant capital investment and should therefore satisfy your criteria for return on investment. Before a decision to implement is made, you should have a very clear idea of where the software will be adding value to your organisation, the costs associated with the implementation and how fast you can expect a return on your investment. While each company is different, a good vendor will be able to explain where you should expect to see improvements and by how much. If a vendor cannot demonstrate research collected into the benefit of systems like theirs, it may be because they cannot quantify the benefits – and therefore are they a safe bet for your business?
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Cost/ benefit ratio
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Document management Documents are of central importance to project and services organisations. Documents might be for Human Resources, Quotations, Clients, Creditors, creditor invoices and other aspects of your business. In considering any software system for your organisation, all potential vendors should be able to demonstrate how their software can link documents to your work flows and transactions. Viewing your documents should be no more than a click or two away from any spot within your chosen software system.
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Erp Enterprise Resource Planning (ERP) is a software system that facilitates the flow of information across your entire company. ERP chains together the processes involved with financials, projects, asset management, human resources, documentation, marketing, supply chain and more. Therefore, all your business functions, whether in the same building or the other side of the world, have access to accurate business information in real time. The right ERP will remove duplication and streamline your business processes, eliminate revenue leakage and improve profitability, improve project cost control, and improve control and governance of the organisation.
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Risk is a factor in any industry, however the construction industry particularly is susceptible to a greater range of risk. This being said, the ability to measure and forecast in terms of financials, time and quality helps to mitigate the risks. Any good software package should work to ensure that your financials reconcile to the cent for every accounting period. But for the construction industry, it is suggested you ensure that short-listed software vendors place equal emphasis on retention and work in progress to ensure you have Project Management Control as well as Financial Control.
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fINANCIAL & PROJECT MANAGEMENT
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Research shows there exists a strong link between governance and a company’s bottom line and that good governance is required by all companies if they are to grow sustainably and become true industry leaders. Integrated software systems (eg. ERPs), when used effectively, can improve a construction company’s governance practices with regards to business performance, performance management, risk management and compliance. Therefore, when seeking a software vendor it is suggested you question them on how their software will work to improve the governance of your organisation.
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good governance
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Helpdesk
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Ensure your software provider has a helpdesk or support service available with a guaranteed response time. In an environment where every minute counts, the last thing you want is to be waiting for long periods of time before you receive the assistance needed.
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Also, be sure to check that you are going to get assistance from people who know your company and know the software. “Assistance” from a call centre employee with limited knowledge of the system will prove frustrating plus cost you time and money – even if it is within a guaranteed timeframe.
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Information SECURITY Information security starts with a comprehensive disaster recovery strategy. In looking for a software vendor, it is highly recommended that you ensure they have a solution you are comfortable with when it comes to disaster recovery. Also worth considering is the extent to which you want to control access to your information. Good providers will be able to offer database access controls, other access permissions, audit trailing and more. These things ensure your data is not lost or compromised, that people access and contribute only as prescribed, reduce the opportunity for fraud and facilitate forensics.
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Construction businesses, by their very nature, carry out high value contracts and therein lies a significant risk. Knowing the profitability of a project at any point in time is vital for control, and forecasting the cost to complete the project is central to an accurate profit measure. A suitable ERP system must contain this important forecasting function to enable you to exercise proper control of your projects. Importantly, the system should retain this forecast data month to month to support trend analysis and project reviews.
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Job forecasting
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A software vendor who knows your industry and caters to your industry’s specific needs is a proven asset. They will provide a solution that caters to your particular requirements such as RCTIs, Security of Payments and site awards to name a few – not just a one-size-fits-all package. The knowledge of the team behind the software is also an important factor. A team who has come from your industry, worked in your industry and knows the industry will almost always do a better job because they understand your business. And, ideally, this industry knowledge should extend beyond just the vendor’s software offering to their training, support and consultancy services offered.
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Knowledge base
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Legislation A feature of the construction industry is the onerous compliance obligations. A suitable ERP system will aid this compliance task by providing functionality to cover things such as Security of Payments obligations, maintenance and reporting of employee and sub-contractor licenses and qualifications, together with the necessary alerts, warnings and controls to streamline these critical functions as much as possible.
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MIlestone SCHEDULES One of the key drivers for investment in ERP is to improve management control across the entire organisation. This is achieved in large part through timely and highly visible information on the status of projects and service jobs. The ERP system will provide the platform for this through schedules designed for the differing styles of projects and jobs in your business, with the status being updated by the performance of the normal day to day activities on the projects and jobs. Management will be empowered with the information necessary to address problems on jobs and act sooner to mitigate the risks.
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We are in a time and industry where winning work can be as much about who you know as it is about what you know. It seems to be less about competing with other companies with the focus increasingly on building alliances, partnering, working together and referring those you recommend. The right industry-specific software provider can be a true asset in this regard. Some vendors host functions where you have the chance to network with representatives from other companies that use their software also. Events such as this also give you the opportunity to let your chosen vendor know what changes you would like to see in the software and to learn about others’ experiences with the software.
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Networks
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Choosing a software provider is a strategic decision and is the start of what should be a partnership that may span many years or even decades. For this reason it is imperative that your chosen vendor is always improving their offering and releases software upgrades regularly – otherwise, as the technology dates, so will your company! Potential vendors should have ongoing development and upgrades that seek to always use the latest technologies to improve your business, save you time and save you money – rather than just producing an upgrade for the sake of it. Ongoing development translates into constant improvement of your business and acts to keep you ahead of the competition.
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Ongoing DEVELOPMENT
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Payroll People are the backbone of any organisation and it is most important to ensure they are all paid for the work they do both on time and in accordance with the relevant awards and allowances. When the payroll and job costing solutions are integrated you will be able to cost jobs, forecast labour on jobs and bring forward labour charges where jobs are “do and charge�. Therefore, when you are short-listing software vendors check to ensure their payroll solution is integrated with the rest of the software they have to offer. This way you can plan and forecast with increased accuracy and therefore build on your strengths and improve profitability.
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Quality Without good quality workmanship, materials and tools buildings will not stand the test of time. The same is true of businesses. Without good quality tools such as business processes and the software that supports those processes, accurate and sensible business decisions become difficult. Ask your shortlisted software vendors to provide you with information on their quality standards and processes – and if they stumble over the question or haven’t thought about it before, what could this mean for your business? Good quality outcomes provide the best opportunity for a sustainable and profitable business.
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Reporting is an important part of any construction business, and your software will play a big part in this. Reports are what deliver you the business intelligence you need to make the best decisions so it is imperative that your chosen software has industry-leading reporting capabilities. While reports can be standardised to a certain extent, every construction company is different and therefore a software package that gives you the ability to create your own customised reports is generally advised. This saves you time, delivers you better information and saves you from paying your vendor to create your customised reports.
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Reporting
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The decision to go with a particular software vendor is often a long-term and strategic decision and usually one made so that growth, improvements and change can take place in your organisation. Therefore, it becomes very important to ensure that the vendor chosen has the experience, knowledge and service offering to be able to support your organisation through change. A software vendor that can support you with your business decisions, assist and guide you through growth, assist with mergers and acquisitions and more is of much greater value than a software vendor that sells out of the box software and waves you good luck and good bye.
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Support
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Training To ensure you get the most out of your chosen software system, education and training must take place before, during and after the implementation. Knowledge of the software should span across your organisation, with extensive training of end users. All potential software vendors should be able to offer your company training programs with proven methodologies and a track record of success. A good training program will allow your company to become autonomous using the system and achieve the highest ROI. Further, concise, quality documentation of your business processes will aid your trained personnel and drive down induction costs for new people.
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user friendly A common pitfall within the software industry is that often the more extensive and encompassing a software system is the more complex its use becomes for your people. In fact this is a “challenge” companies within the industry and research firms often highlight – just because you put the system in doesn’t mean your people will use it. This is not always the case however it demonstrates the need to “shop around” when searching for a vendor. Ask your vendor what functionality is built into their system to make its use easier for their people. Understandable help-text, customisable profiles, point-and-click navigation, logical design and training options should be among the answers that a good vendor will give.
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It wouldn’t be a construction or engineering project without variations! An ERP system claiming to service the industry must demonstrate comprehensive functions for the management of both head contract and sub-contract variations, including the changes to project cost budgets arising from them, their status and valuation from one accounting period to the next, and their inclusion in progress claims and payment processes. Managing variations with an ERP system addresses a key risk to revenue for any construction business.
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Variations
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Work in Progress (WIP) is one of the key components of working capital for any construction business and its management is vital to the financial health and capacity of the business. Construction industry ERP systems will streamline the monthly process of valuing WIP by integrating all the functions necessary for generating a valuation and bringing it to account. Also, by having the system perform this critical task monthly, many hours of spreadsheet entry are eliminated and a much more timely and accurate picture of the financial position of each project and the business is available to management.
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WIp
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X-factor Many companies surveyed in compiling this guide agreed there is a certain feeling you need to get when deciding on a software vendor. By the time you have a solid short-list of potential vendors you might have a clear feeling that one vendor stands out as a better match for your business or as more trustworthy than the others. Those surveyed agreed with the saying ‘all else being equal, go with your gut’. By the time you reach the decision point, you should have seen at least one, but maybe multiple demonstrations of the software and you will likely have a good feel for the team behind it. If you can see your company working better with one provider over the others – go with them.
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Your requirements Your company and your company’s requirements should always be at the centre of all conversations with potential software vendors. Sure, their programs may be able to do all kinds of fancy things, but if they cannot do what your company needs to stay ahead, what is the point? And, if they are not listening to your requirements from the start, it’s likely that things will remain all about them in the long term. This being said, it is important to have done a thorough analysis of your company’s needs and expectations for the software so that you can make the most informed decision and get the product and vendor that best suits your needs.
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If your construction company is in the market for software and you have followed the tips contained in this guide, you should definitely be catching some “z�s and sleeping easy. Following these tips, you will have peace of mind that you are going to make an informed software decision that will see your company implement a software package for real return-on-investment.
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NOTES
levesys software and services for the australian construction, engineering and service contractor industries.
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