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Construction and ERPIs it Possible?
Project-based industries such as construction have very different business challenges from other manufacturing or process based industries. Almost every project is unique, often with a new team, so each is a new challenge from the outset.Is construction industry ready for ERP?
Project Oriented
Specific Entities
Specific Documents
Specific Processes Workflow
What is specific in cons?
First Scenario – Only Financial
Project Oriented
Three Main Business Scenarios
Project Oriented
EXPENSE
REVENUE
NAV standard – Financial
Raw Material Internal Work External Work
G/L Expense Accounts by Project Dimension
G/L Revenue Accounts by Project Dimension
% profit
G/L Account and Dimension Based
Standard Financial Reports
Analysis by Dimensions
Standard Invoicing – no AIA model
No Pre-calculations and WIP
COGS – somewhere?
…
Project OrientedNAV standard – Financial
First Scenario – Only Financial
Second Scenario – More Details
Project Oriented
Project Oriented
Raw Material Labor Work Machine Work
EXPENSE
REVENUE
NAV standard – Jobs and Resources
Project and GL/Dimension Based
Job & Resources and Financial
Reports
Job Analysis & Analysis by
Dimensions
Standard Invoicing – no AIA model
No Pre-calculations, but with WIP
Percentage of Execution per Project
…
Project OrientedNAV standard – Jobs and Resources
First Scenario – Only Financial
Second Scenario – More Details
Third Scenario – We Need All Details
Project Oriented
Project Oriented
Raw Material Labor Work Machine Work
EXPENSE
REVENUEConstruction(mostly)
Project/Item and GL/Dimension Based
Financial and Item & Sales Reports
Analysis by Dimensions and Item
Analysis
Standard Invoicing – possible as AIA
model
Yes Pre-calculations and No-WIP
Percentage of Execution per Project
…
Project OrientedMfg. as Construction (mostly)
Positions
Bill Of Quantity
Posting Consumption and Outputs
Percentage Of Execution
AIA Billing (Cumulative Invoicing)
Project Planning
Entities and Documents
Parts of Job
Point of Billing
Positions
Pre-calculation of Position Costs
Collection of Calculations
Project Expenses and Revenue
Bill of Quantity
Items or Resources?ItemOn stock
ItemNon-stock
Resource
Using as Construction Positions YES YES YES
Make a Bill of Quantity YES - -
Using Resources as Machines - YES YES
Using MC/WC as Machines YES - -
Using NAV Job Modules - YES YES
Item on Stock as Positions
MC’s as Machines
If We Choose an Item…
Bill of Quantities (Cost Analysis)
Simulated Production Orders
If We Choose an Item…
Bill of Quantities (List of Positions)
Sales Order -> Production Order
If We Choose an Item…
Posting: Consumption: Mfg. Consumption
Journals
Output: Mfg. Output Journals
Projects as Dimensions
If We Choose an Item…
Percentage of Execution (Sales
Order) Quantity Shipped * 100 / Quantity
New Report for Each Line
If We Choose an Item…
AIA Billing (Cumulative Invoicing) Sales Data: Sales Order and Posted
Invoice
New Report
If We Choose an Item…
Project Planning All standard NAV Planning Features
If We Choose an Item…
Item as Service
If We Choose an Item…
Using Job Module
We have not Bill of Quantity
But We Have WIP
If We Choose a Resource…
Invoicing as Contract Posting Type
Every month prepare Contract Type: For Resources and Items
Still Has Not Hierarchy
…
If We Choose a Resource…
Specific Processes Workflow
Create Position(s)
Create Project
Create Norm(s)
ItemsResource
s
Costs Analysis (Actual,
Assessment…)Bidding
Fixing of Conditions
Specific Processes WorkflowPlan of Execution
(Project Plan)
Machine Consumption
Labor Consumption
Item Consumption
Positions Outputs
Other Costs
Daily
Base
d C
ost
s
Periodically
Monthly Outputs
Recognitions Process
Depends of Quality, Quantity, Scheduling,
Evidence, Bills…
Accepted Quantities
Specific Contracts Billing Process
Cumulative Billing from the Beginning –
AIA Billing Model:Based on BoQ, Scheduling, All
Positions, Execution…
Percentage of Execution
Posting of AIA Bill is not Posting to GL, Customer, VAT,…
Accepting and Signing
Revenue
Going Vertical or Not?
Depends of the Project Type
Benefits & Issues
• Benefits:– Small and Easy Projects with Standard NAV– Small Project Budget– Small Customizations
• Main Issues:– A Lot of Items (Items are Positions and Raw)– A Lot of Machines (MC are Mfg. and Machines)– Calculating WIP– Specific Calculations and Analysis– Construction Manager doesn’t love ERP
Going Vertical or Not?
• Huge Construction Company– Civil Engineering– House Building
• Construction Is the Main Business• Construction and Manufacturing• Lot of Mechanization Resources• Lot of Items and/or Positions• AIA Billing with Hierarchy Positions
Showed• …
Going Vertical or Not?
Depends of the Project Type and Requirements
Aleksandar Totovic:
Mail:
Blog: totovic.com
Twitter: @atotovic
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