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Five Competitive Advantages of
Cloud-based Integrated Construction Software
Wondering where your
profits have gone and why?
The risks of non-integrated accounting,
project and operational data in the
construction industry.
Using disparate accounting and project costing software is not
uncommon in the Australian construction and civil sector.
Smaller companies usually start out using a generic accounting
system like MYOB, Xero or Quickbooks combined with manual
spreadsheets for managing project costs, claims and forecasts.
The larger companies often have a legacy accounting system in
place along with a combination of spreadsheets and nonintegrated in-house or third-party project and operational
systems.
ABSTRACT
Many construction businesses
continue to use a number of
disparate software systems designed
for specific business functions. It’s a
risky approach in a complex industry
that demands integrated and
accurate real-time data across the
business. Managers need to know
how their current projects are
performing and how future projects
will impact the company’s
performance.
Non-integrated accounting and project information is extremely
cumbersome to manage and creates issues such as double
entry, data accuracy, reconciliation challenges and significant
delays in end of month project and financial reporting across
the organisation.
Considering the intensively competitive nature of the
construction industry where businesses can tender with little to
no margin, running software that fails to effectively help
minimise project risk, maximise productivity and project profits,
and manage cash flow can put companies at a serious
competitive disadvantage.
This is achieved by using an
integrated information approach
which brings together financials,
projects, plant and equipment and
payroll data in to one enterprise
system, offering a timely, accurate
and unified view of information that
facilitates better decision making.
Jobpac International Systems Pty Ltd, L1/201 Miller St, North Sydney, NSW 2060. Ph: +61 2 9492 4100. www.jobpac .com.au
The challenges of ‘siloed information’.
Any construction company, whether it’s a family owned
subcontracting business or a billion dollar multinational wants to
ensure that projects are profitable.
This requires keeping projects on track with tight management
and controls.
Customer References
“Because of the integration
between accounts payable,
accounts receivable and costing,
we manage our liquidity and cash
flow on a real time basis.”
Rick Manias, CFO
Planet Plumbing.
Project Controls
1
Tight grip on work in progress (WIP)
2
Tight control and visibility of project costs
3
Accurate forecasts
4.
Management of revenue and cash
This is often extremely challenging when running disparate
accounting, project and operational systems resulting in silos of
information. For example, site staff working with a separate set
of figures in spreadsheets, are likely reporting very different
numbers/results to those that the accounts staff are seeing in
the accounting system.
This is generally due to site staff projecting an optimistic final
forecast cost on their projects; consequently the ‘derived
margin’ using the accounting standard of ‘percentage cost to
complete’ will be overstated. This derived margin is often not
reflected in the accounting system which is reporting actual
revenue less costs. In this case, it’s impossible to reconcile the
discrepancy without an in-depth review of the project, using
contract valuation techniques. Worst case, it’s not until the
project nears completion, that it becomes apparent to the
management that due to understated forecasts during the
duration of the project, a project loss may occur rather than a
profit.
To minimise this along with other risks, astute construction
companies are throwing out disparate software systems and
spreadsheets that don’t give them the operational and
management information they need, when they need it, to run a
successful contracting company.
Delivering better business results
through integration.
Industry specific construction software that integrates business
transactions, processes and workflows across the enterprise,
and that is accessible to all staff on any device, at any time,
provide five key competitive advantages to any construction
business.
“As soon as we enter data into
Jobpac, it’s available for everyone
to see. This means we’re all
working with the same, up-to-theminute information - there’s no
batch processing or scramble at
end of month to pull reports
together.”
Robert Barron, CFO
Wiley & Co.
“The greatest benefit of Jobpac is
that we’re not doing multiple
entries of information. Previously
we were entering information into
two or three different spreadsheets. This saves us time and
money.”
Michael Roszka,
Commercial Manager
Abigroup (now Lend Lease). QLD.
“The payback from implementing
Jobpac was almost immediate. It
has given us 100% visibility of
project costs, better cash flow
management and timely and
reliable information.
Jobpac has armed us to capitalise
on opportunities and to support our
growth strategy.”
In fact, it is increasingly becoming a requirement in a tough,
high risk and competitive industry that is encumbered with
stringent reporting requirements.
Jobpac International Systems Pty Ltd, L1/201 Miller St, North Sydney, NSW 2060. Ph: +61 2 9492 4100. www.jobpac .com.au
Dean Willemsen, Director
Prime Build Pty Ltd.
The 5 key competitive advantages.
1.
One record of the truth.
A business will often evolve a non-integrated approach. It starts
out with a generic accounting system, that is not designed to
run a construction company. As the company grows and
becomes more complex, other systems to support various
business functions are acquired or managed in spreadsheets.
For example, the payroll department may implement a standalone system. Site staff on one project may start using a
complex set of formulaic spreadsheet templates to track and
approve subcontractor claims and forecast costs. Another
project manager may use his own set of spreadsheet
templates. And it goes on across the company.
By default, silos of information, in different formats are formed
by business function and by project. Source documents are
routed from department to department, office to site to office.
And with no standard data validation processes in place, the
accuracy of the data is questionable.
This scenario is extremely difficult to manage. The CFO needs
to bring all the information together, in its various formats to
maintain financial control of the business and generate accurate
timely reconciled reports and analysis, giving management
visibility across the organisation.
What Gartner Says
ERP* improves business
processes and the use of information across an organization by
integrating functions such as
finance, order management and
purchasing into a set of
interconnected modules.
ERP applications automate and
support a range of administrative
and operational business
processes across multiple
industries, including line of
business, customer-facing,
administrative and the asset
management aspects of an
enterprise.
Look for business benefits in four
areas:
1.
IT cost savings,
2.
Business process efficiency,
3.
As a business process
platform for process
standardization and
2. Reliable information and reports.
4.
As a catalyst for business
innovation.
One of the big failings of multiple disparate systems is data
integrity. With the source data being entered into multiple
systems, by different people, errors and anomalies are par for
the course.
Most enterprises focus on the first
two areas, because they are the
easiest to quantify; however, the
latter two areas often have the
most significant impact on the
enterprise.
In stark comparison, a fully integrated system contains all
project, operational and financial information across the
organisation in one system – giving one record of the truth that
is always accurate and up to date. Only then can the business
have one hundred per cent confidence in the information to
make the right business decisions in the right time.
For example, an employee enters information into a standalone timesheet payroll system. That labour cost is then booked
against a job in the project costing system by another person.
And that same labour cost is then journalled into the accounting
system. The same data has been entered into three systems,
possibly by three different people.
No wonder month end reconciliation is a tedious and time
consuming exercise. The flow-on impacts of human error, nonvalidated data, missing paperwork and inefficient processes
increases the likelihood that decisions are being made based
on inaccurate information.
Source: Jeff Woods
Research Managing Vice President
Gartner Inc.
ERP Key Initiative Overview, 2010.
* ERP is the acronym for
Enterprise Resource Planning, a
business management software being a
suite of integrated applications - that a
company can use to collect, store, manage and interpret data from many
business activities.
Jobpac International Systems Pty Ltd, L1/201 Miller St, North Sydney, NSW 2060. Ph: +61 2 9492 4100. www.jobpac .com.au
3. More accurate forecasting.
Project forecasting is crucial for any construction business, with
end of month project forecasting the norm. In the construction
industry, every project manager wants his project to look good,
and sometimes manipulation of, or understating the forecast
final cost can occur. This incorrectly overstates the forecast
final margin and can have dire consequences on the profitability
of the project if the inaccuracy is not picked up.
With a sophisticated integrated accounting and project costing
solution there is no-where to hide as an understated forecast
final cost becomes very evident when the forecast is validated
during the end of period contract valuation review process.
4. Increased productivity.
Legacy non-integrated systems rely on multiple entries of data
with either manual or batch updates from one system to another
occurring.
Different parts of the business input almost identical data into
different systems, as in the timesheet labour cost example, in
different formats specific to the various systems being used.
Conversely integrated systems require single time entry of data
from the source document, guaranteeing no duplication of effort
and one record of truth across the business. Staff can spend
less time gathering data and more time analysing it. Additional
features, such as on-line processing and authorisation of
supplier invoices, allow the company to abandon traditional,
unwieldy paper shuffling processes.
There can also be significant savings on IT resources with a
single integrated solution. There’s no longer a requirement to
maintain multiple applications from multiple software vendors
each with their own subscription costs and contracts,
infrastructure requirements, support desks, software upgrades
and annual support and maintenance costs. Instead the IT team
can focus on delivering value-add to the business.
5. Efficient and standardised processes.
Construction companies using non-integrated systems are less
likely to be driven by efficient operational processes. There’s
often an ad-hoc approach to decision-making, supported by
information gathered on spreadsheets, passed by email and
subject to little in the way of critical evaluation. In other words,
decisions are made based on incomplete, out of date or
erroneous data.
Further the time it takes to reconcile accounting and project
data and the time it takes to get accurate reports, handcuffs a
company from making timely decisions.
Jobpac - the most widely
used construction
management software.
Jobpac is the most widely used specialised
construction management software
solution built for the Australian market.
It is a complete web-enabled system that
is delivered as software as a service.
It is designed to give construction
companies a project and business-wide
integrated approach to managing projects,
finances and complex business processes.
In 2014, Jobpac was used to help
manage and control more than
$97 billion of project works in Australia.
The implementation of an integrated solution demands
companies adopt a new, more efficient way of working. Logical
workflows operate across the company, where data is entered
and authorised by business users of the data, with standards,
validations and data security enforced and controlled.
Processes, such as end of month contract forecasting and
valuations that used to take weeks are now processed in hours
or days.
Jobpac International Systems develops, services and supports enterprise software for the construction industry
to help run finances, operations and projects more profitably. Jobpac is designed to provide commercial,
financial and management control to help companies sustain profitability and growth.
www.jobpac.com.au +61 2 9492 4100
Jobpac International Systems Pty Ltd, L1/201 Miller St, North Sydney, NSW 2060. Ph: +61 2 9492 4100. www.jobpac .com.au