Why Generic ERP Does Not Fit the Construction Industry?

Why Generic ERP Does Not Fit the Construction Industry?

The construction industry is dynamic, operating on a project-centric model. Every construction project has distinct requirements, workflows and cost structure. Unlike retail or manufacturing industries, where the processes are standardized, construction projects are scattered across regions, connect diverse stakeholders and demand tailored operational and cost control.  

Today’s businesses rely significantly on Enterprise Resource Planning systems for managing complex operations. While referring to ERP systems, there are several kinds of systems available in the market, predominantly the generic ERPs. While generic ERPs have proven effective in several other industries, they fall short in addressing the unique challenges of the construction industry.

Before moving further lets see the basic differences between a generic ERP and a construction industry ERP

What is a Generic ERP?

A generic ERP is a management tool that is designed to serve all businesses irrespective of the industry. It offers standardised modules for finance, HR, procurement and basic business frameworks for broad organisational efficiency. However, its one-size-fits-all approach falls short in addressing the unique need of industries like construction. 

What is a Construction-Specific ERP?

A construction industry ERP is purpose-built to meet the dynamic demands of construction projects. It serves the entire project life cycle starting from tender and estimation, budgeting and scheduling, project execution, management of procurement, inventory, machinery, HR and payroll, finance management, safety & quality. The specialised design of construction ERP software streamlines businesses to handle complex workflows, reduce delays, and achieve seamless collaboration between project-site and head-office teams. 

Cause of failure in Generic ERP systems

The failure of generic ERPs in the construction industry is the lack of industry-specific functionalities. Unlike construction industry ERP, the idea of generic systems is to serve a broad range of industries, and often lack necessary features like project tracking, billing, budget control and job-wise costing. For any construction company, critical backend operations such as material transfers, labour and equipment productivity tracking and asset depreciation management are non-negotiable. Such kinds of features are either missing or underdeveloped in the generic ERP solutions. 

Furthermore, incorporating these construction-specific requirements into a generic ERP demands heavy customisation. In fact, more than 70% of the system may require redevelopment, which hikes the cost and also leads to delays and even failure in implementation. Additionally, the nomenclature and workflows in construction projects are industry-specific and rarely align with the standardized structures of generic ERP systems, making seamless integration nearly impossible.

Read also: Top Challenges in the Construction Industry Without ERP Software

The financial features in construction management

The inefficiency gap of generic ERP can be emphasized with the financial aspect. Construction businesses operate on thin margins and require precise cost control and financial tracking to maintain profitability. Generic ERP lacks several financial specialisations such as budget management, job-wise costing and real-time financial oversight. On the other hand, a dedicated ERP software for construction ensures accurate cost control, project profitability analysis and helps ensure compliance with financial regulations. This enables construction companies to track project budgets in real-time, minimize overspending and ensure financial resources are utilised efficiently. 

The billing processes across different construction sectors vary significantly. For example, road construction follows milestone or stage-wise billing, civil projects follow RA billing while mechanical projects and other sectors have unique billing standards. Generic ERPs fail to accommodate these variable requirements. The inclusion of these will require extensive customisation which is less practical and more expensive in the long run. 

Accurate billing and strict cost control are core factors of effective site operations. Managing labour, material, machinery and overhead expenses is crucial to maintaining project profitability. Most importantly, financial aspects also require transparency. Generic ERP falls short in addressing these specific requirements. 

Better User Interface in Dedicated Construction ERP Software

User adaptability is another important factor to consider. The field teams or the site engineers/managers play a critical role in the construction industry, and may not have extensive experience with complex software systems. So an easy-to-use interface is a requirement in construction. Generic ERPs are designed with a broad user base in mind and are not adequately intuitive for construction teams. In contrast, dedicated construction management software is built with user-friendly interfaces and workflows that best align with the everyday operations of construction professionals. Such user-friendly systems make data entry easier, ensure seamless project progress tracking, simplify compliance management and reduce the learning curve for teams, ultimately boosting productivity and operational efficiency. 

Reports and Dashboards

In a generic ERP, reports and dashboards are often standardized and lack the flexibility to address industry-specific needs. In-depth data are not available in their report, limiting the access and review of crucial information necessary to make quick decisions. In contrast, a construction ERP software offers tailored reporting and dashboard capabilities designed specifically for project-centric workflows. It provides real-time insights into site progress, resource utilization, budget tracking, and subcontractor performance. With customizable dashboards, construction industry ERP ensures that stakeholders can monitor key performance indicators relevant to their roles, enabling precise decision-making and better project outcomes.

Implementation Success Rate

Successful construction ERP implementation means effective training and seamless data migration based on construction specific terminologies, smooth trial runs and going live on time. A generic ERP can never achieve such a milestone without hindrance. However, a team of experts who built a dedicated construction management software, bring real-time case studies and a deep understanding of customer challenges. Their training programmes are designed to address real-world scenarios, empowering teams to adopt the system effectively. As a result, the product becomes immediately usable. 

Being ready to use from day one, construction ERP software is highly scalable, allowing businesses to expand rapidly. Customisable and intuitive dashboards offer a quick view of business intelligence and real-time reports present detailed metrics to help make quick decisions. In a dedicated system, workflows and approval processes across departments are seamlessly integrated, ensuring efficient collaboration. Tax components and related compliance are handled with precision, minimising errors and ensuring the accuracy and transparency of the final financial output. 

Construction Needs Specialised Approach

While generic ERP systems may serve other industries, the construction industry demands a specialised approach. Enhanced capabilities like attribute-wise payment terms control, resource productivity tracking, scheduling, site progress updates, etc, are notable points while searching for a construction industry ERP. Investing in a dedicated ERP will help your business to ensure accurate expense control across labour, materials, machinery and subcontractors, streamlining financial expenditure. Avoiding project completion delays and maximizing efficiency requires a system that offers real-time monitoring capabilities. 

Tactive – Delivering Specialisation through Construction Management Software

ERP softwares like Tactive Construction ERP has emerged as the ideal choice for construction companies. Built by industry experts with years of domain experience, Tactive offers tailored solutions for various construction sectors,  including Road & Railways, Civil contractors, Oil & Gas projects, Power Projects, EPC/MEP Contracting, Interior Design Projects and more. We seamlessly integrate diverse workflows across budgeting, procurement, project execution, and compliance, creating a unified platform for efficient operations. By addressing construction-specific needs, Tactive ensures businesses can focus on delivering projects successfully without worrying about software limitations as found in generic ERPs.

Our product training programmes are designed to be a hands-on experience with real-time training sessions with actual data entry and live scenarios. This will empower the users to navigate the system confidently. With user specific knowledge transfer and champion training program, we tailor every session to maximise efficiency and enable proficient usage from day one. Tactive goes beyond the capabilities of generic ERP systems, offering tools, workflows, and insights tailored specifically to the needs of construction businesses. By investing in a dedicated construction ERP software like Tactive, construction companies can achieve better project outcomes, improved financial control, and long-term scalability.

FAQs

Can the Tactive construction project management system integrate with other software?

Yes, the construction project management system can integrate with external software like MS-Projects, Primavera, SAP, Oracle, Tally etc,.

The Tactive’s project management software for construction helps with tracking project progress by providing real-time insights into project status, identifying potential delays, and enabling project managers to take corrective action.

The Tactive construction management software enables to set a timeline for each activity. And the system provides an option to link the schedule and cost. Thus, the cash/fund flow can be automatically generated. This empowers the management or finance team to have real-time visibility on the cash/fund flow.

The Tactive construction finance software provides a variety of financial reports, including bank reconciliation, trial balance, cash / fund flow, balance sheet, fixed asset, Project MIS report, payable and receivable, ageing analysis, expenses booked vs paid vs balance payables, etc.

Yes, the implementation department of Tactive gives you clear knowledge transfer and training to operate with the entire software suite. Our team has programs to train the inhouse team at the head-office and site departments, separately. The training also includes the provision of materials like manuals and videos.

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