Infrastructure development plays an important role in the growth of any country. It has been linked with economic growth and many other aspects that contribute to the country’s progress. This is one of the industry sectors which have made progress through trials and tribulations. But the limited technological utilisation within the sector, misinterpreted as a boon, has become a bane. Infrastructure firms regularly face cost overruns and project delays. Today, more than ever, they need to create a digital foundation for now and for the future. While every business has been affected by COVID-19, infrastructure projects have faced a huge setback. Lack of demand, labor shortage, and supply chain interruptions such as raw material shortage have affected the viability of many projects. The message is a loud and clear message: what is needed is digitalisation.
The major challenge faced by most infrastructure firms is disconnected islands of information that are scattered across multiple functions and departments.
This will establish highly integrated efficient workflow, seamless data transfer and improve their risk management practices to ensure that they are profitable in these challenging times. To survive and succeed, infrastructure firms need a well-defined process for digital transformation. Deploying a proven ERP solution that has stood the test of time has helped enterprises become more competitive.
Establishing a process-driven culture
Infrastructure projects can be broadly divided into two phases, firstly, construction, and then operations and maintenance. So, a technology platform that not only delivers for today but also supports a vision for embracing the future is highly required. Cloud ERP is an enterprise platform that enables infrastructure firms to embrace best practices while allowing flexibility for enhancements. For example, during the pre-construction phase, infrastructure firms can enable enterprise-wide visibility across different supply, production, and inventory functions. The major challenge faced by most infrastructure firms is disconnected islands of information that are scattered across multiple functions and departments. The solution will enable these organisations in the macro and micromanagement of the end-to-end processes. Adopting an ERP will help these firms move to a single version of the truth. A single platform that will connect each and every stakeholder, internal or external, and seamless data transfer will reduce significant operational errors.
Ensuring projects are completed on time
The timely completion of the construction can be managed and monitored through the solution, and at the same time, cost overrun will be controlled through financial checks and validations. From planning for procurement of raw material to identifying and gauging resources that are required for the execution of the project – ERP can help firms plan appropriately. Similarly, project risks can be reduced by detailed planning for different scenarios. For example, during the COVID-19 crisis, infrastructure firms can identify and assess the impact of manpower disruptions, raw material disruptions, and vendor’s and subcontractors’ potential bankruptcy. ERP will enable the decision-makers with ample information at a click of a button to prioritise and mitigate the risk.
Visibility of key financial metrics helps infrastructure firms forecast projects’ financial health, identify trends and make accurate decisions cost-effectively.
Better financial planning and analysis
Using ERP, infrastructure firms can centralise planning, analysis, and execution in one system. This helps them to continuously review their financial data using a centralised database, accompanied by real-time reports and insights into key performance indicators. Visibility of key financial metrics helps infrastructure firms forecast their projects’ financial health, identify trends, and make accurate decisions more cost-effectively. This is extremely important in the current environment, where the demand is uncertain, and infrastructure firms need to keep on analysing their financial health on a real-time basis.
ERP deployment has been instrumental in integration with other emerging technologies, including machine learning, RPA, blockchain and the internet of things.
As mentioned above, the recurrent issues faced in the infrastructure sector are project delays and cost overrun. The key factors for cost overrun in the construction phase are poor schedule management, wrong estimation, poor design, and drawing management. With the enhanced capabilities of ERP project management, each and every activity of the project, from concept to commissioning, can be linked with cost. Budget control and validation against the activities help in monitoring the cost.
The holistic view of the project through ERP provides the control on other cost affecting factors such as material management (inventory and reconciliation), sub-contract, manpower, and equipment management, all on one single platform. The system also can help in optimising various kinds of construction wastage. Procurement control, identification of non-moving stocks, material reconciliation, equipment performance monitoring, and various checks and controls on subcontractor payments helps in real savings in money terms.
Similarly, in the operation and maintenance phase, effective and efficient maintenance practices and predictive maintenance can be achieved. The enterprise asset management functionality provides robust equipment performance monitoring and controls wastage of resources like manpower and materials.
Management information system
If we go by the definition, MIS is used for decision making, control, analysis and visualisation of information in an organisation. ERP analytics display the information through a dashboard and various online reports, which assist the decision-makers. The availability of a dashboard and reports just at a click of a button could make all the difference in the project’s success or failure.
Preparing for the future
ERP deployment has been instrumental in integration with other emerging technologies, including machine learning, RPA, blockchain, and the internet of things (IoT). Construction firms can reap exponential benefits in the future through these abilities. They can leverage the analytics capabilities to analyse data with what-if analysis and many other options. Building information management (BIM) and ‘digital twins’ have proved to be ground-breaking concepts, for which ERP can act as the core and drive the complete end-to-end process.
Construction firms can proactively monitor the health of equipment and predict a possible failure with IoT. With machine learning and artificial intelligence, monitoring of project completion based on multiple factors can be easily achieved. The mobile-friendly features available can help managers run the entire system on the go.
When the companies adopt digital transformation, unlimited capabilities will be unlocked. Only the sky is the limit.
By Joydeep Banerjee, Business Head, Highbar Technocrat Limited