How the right ERP partner can transform a construction business
Photo by Joaquin Carfagna
The construction industry is changing fast.
With rising material costs, thin margins and more complicated projects than ever… construction companies are getting squeezed from every angle. And most are still running their companies with spreadsheets, disjointed software and a gut instinct.
Here’s the truth: That approach doesn’t work anymore.
The right ERP system can revolutionize your construction company. However, selecting the software package is only part of the challenge. It’s the ERP partner that powers your implementation that will make all the difference.
Let’s break down why…
Here’s what’s inside:
- Why construction firms need a better system
- What makes NetSuite for construction different
- How the right ERP partner Transforms a Business
- What to look for in a NetSuite consultant
Why construction firms need a better system
The numbers tell a brutal story.
98% of construction projects have cost overruns or delays. Doesn’t matter if it’s a huge commercial project or the smallest residential job. In fact the bigger they are the worse it can happen. Projects getting 20% behind schedule and 80% over budget is not uncommon. This is occurring daily on job sites across the country.
Why is it so bad?
Most construction companies operate multimillion-dollar projects with the tools of a small business. QuickBooks is where your financial data lives. A spreadsheet contains all your project data. Someone’s head contains all your field data. They all operate in silos.
This is why NetSuite for construction has become transformative for companies who want to build scale. However, deploying NetSuite is not a set-it-and-forget-it undertaking. The technology can be powerful… but the implementation process is where most companies fail. That’s why partnering with experts such as Accrete can mean the difference between success and failure with a NetSuite for construction implementation.
Here’s why it matters so much:
- Job costing needs to be accurate to the penny
- Progress billing has to match project milestones
- Subcontractor payments must line up with retainage rules
- Multi-entity accounting has to work across projects, divisions, and locations
A cookie cutter ERP implementation isn’t going to cut it with any of these. Contractors need a partner who knows construction through and through.
What makes NetSuite for construction different
At its core, NetSuite is a cloud-based ERP solution that seamlessly merges the financial, operational and project aspects of your business into a single platform. However, NetSuite becomes even more powerful when customized for construction-specific workflows.
Think about a typical construction business:
- Long project cycles (months or years)
- Complex billing methods (AIA, T&M, fixed-price)
- Change orders happening constantly
- Retainage on nearly every single job
- Cost codes that need to roll up multiple ways
Ready-made accounting packages won’t cut it. NetSuite for construction will – but only when set up by someone who understands how the industry works. That’s where most companies mess up.
They buy the software… Then hire a generalist to implement it.
Bad idea.
How the right ERP partner transforms a business
Now, here’s the cool part. The right ERP partner will do much more than merely implement software. They transform how the business operates.
They fix job costing first
Job costing is the lifeblood of any construction company. If you don’t know precisely how much a project costs you as you are working, you are shooting in the dark. Custom codes are setup by a specialist partner that reflect how your business operates – not from an off-the-shelf template.
That means project managers have real-time visibility into actual versus budget. They can identify issues during week two of a project instead of month six. And they can protect margins on every project.
They streamline change orders
Design changes account for 56.5% of cost overruns and 40% of schedule delays on major projects. Change orders are inevitable… it’s how you track them that counts.
With a great ERP partner, change order workflows are built right into NetSuite. Changes are logged, priced, approved, and billed automatically. No lost paperwork. No missed billing. No margin lost.
They integrate the field and the office
The biggest issue within construction is field and office disconnect. Field inputs information one way. Office needs it another way. Cue frustration on both ends.
The proper NetSuite consultant remedies this by connecting field technology such as time-tracking applications, mobile job costing software, and project management systems into NetSuite. Information from the job site automatically flows into your accounting system.
Say goodbye to double entry. Goodbye to exporting to Excel. Goodbye to waiting until the end of the month to see how your business is performing.
They handle multi-entity complexity
Many construction companies expand to several businesses – subdivisions, single-project LLC’s, JV’s with other contractors. Attempting to run that all through QuickBooks is frustrating.
NetSuite works elegantly with multi-entity accounting ….IF IT IS SETUP PROPERLY. That’s another place where a knowledgeable partner more than pays for their fee.
What to look for in a NetSuite consultant
Not all NetSuite consultants are created equal. Some understand the software but not your industry. Some understand construction but not SuiteCloud. The perfect partner understands both.
Look for these traits:
- Extensive construction company experience with NetSuite implementation – for GC’s, subs and specialty trades
- Real references: Talk to at least three former clients before signing anything
- A phased approach: Big-bang implementations fail. Good partners roll things out in stages
- Ongoing maintenance: Once your system is operational, the real work begins.
- Custom workflows: Every construction business is different, so cookie-cutter setups won’t work
If they cannot check every box on this list, keep shopping. The price of a poor implementation far outweighs that of a proper one.
Watch out for these red flags
Some warning signs to walk away from right away:
- Promises of “quick” implementations under 8 weeks
- No construction-specific case studies
- Vague pricing or constantly shifting scope
- Junior consultants doing all the actual work
The bottom line
Construction is one of the hardest industries in which to operate a business. Margins are slim, projects are complicated, and one mistake can erase a year’s earnings.
NetSuite for construction offers firms a genuine opportunity to scale profitably. However, software is not a silver bullet. Your ERP partner can mean the difference between transformation and disappointment.
Here’s the quick recap:
- Construction firms lose massive amounts of money to cost overruns and delays
- Generic ERP implementations don’t fix the problem
- NetSuite for construction works when it’s configured by real specialists
- The right partner rebuilds job costing, change orders, field-to-office flow, and multi-entity accounting
- Choose a consultant with construction experience, real references, and strong post-launch support
Choose the right ERP partner and everything else will align itself. Choose poorly and you’ll spend the next two years putting out fires.
The choice really is that simple.