May/June 2012

Today’s construction companies, large or small, specialty or general, find value with ERP in different ways.

“Being able to get feedback as needed helps us to know where jobs are at. And if you cannot do that, then you are operating blind, which can be dangerous for any size contractor.”

These words, from Tom Gallina, controller, Falasca Mechanical Inc., www.falascamechanical.com, Vineland, N.J., certainly ring true across the construction industry. More specifically, those final three words, “any size contractor” should strike a chord with every company today, across any discipline in construction. In a market where the companies with the best data come out on top, the value of good, accurate, and timely information cannot be understated. For this very reason, the ERP (enterprise resource planning) system has suddenly shaken the stigma of being suited just for the very large, multi-discipline construction companies.

But finding the value is all in what you prioritize as a business. Whether it’s the ability to get at data quicker, outsource the heavy lifting in IT to the cloud, or consolidate multiple units under one integrated platform, today’s ERP is here to accommodate. Perhaps that is why so many different types of contractors are jumping on board.

As a leading HVAC and plumbing contractor, Falasca knows the true value that only an integrated system can deliver. And it’s not as if the company has suddenly come around to this way of thinking, either. In fact, Falasca has been using enterprise technology from Computer Guidance, www.computerguidance.com, Scottsdale, Ariz., for the better part of five years.

Beyond providing all the accounting for the company, Gallina emphasizes how the system helps the company benchmark in different areas. He says, “Tied to (the accounting data) is all the job costing and statistics that we look at on a daily basis to track where our projects are at, and where they are going.”

Having such data at the fingertips of decisionmakers within the company is crucial to success. Data such as how much labor is being used and where labor is projecting to grow, for example, is essential to a contractor that self performs a good amount of its work, such as Falasca. Having instant feedback as to where labor and material rates are headed can be a great indication for which direction the project is ultimately headed, and that is precisely the value ERP technology provides.

Beyond the standard benefit of having all information integrated and accessible at any given time, it is the unique reports that can be pulled from the system that please Gallina the most. Shedding another label that business intelligence and reporting are only for the big boys, Falasca takes full advantage of the fact the system allows it to run customized reporting that can help manage every level of detail on a job.

“There is a report-writing function that is sister to the program that makes it so that whatever type of report you can think of running you can do so as long as you know how to create it,” adds Gallina. “What I liken it to is Excel, except with reference data.”

He points to a custom report he creates to run the company payroll reports that are required by the state of New Jersey for public works projects. Without such a report-writing feature, Gallina and the two other professionals on staff that make up the company’s accounting department would be required to manually pull and input such data.

“With the number of people we have and the number of jobs we run at a time, we have myself and two clerks as the entire accounting department. A lot of this depends on a system that (minimizes) the day-to-day, month-to-month, and year-to-year reporting,” says Gallina.

Overall, Gallina emphasizes the fact you do not need to be a certain size or type of contractor in order to take advantage of ERP.

Richard Forrestel Jr. agrees. He is treasurer/CPA with Cold Spring Construction, a 101-year-old road-construction company near Buffalo, N.Y. The company was started by Forrestel’s grandfather and today it is run by Richard and his brother. Just like any passionate business owner by day, he is a family man by night, which often means he switches back to being a businessman late at night after the kids have gone to sleep. It is at this time Forrestel believes the true value of an easy-to-use and fully integrated system shines brightest.

“I am not an IT guy, so when it’s 10 p.m. and I log in, I want to know that the system is going to work,” he says.

Logging in from anyplace is not a problem, mainly because the company has made a commitment to going to the cloud. While he isn’t quite there yet with his eCMS program from Computer Guidance, it is the next step. It is at that point the company will have “a cloud kissing a cloud,” and he couldn’t be more excited.

This demonstrates the progression that ERP has taken throughout the years. Long thought as being strictly an on-premise solution, ERP is taking its place within the cloud as more and more construction companies look to ease the burden and cost of IT internally. To Forrestel, the cloud is where construction technology is headed, so why not place ERP, and all its valuable data, among the cloud-enabled implementations as well?

“2010 was the first year in my 27 years as CFO that we had no capitalized fixed assets in the computer world,” boasts Forrestel. “I see technology changing dramatically for us as a company, particularly in the field. I see more relationships between my traditional accounting package and the field applications, and that will only continue in the future.”

The need to integrate items like remote time entry directly to accounting, and the ability to generate drilldown reports that provide instant access to vendor items in a moment’s notice are things that are changing the landscape for Cold Spring. Having the technology in the cloud is what makes all of this doable, says Forrestel. But he emphasizes the fact that just because the technology is out of house doesn’t mean it is necessarily out of hand.

“When you want to think about something, it is not as much of an effort to ask the what-if questions, because now you are able to find the answers to those questions much easier,” says Forrestel. “The moment you liberate people and allow them to ask more questions, I think it makes for a more efficient construction company.”

It is that ability to obtain construction-related information that provides perhaps the greatest value of ERP today. Slowly but surely, the progression is being made where construction companies are moving off of horizontal, generic ERP systems and into ones that are built from the ground up with the construction company in mind. Such a move to a construction-specific solution makes it much easier to get at construction-specific data.

Manhattan Construction, www.manhattanconstructiongroup.com, Tulsa, Okla., a division of Rooney Holdings, is a prime example of this scenario. This multi-faceted construction company went down the path of implementing a horizontal ERP system roughly 13 years ago with the intent of plugging its various lines of business into the system along the way. But that scenario didn’t quite play out as planned.

“Such a solution is designed for 15 different industries with so much flexibility,” says Rodney Stephens, manager of business systems, Manhattan Construction. “… Unless you have a good vision and a good implementation team (both internally and externally), it makes it hard to (take) something generic and mold it to fit your business.”

Manhattan has since switched over to using construction-specific ERP systems for its business lines. Part of the appeal to this approach is the construction-technology specific consulting Manhattan receives from partners like Computer Guidance, among others.

“With having a number of different businesses, it provides centralized operations, accounting, HR/payroll,” he adds. “Having a common platform makes it easier to have such centralized functions. Overall it helps increase our accuracy, as things are integrated and you know from beginning to end that things fit in well. There is no worry about getting bad data, like when you are piecing together a bunch of information from (disparate) systems.”

Duwayn Anderson, senior vice president of accounting and IT, Manhattan Construction, says being able to produce accurate reports is highly valuable. He adds, “That means the information is really unquestionable, because it has already been vetted through the system.”

‘Unquestionable’ is a great word to describe the value of ERP in construction. It is precisely how information needs to be presented in order to run jobs effectively.

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