Can an ERP System Advance the AEC Industry and Why? 

Thu 9 Jun 2022 posted by Project Partners

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The AEC industry is expanding and evolving. However, after decades of lacking interoperability and interconnectivity between critical project management systems, the industry’s growth and productivity tools need to come together. Bringing these systems together enables cross-departmental teams on-site and remote access to crucial data to execute tasks from start to project close successfully. According to Allied Market Research, the global AEC market size was valued at $7,188.00 million in 2020, and projections indicate it will reach $15,842.00 million by 2028 (growing at a CAGR of 10.7%). So, the question remains, how can AEC organizations pivot to meet the upcoming demand and stay competitive in the market? 

Historically, ERP system implementations have focused on the financial systems an organization runs on. It’s understandable. However, due to the complex nature of AEC business operations, companies need to take a different approach to implementing and utilizing an ERP system – emphasizing not one but all project aspects. According to a KPMG study over three years, only about 31% of construction projects finished within 10% of their original budgets. When your systems aren’t aligned with your core competencies you can run into poor project management which results in projects being not on time and not within budget. 

An Integrated Approach

How to bridge the gap between operational & financial needs.

To become more successful and agile, organizations across the AEC industry require systems that seamlessly integrate between their ERP and Project Portfolio Management applications and processes. An integrated application infrastructure can be configured to lead you forward to greater efficiency from a new sales opportunity through to project sourcing, project delivery, and financial accounting. 

Business applications for enterprise organizations begin with the core financial applications, including GL, AP, AR, Assets, and Cash Management, to record and manage their financial transactions. Although managing Project financials can be accomplished directly with these applications via a project/task identifier in the GL chart of accounts, this is a very inefficient mechanism for AEC organizations, as it places a significant burden on the GL to hold and report large volumes of project transactions. Further, this approach hinders the operational group’s efficiency by relying on the finance organization to provide the reporting needed to execute and manage projects efficiently. 

By providing an efficient bridge between finance and operational needs, Project Financial Management applications enable AEC operations with a single source of truth for all project information. These applications provide visibility into the project structures and plans and aggregate all project costs, revenue, and invoice information while seamlessly interfacing with various financial applications needed to record, process, and report financial information. Further, these applications serve as a true sub-ledger by holding detailed project transactions for reporting and auditing while providing finance with summarized entries that result in an uncluttered GL. 

Our Recommendations

Successful project planning and execution across multiple functional areas requires project execution management and workflow applications, such as Primavera Unifier or Kahua, to complement project financial management applications, such as Oracle E-Business Suite (EBS) and Oracle ERP Cloud (Oracle Fusion Applications).? 

In addition, Primavera P6 and other project management applications provide more sophisticated project scheduling. These applications deliver the functionality to manage the core elements of project delivery, including scheduling, materials, and resources, while Primavera Unifier runs the workflow, approvals, contract management, and cost-control cycles, with touchpoints across all applications. 

Project Partners understands the processes and software solutions any project-centric organization, including AEC organizations, needs to integrate back-office applications into front-office delivery and execution systems successfully. There are enormous opportunities ahead for the AEC industry, and Project Partners is here to help effectively use your existing and desired technologies along the way. For more information on how we’ve helped our AEC clients, check out our featured case studies:

About the Author

Terri Maginnis is the Practice Director in the Project Partners  Primavera / PPM Division. She has 30+ years of project management, scheduling, business process improvement, and solution architect experience that spans multiple sectors including AEC, power/utilities, information technology, transportation, health care, DOD/military construction, and higher education. Terri began her project management career as a U. S. Navy Civil Engineer Corps officer and started using Primavera as a general contractor in 1989. In 1998, she established an Information Technology Project Management PMO for the California Public Employees Retirement System (CalPERS) working on the corporate database project, a custom CRM rollout, and several investment office projects. She also set up an ITPMO for the Hewlett Packard’s ProCurve Networking Division’s IT organization. She began Primavera consulting in 2006 and has designed, implemented, and trained solutions for 100+ companies in the use of Primavera products for business process improvement.