Construction companies rely on multiple key metrics to monitor business and project activities and performance. Analyzing metrics is crucial for businesses to document successes or challenges and make informed decisions to improve processes. One helpful way to access and analyze data is to deploy the best ERP Software for Construction.
Such systems are an ideal way to access metrics like cash flow, profit and loss, budgeting, scheduling, etc. Moreover, ERP software also provides access to real-time information and data, enabling efficient construction project management and improved decision-making. But when it comes to data, sometimes companies can encounter information overload, making it difficult to analyze.
Are you measuring accurate data? Is it providing a clear picture of how your construction business and projects are working? Is it helping project managers make the right decisions? This article enlists a few key performance indicators (KPIs) your ERP system can provide.
Table of Contents
Inventory Turnovers
With the inventory turnover metric, you can measure how often products are sold, replaced, or turned over in a certain period. It helps measure the overall efficiency of your construction business, and the higher turnover represents greater efficiency. Inventory turnover is an important metric as it helps companies avoid losses because of overstocking. In addition, construction firms can better predict demand based on market behavior.
A properly deployed ERP system will enable construction companies to monitor inventory turnover progress while providing valuable insight into inventory processes and how products can be moved quickly to improve efficiency.
Project Margins
Construction is a project-based industry depending on the project margins to determine the company’s profit after deducting materials, labor, and overhead expenses. It’s a must to track multiple metrics like project expenses, cost estimates, budgets, and the revenue that a construction project generates. You can improve all these margins by implementing an ideal ERP system for automating business processes, minimizing labor costs, making budgeting easier, and optimizing resource utilization.
Demand Forecasting
An excellent inventory management KPI, demand forecasting that reflects the accurate variation in real or actual demand and what is estimated. This KPI showcases how reliably a construction company has predicted future demand for its projects, products, and services.
Accurate demand forecasts enable companies to manage their inventory better and reduce the likelihood of ordering inventory beyond market demand.
With the successful deployment of an ERP solution, you can leverage a high level of forecast accuracy, which will further aid in predicting demand based on current indicators, historical data, and economic trends like a supply chain shortage.
Scheduling
Scheduling KPIs are crucial to track the overall health and efficiency of a construction company’s planning and scheduling process. With this KPI, you can track production speeds against your project’s production schedules. It ensures that your construction projects don’t fall behind or vital milestones are not missed.
Construction firms can simplify their scheduling with ERP systems capable of showing a clear picture of production being carried out against deadlines and insights into potential disruptions, allowing project managers to make adjustments proactively.
Productivity
Productivity is the most common measure of any business performance, including construction. Equipment failure, process inefficiencies, supply chain issues, and reduced labor input are some causes that can impact business productivity. These inefficiencies can lead to cost overruns, reducing your company’s profitability.
An ERP Software for Construction can efficiently track these trends, enabling you to analyze what is affecting your productivity and make more informed decisions on improvements.
IT Spending
Construction companies are turning to construction-specific software solutions to manage everything from accounting to projects, human resources, and estimation in this digital era. This transformation requires construction firms to keep tabs on their IT spending. With IT spending metrics, you can determine if your company is getting the most from its technology investments at reduced costs.
ERP systems can track metrics related to software, hardware, and cloud-based solutions, allowing you to determine where to consolidate and optimize IT systems to cut costs without compromising performance.
Concluding Thoughts!
Since measuring KPIs accurately and quickly is crucial to construction business success, you must choose the right ERP system. Make sure to ask the vendor, what KPIs you can measure with his ERP application and whether the system can meet your company’s unique needs. A fully integrated and user-friendly ERP software can give you real-time access to vital KPIs, allowing you to run your construction business better.
