Use Cases in Construction
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Architecture, Engineering and Construction (AEC) project management is an art. No one project is the same, yet all require careful planning, budgeting, and monitoring. Despite all good intentions and efforts, project outcomes rarely mirror the expectations set at the beginning.
Why outcomes are frequently off the mark is a clear sign that the methods used to account for project variables aren’t as effective as they need to be. It can start at the beginning with estimates, but can be evident throughout the project lifecycle.
Hitachi Solutions’ Engage for Construction connects all aspects of AEC project management from estimates and sales to forecasting and execution. Because it fully integrates with your back-end ERP system, the flow of data is seamless and accurate between stakeholders, closing many of the gaps that often result in poor project outcomes.
Let’s look at five common gaps that can contribute to poor project outcomes, and how an integrated digital solution can help close them, getting you on the road to a better profit margin every time.
Gap 1: Building collaborative bids
In the traditional bid process, construction firms would estimate project cost by referring to past projects and drilling down into old spreadsheets and expense data. It’s a time-consuming process, and likely to be inaccurate – especially if you are bidding during a time of increasing and volatile costs.
Contractors must master the bidding process, not only by submitting winning bids, but also by submitting bids in line with fluctuating costs. You can’t ignore it — construction costs skyrocketed by 17.5% year-over-year (YoY) from 2020 to 2021, and are expected to increase 14.1% by the end of 2022.
Engage for Construction can fix that with the transparency and collaboration tools needed to build a better bid. Our IP pulls back the curtain on the costs and risks by providing all project stakeholders with a better understanding of how a bid evolved from initial projection to final estimate. Without this transparent lineage, stakeholders may end up asking: “Where did that bid come from?”
Check out the quoting process we’ve developed below to ensure complete and transparent bids using Microsoft Dynamics 365 Sales as the foundation. In the bottom right drop-down list, you can see how the bid evolves over time, starting with conceptual estimates from the sales team. As the estimate becomes more formalized, you can even output it to a third-party cost estimation program for more fine-grained analysis, and then import the resulting estimate back into the quoting system.
That output can be used to determine margin and to better understand the evolution of the bid. From the winning bid, a resulting project is created automatically, and Microsoft Project Operations then supports resource scheduling and operational tracking of the project.
Gap 2: Risk awareness: estimating to final bid
Salespeople are focused on making the sale, and management needs control over what was sold. And as projects increase in value, so do the number of management eyes on the estimates and final bid. Very often, management becomes focused on wanting some level of control.
The understanding of how you’re accounting for and recognizing risk needs to be clear to everyone —salespeople, estimators, and project management. Project owners, all specifically, want to understand what is being sold at what price and at what risk. When all project stakeholders clearly understand how bids have evolved and why, the organization can account for the unknowns confidently and logically.
Engage for Construction can become that risk-management tool. Before a final bid is submitted, what-if estimates can forecast the potential cost impact for scenarios that could hinder the outcome. By leveraging a combination of past project data and real-time performance metrics, more accurate estimates can be created to help understand how potential risks or changes may affect profit margin.
These forecasts can become the basis for data-driven bids, and can also help management determine the level of risk it is willing to take.
Gap 3: Ensuring Internal Compliance
Sometimes construction projects are long engagements—some take years. It’s not uncommon for documents like insurance policies, licensing, bonds, and lien waivers to expire during the lifecycle of a project, triggering noncompliance. Often, frustration results when there are many dates to track, different types of coverages, and other requirements that all need to be reviewed and confirmed.
Engage for Construction extends the AP certification tracking in Microsoft Dynamics 365 so you can track and report on compliance-related activities directly from the project record. Compliance requirements are often tied to the project schedule and/or specific activities and milestones, so the integration allows organizations to have greater assurance over their compliance adherence, reducing risk of penalties or delays.
Engage for Construction uses Microsoft Power Automate to keep a watchful eye over compliance. For example, before a purchase order is filled, the system can automatically verify compliance and generate alerts notifying project participants that information is missing or expiration dates are approaching. If it’s a PO for payment, let’s say, or a sub wanting to get paid, the payment can be put on hold until compliance is met.
Another issue that is often overlooked is safety and how to demonstrate and track compliance. When you adopt a digital system like Engage for Construction you can automate and standardize inspections including safety walks, quality checks, issue tracking, punch lists, daily reports, and more. Output from these tasks can be captured on mobile devices to eliminate paper and provide an audit trail of regulatory compliance.
Gap 4: Insightful cost and schedule reporting
Project managers are continually asked by company management and the customer to verify that a project’s cost can be met within the authorized budget. When owners trust the numbers — in terms of accuracy and timeliness — planning and project decisions are made more confidently. It’s why the best decisions are the ones that are data-driven, and the larger the project, the more important data becomes.
As prices fluctuate, or as project information becomes known and clarified, Engage for Construction can reconfigure estimates automatically — allowing for real-time decisions based on real-time data. What’s more, the data can be presented visually for project managers and c-level executives in user-friendly reports and dashboards for easier interpretation.
For example, Engage for Construction’s EAC Forecasting summarizes the budget, actual costs, committed costs, and change orders for easy review. Monthly updates to the project’s estimate-to-complete are captured with related notes and used to update the overall project forecast and budget.
Check out the illustration below, where planned margin amount and percentage against actual-to-date and forecasted margins change as fluctuations are identified.
Gap 5: Effective vendor and subcontractor management
Construction projects almost always require subcontractors, and as project complexity increases, so does the number of subcontractors. Subcontractors are always required to complete due diligence tasks ranging from risk assessments and mitigations to declarations regarding how work will be completed, to work permits and credentials.
Coordinating work to maintain compliance among subcontractors can be especially hard, given the short-term and sometimes adversarial nature of construction contracts. You can close this gap with Engage for Construction’s mobile self-service onboarding processes built using low-code Microsoft Power Platform applications.
Consider this mobile app that walks subcontractors step-by-step through the onboarding process. If management is happy with the submitted information, you can approve it. That, in turn, kicks off a notification to the subcontractor who can begin the activities required to gain access to the job site. This streamlined workflow keeps everyone informed, keeps business humming along, and keeps your organization compliant. You’ll have a full audit trail to minimize disputes over what was sent, received, or agreed to. Say goodbye to flying blind and operating unprotected.
If you’re looking to close gaps in your construction organization, we’d love to hear from you. From connected, cloud-based AEC solutions to mobile timekeeping and scheduling applications, our innovative technology and integration Microsoft Dynamics 365 and with Microsoft Project Operations is helping more and more construction companies stay on top today’s challenges and maintain a viable profit margin.
Contact us today to learn more about our construction solutions built on the Microsoft platform using some of the most innovative technologies available today.
Stay tuned for more in this blog series. In an upcoming article, we’ll discuss how Hitachi Solutions can provide the analytical infrastructure and tools to help to reduce risks, improve project performance, and increase efficiency.
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