The gains driving modular construction are huge, not just in productivity but a global skills shortage in the industry is also contributing to its rise. Skilled members of workforces are retiring, and this phenomenon will only become more widespread. As a result, moving away from traditional construction models will be essential for construction companies to manage a potential skills gap. Fewer people can perform the same amount of work and build a higher quality of assets more efficiently in a shop-based environment; as such, contractors and project owners are beginning to fully appreciate its true value.

One ERP for all?

It’s common for modular builders to have a construction contractor background but to have expanded into various offsite disciplines over time—including wall panels or mechanical controls during their careers. Construction companies that hold this experience in their ranks are well placed to benefit from sophisticated supply chain and inventory management, lot and batch tracking, and material management. In addition, such companies stand to benefit from transitioning to more standardized content instead of a unique, iterative design on every project.

Standardization enables companies to approach client engagements with a more competitively priced project that can be delivered in a shorter lead time and to a proven quality standard.

Other modular builders start out as manufacturers—working for example with construction contractors as partners for their pre-packaged, engineered system. Today, clients will often expect them to perform erection and installation work on-site. The once manufacturing-centric business must ensure their work is expedient, cost-effective, profitable and performed to industry standards.

These changes mean a different approach to ERP

Both of these types of companies have been involved in construction for a long time, but to take these process changes effectively, they need comprehensive financial project controls built into their enterprise software suites.

Their enterprise resource planning (ERP) system must provide not only construction industry-centric project management and control capabilities, but also equipment asset or rental management because many of these environments require equipment to install structural members, control systems or other modular components. This will also help manage the shipment and transport of materials to the construction site according to the project schedule in addition to managing subcontractors—a critical obstacle for most manufacturing-blended construction contractors.

Advanced project control: combining management and manufacturing

This is where an effective project-based solution (PBS) in an enterprise software system is essential to allow construction companies to create and manage projects in real-time. This includes work breakdown structures, work package management, bills of quantities, project variation control and change orders. It will enable tracking of equipment cost against a specific project, regardless of whether a company rents it externally or if the project “rents” the equipment from its internal division.

A good PBS also has the functionality to deliver estimate to complete, estimate at completion and margin forecasting based on real-time transactional activity. On-site project elements such as subcontractor management and the delivery of materials for design, procurement, manufacturing, shipment, construction, installation, commission and maintenance purposes can also be tracked.

This all-encompassing solution has the capability to bring projects and manufacturing together, acting as a world-class enabler for traditional construction companies.

BIM and integrated ERP is a must

The latest digital technologies, such as BIM, are increasingly being mandated by project owners and even governments—adding to the appeal of off-site construction and standardization. The requirement to secure the design at an early stage increases if off-site construction methods are used and the integration of the BIM model data becomes a necessity.

Despite plans put in place at the beginning of the project in traditional construction, they often change and the as-built asset may differ in functionality from how it was designed. Every modification to a design has an impact on multiple downstream dependencies in a BIM environment.

As a result, the engineering of the asset must be built using off-site, manufacturing principles from the start. This results in fewer design modifications midstream which limits the cost and project lengths. From the outset, the asset should be designed with ease of maintenance and cost-effectiveness in mind. The total cost of the asset during its life is now the priority for asset owners, and an integrated ERP system should be recognized as the platform to integrate technologies such as BIM.

Fail to prepare, prepare to fail

It’s plain to see that modular construction necessitates comprehensive ERP software even more so than on-site construction. Modular builders require an enterprise system that can manage the entire process of the project and asset’s lifecycle, and the time is now for construction companies to invest in off-site systems. This is where value will be realized in the construction industry in the short and long-term, and how companies can ensure they are strengthening their competitive advantage and future-proofing their business.