Top 6 Construction Project Management Challenges Solved with ERP

Project management is one thing everyone in the construction and heavy equipment industry wants to get right. 80% of construction projects exceed budget, and 77% endure delays (McKinsey). Managing complex construction projects is crucial for any heavy equipment or construction business.

With over 20 years of experience assisting global businesses in the construction and heavy equipment industries with the right technology and software in Microsoft Dynamics 365, we have interacted with many companies struggling with optimizing project management.

In this blog, you will gain insights into the top 6 construction project management challenges and learn how to address them using a project management solution.

What are the key construction project management challenges?

1. Not having a complete view of the construction project

Construction projects take many years to complete on average. With an extended project period, a detailed and structured breakdown of the project deliverables, the planning, and equipment reservations are crucial to ensure you have the proper objects and deliverables planned.

Information about various processes, teams, roles, budgets, and timelines must be well documented and communicated. The end-to-end process of the project must be well-defined — from the pre-construction activities to the project closure with the final changes.

Solution: Use a construction project management ERP solution that can easily handle lengthy, complex projects. The solution must be able to define Advanced Work Breakdown Structures (WBS) to allow a comprehensive view of projects, subprojects, subcontractors, and the required materials and equipment.

2. Cost management and billing

Managing production costs while maintaining quality is crucial. Fluctuations in raw materials prices and labor costs can greatly impact profit margins. Construction and heavy equipment companies must employ efficient production processes and cost-effective sourcing strategies.

It is also essential yet tricky for construction companies to bill accurately at specific periods of project progress. An inefficient invoicing method risks revenue loss, impacting your business's bottom line.

Solution: The right construction project management ERP tackles this challenge by offering cost breakdown structures and budgeting features to enable robust management and views of costs across projects. You can track project costs and avoid overruns or stockouts by anticipating the schedule and managing material cost and availability per project.

With proper invoicing features in the project management ERP software, you can manage invoicing, reduce risks, and track the progress of long-duration, multi-million-dollar projects.

3. Planning and resource allocation

The construction industry is susceptible to economic cycles —during economic downturns, construction projects tend to decrease, reducing demand for heavy equipment. On the contrary, in economic upturns, demand for construction equipment increases, making it imperative for you to have a well-organized and dynamic system to plan and allocate resources for each project. This cyclical nature poses inherent construction project management challenges, making long-term planning and allocation decisions particularly demanding.

As a construction project manager, you need to tackle different variables, forecast potential errors, and proactively address them to avoid any delays in the project.

Solution: Construction project management ERP software is a one-stop solution to mitigate all the issues related to project planning. You can leverage graphical resource planning tools to gain real-time insights into project planning, resource capacity, and allocation. It also helps you to understand the current project status by easing scheduling and associated operational activities.

4. Supply chain disruptions

Disruptions in the supply chain, such as the COVID-19 pandemic or natural disasters, can pose significant construction project management challenges impacting the availability of raw materials and components, leading to production delays. The consequences can be severe as it delays shipments and affects the construction project's timeline and budget.

Supply chain disruptions also directly affect construction costs, making it difficult for contractors to stay within budget and maintain the project schedule due to long material lead times.

Solution: Managing supply chain resilience and developing contingency plans to diversify your supplier base is crucial. You must invest in project management ERP that can tightly track and book inventory across complex projects to avoid any gaps in the supply chain.

5. Poor communication and collaboration

Effective communication is a significant part of a project manager's role in the construction and heavy equipment industry. However, construction project management challenges often arise when there is a lack of proper communication, resulting in missing vital task-related data. The consequences become apparent when the team remains unaware of the issue until it is too late to rectify it.

Disconnected systems cause a natural information gap among the project management teams, and with no access to the project overview, managing the construction project becomes hectic.

Solution: A proper construction project management ERP boosts collaboration by offering a unified view of all projects. Such a solution helps remove data silos and improves interdepartmental communication. Additionally, you can integrate it with an advanced WBS across many other data sources and tool ecosystems to increase collaboration.

6. Maintaining project quality

During construction project management, addressing planned and unexpected challenges without disrupting the overall project's progress is imperative. You must respond quickly and accurately to a tender or request for a quote by leveraging previous experiences and knowledge.

Simultaneously, you need to balance multiple aspects related to minimizing errors, enhancing customer experience, keeping up with technological advancements, and staying competitive — all without compromising the project quality.

Solution: The right project management ERP can simplify complex projects while maintaining quality and integrity. You can manage your time better, combine task planning with MRP (Material Requirements Planning), track project log details, and include incident reporting.

Do you want to address your construction project management challenges?

Using a project management ERP solution to manage your construction and heavy equipment projects has various benefits. However, you must select the solution that fits your business and construction project management needs.

If you want to adopt cloud-based construction project management software that solves all the above challenges, explore our project management solution for Microsoft Dynamics 365 F&SCM: Project Control Suite.

Manage the end-to-end lifecycle of your project with our Project Control Suite to enhance efficiency, facilitate timely deliveries, and maintain budgets.

To learn more about the Project Control Suite, check out the factsheet linked below.