ERP Implementation in a Construction Firm : The construction industry is facing heightened challenges and competition, prompting manufacturing firms to seek innovative solutions to boost productivity, foster integration, and bolster their competitive edge. Among these solutions, enterprise resource planning (ERP) systems emerge as potent tools. These IT-driven business solutions empower construction companies and their contractors to efficiently manage capital projects across their entire lifecycle.
Numerous studies have underscored the advantages of ERP systems in manufacturing. Consequently, there’s a growing body of research highlighting the critical success factors (CSFs) pivotal in the implementation process. This paper delves into identifying the most influential CSFs from the perspective of ERP users within a large manufacturing company.
Drawing from extensive literature, 26 factors were pinpointed, forming the basis for a questionnaire survey administered to ERP users. Through structured interviews with 25 users intimately acquainted with the ERP implementation process, valuable insights were gleaned.
The findings illuminate that robust management involvement and awareness, coupled with comprehensive user training and support, alongside a well-composed team, emerge as the linchpins for ERP implementation success. These results echo prior research, emphasizing that while IT plays a foundational role, the human element significantly shapes the ERP implementation journey.
By elucidating these critical factors, this study contributes to a deeper understanding of ERP implementation dynamics, providing actionable insights for stakeholders navigating this complex terrain within the construction industry.
Introduction
ERP Implementation in a Construction Firm : Recent advancements in the Information Technology (IT) sector have equipped construction organizations with an array of tools and techniques to advance their objectives. Enterprise Resource Planning (ERP) systems stand out among these tools, showcasing potential for enhancing organizational management [1]. ERP, an IT solution, empowers enterprises and their suppliers to effectively and efficiently manage large-scale projects throughout their lifecycle. The primary goal of an ERP system is to standardize processes related to project development, delivery, and execution, thereby fostering consistency and efficiency. By providing a unified approach to project performance and implementation, ERP enhances reporting and documentation within projects. Equipped with tools and functionalities tailored for project management, ERP systems streamline project data and reports throughout the project lifecycle, ultimately aiming to improve project execution efficiency and enhance project controls.
Despite the promises of seamless integration offered by ERP systems, their implementation poses significant challenges. Organizations often invest substantial resources in terms of time, finances, and energy into the implementation process, only to face disappointingly high failure rates [2]. Recognizing this, it becomes crucial to identify the critical success factors of ERP implementation and assess their impact on the process. A comprehensive understanding of these factors directly informs the selection of appropriate implementation strategies.
This study has two main objectives: first, to delineate the major challenges encountered by construction firms during the ERP implementation process, and second, to identify and quantify the impact of critical success factors on ERP implementation within the construction sector. Achieving the first objective entails conducting a thorough literature review encompassing previous research within the construction domain. The second objective will be fulfilled through a questionnaire survey targeting ERP users. Through data analysis, this research aims to explore ERP users’ perceptions regarding the success of implementation efforts. The anticipated findings of this study are poised to furnish leaders in construction firms with valuable insights to effectively and efficiently implement ERP systems.
Definition of ERP
The explication of ERP systems might diverge depending on the entity concerned. Typically, ERP systems allude to these extensive software bundles that endeavor to fuse all business processes and undertakings to present a comprehensive perspective of an IT architecture . An ERP system within the manufacturing realm can be delineated as “an IT-driven computer platform facilitating the amalgamation of an organization’s diverse business processes, enhancing efficiency and thereby profitability, utilizing a singular database”. In further elaboration, all the solitary software packages in ERP, finance, HR, inventory, planning, etc. are substituted by a singular unified software fragmented into modules. Each module operates nearly as an autonomous system; nonetheless, all modules are interconnected and exchange information and data. The ultimate objective of ERP software vendors is to supply adaptable modules that possess heightened capability to effectively exchange business data and information.
Benefits of ERP systems (ERP Implementation in a Construction Firm )
Enterprises eagerly invest in ERP systems to derive advantages from amalgamating their operational procedures within a singular IT framework. The direct outcomes of this amalgamation encompass streamlining operations and expediting the decision-making process. Prior investigations unveiled that the primary motivators for ERP implementation include:
- corporate expansion;
- enhanced customer satisfaction;
- optimized distribution channels; and
- minimized operational expenditures
- Shang and Seddon
- formulated a categorization for the anticipated benefits of ERP systems.
Focused on the advantages derived from operational systems and adopting the perspective of top management, the study delineated five dimensions of benefits, specifically:
- Operational Benefits,
- Managerial Benefits,
- Strategic Benefits,
- IT infrastructure benefits, and
- Organizational benefits.
ERP systems are progressively being adopted by organizations globally across diverse industries and sectors. This trend underscores the necessity for such systems, thereby necessitating a comprehension of the motivating factors prompting organizations to implement ERP systems.
- introduced three primary reasons for contemplating ERP system implementation. The initial rationale was to establish a unified database spanning the entire enterprise. The subsequent rationale was to automate as many business processes as feasible within the organization. The final rationale was to generate and access business information in real-time environments.
delineated the benefits of ERP systems as follows:
- resolving legacy system issues;
- mitigating development risks;
- enhancing competitiveness; and
- optimizing business efficiency.
ERP Implementation Challenges (ERP Implementation in a Construction Firm )
RP Implementation in a Construction Firm : Nevertheless, ERP systems have achieved widespread adoption, as indicated by Momoh et al. , who noted that challenges following implementation persist as a growing concern. Furthermore, the ERP implementation procedure is a prolonged endeavor necessitating ongoing organizational adaptation. As per Huang et al. ERP implementation may engender “intricate technical, organizational, cultural, and political dilemmas, rendering the integration process exceedingly arduous. Additionally, ERP systems confront the volatile contemporary business landscape, burgeoning markets, and escalating customer demands . ERP system providers within an organization, in their endeavor to consolidate all processes, often encounter deficiencies in their offerings. The transition from a conventional system to ERP may necessitate organizational-level process re-engineering. The protracted implementation period of ERP systems may induce employee fatigue and discontent. Moreover, most organizations fail to complete the entire implementation process, erroneously anticipating benefits prematurely. They perceive the “go live” phase as the culmination or objective
Implementation costs
ERP implementation encompasses various costs, spanning hardware, software, consulting services, and internal staff expenditures. These expenses extend beyond the initial installation phase, persisting over years. Studies, such as the 2002 Meta Group survey involving 63 companies across different sectors, reveal the pervasive nature of ERP’s expense. The average cost of ownership, as per the study, amounts to $15 million, though figures ranged from $400,000 to $300 million. Often, budgetary considerations overlook certain crucial elements, constituting hidden expenses in ERP endeavors. These encompass training, integration, testing, customization, data conversion, analysis, consultation fees, and ongoing implementation team expenditures. Furthermore, there’s the anticipation of ROI, along with potential post-ERP adjustment periods, contributing to the comprehensive cost landscape of ERP implementation
