Can Microsoft Dynamics 365 improve margins in the Construction sector?
Whether you manufacture and distribute your products, whether you sell via wholesale or into projects, Dynamics 365 is a leading solution built on the world’s most capable platform.
From sales and marketing, through project quote management, and through order processing, fulfilment and finance, Dynamics 365 is a proven solution for building materials suppliers.
If you are a Professional Services business providing engineers, architects, surveyors, project managers or other specialised services, Dynamics has for a long time been the leading solution for project accounting.
The end-to-end solution again starts at marketing and business development, goes through project estimating, project delivery, and into billing and finance. It provides instant visibility across your business of project status, utilisation, resource allocations, profitability by project and work-in-progress. It has been helping project service organisations for many years to manage and drive their businesses effectively.
But what if you are a main contractor, or specialist subcontractor in the sector?
Well, the applications suite itself has always been available cross-industry, seeking to help organisations:
- Drive growth with solutions – empower customers with an end-to-end digital buying experience, through activating a digital selling experience for the organisation.
- Expand service provisions – remove barriers that prevent meaningful and personalised customer and employee interactions.
- Build a resilient supply chain – create end-to-end supply chain visibility through a non-monolithic approach.
- Improve organisational agility – optimise financial and operating models to improve business decision-making and performance.
These points may resonate with a construction firm somewhat, but construction firms also know that if they are looking at implementing a new commercial or finance system, then there are some specific functional areas to look at closely.
The Finance and Supply Chain modules are of course standard and classically capable. The Customer and Field Service solutions are proven and adaptable. Then we have the area that makes construction businesses challenge traditional ERP solutions – commercial and project operations.
In order to consider these areas, we’re going to look at the new module Microsoft created by merging the capabilities of 3 of its solutions:
- Project Service Automation – focussed on the front end of projects, managing clients, bidding, estimating, resourcing, and approval gateways through to closing out contracts.
- Project Management Accounting – detailed project accounting capability with billing models, revenue recognition, management of subcontractor procurement and payment through to client invoicing.
- Microsoft Project – the well-known and long-standing project management tool.
Microsoft has called the new single combined module Project Operations.
Dynamics 365 Project Operations is an end-to-end solution for quotations and bid management, planning, cost management, resourcing, delivery and billing. Project Operations works alongside Dynamics 365 Finance, or it can be used in conjunction with your current Finance system.
Standard Project Operations provided by Microsoft is a fantastic solution for Professional Services businesses. Those that sell projects and outcomes and deliver using their resources. For Construction, this forms a solid foundation, but one that only partly meets what is needed. On top of the foundation, we at Hitachi Solutions have added the functionality and capability necessary to allow organisations in the Construction sector to take advantage of the new Microsoft Dynamics Project Operations module and use it in their own environment.
Classic Dynamics 365 Project Operations
Traditionally, businesses have a situation like the one below; disconnected systems and a lack of information flow throughout the process.
Native Project Operations, as delivered by Microsoft, is aimed at what we might term classic Professional Services. Operating in a linear format it is suitable for Accounting, Consulting, Architects, Engineering, Media and other similar businesses. It flows from client engagement and business development, through execution and delivery, to billing.
Project Operations in Construction
When we look at the Construction sector, we need more than this.
The example above is not exhaustive, as the main contractor, the simplified subcontractor management statement includes the application-for-payment process. The list above shows that it fits into the foundation that Project Operations provides, but the foundation alone is not enough.
At Hitachi Solutions, we’ve been able to enhance the core of Project Operations and use the full platform capability to add mobile and desktop apps for additional functionality using the core foundation.
Within the main solution, we have added:
- An updated project quote process and estimate import
- A project initiation wizard to establish the project consistently in this and other existing systems
- Manpower planning tools
- Plant and equipment “on” and “off” hire
- In-house plant hire
- Enhanced processing and costing of time by project
- Managing subcontract work packages and the RFI process
- Recording CIS from applications for payment and supplier invoices
Using Microsoft’s wider platform strengths, we have also added:
Power Apps increase agility across your organisation by rapidly building low-code apps that modernise processes and solve tough challenges. We have used Power Apps to produce a series of time entry apps for either mobile phone or kiosk use in the site office, including a management app for review and adjustment of times as needed.
We have also added apps for subcontractors which cover the seamless submission of RAMS, certification clarification, permits to work and remove site inductions, enabling a more streamlined arrival on site.
For Construction sites, we have also provided proof of concept apps for health and safety incident reporting and management, and for task-based risk assessments.
With Power BI you can create rich, interactive data visualisations from multiple data sources and share important business insights that drive success. We have used Power BI to pre-build reports and dashboards that focus on project status, time and cost. With this data, we produce an EAC and a CVR, both of which can be tailored to individual client needs. We have dashboards that focus on resource management and utilisation, on under and over-performing projects, specifically highlighting projects-at-risk.
As a result of Project Operations, Dynamics 365 is now fully capable to be used as a part of a full Dynamics 365 ERP suite for firms in the Construction sector. For materials suppliers and Professional Services, this enhances what was already a leading solution. For Construction firms, contractors and subcontractors, it unlocks Dynamics 365 and the wider Microsoft platform so that they can now take advantage of the capabilities functional gaps had originally made difficult for them.
Project Operations itself can also be used on its own within the Microsoft platform and hooked into your existing finance systems. It can be deployed across your organisation, or by project or contract.
If you’d like to understand more about how you could take advantage of the Microsoft business applications in your organisation or would like to understand more about the Project Operations module then please contact us.