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TECHNOLOGYfocus The cost of going carbon free How ERP systems can help housebuilders keep costs under control, including the hidden cost of sustainability For housebuilders, cost control is a constant balancing act. Juggling material prices, labour expenses, and tight timelines leaves little room for error. The Building Cost Information Service has flagged dramatic increases in the cost of building houses over the past three years, with most of the blame lying within increases in material and shipping costs triggered by economic uncertainty and rising interest rates. Housebuilders are also facing additional pressures with the new 'Part L' building regulations, which demand new homes must produce 31% lower emissions than the older standard. This will lead to more than just the increased costs in materials and labour, with a demand for newer and more sustainable building materials, a scarcity of builders trained in their use, alternative supply chains, and closer cooperation with architects having to design buildings with lower embedded carbon emissions. ADAPTING ERP FOR A SINGLE SOURCE OF TRUTH In this pressure cooker environment, adopting an Enterprise Resource Planning (ERP) system can be a game-changer, helping to both slash costs and boost profitability. An ERP system is a centralised platform that integrates all critical business functions, from procurement and inventory management to project planning and financial reporting. This connects the back office to the building site, helping everyone from project managers to procurement specialists work from the same data set and collaborate seamlessly on house building projects. Traditional methods of managing construction projects, using siloed data and manual processes, are prone to inefficiencies and costly mistakes, whereas working from a single source of truth helps construction companies navigate project blockers with ease. The single source of truth also provides a stable platform for integrating newer technology and demands, such as the implementation of carbon friendly materials and practices in housebuilding, as required by the UK Government. There are, therefore, many reasons for adopting an ERP system to help house builders protect their profit margins. CUTTING PROCUREMENT COSTS While ERP can't change the prices of materials, it can help cut costs elsewhere by streamlining the procurement process, from identifying the best suppliers to negotiating price discounts. With new materials, new suppliers and an increasing demand for sustainable resources, the market is going to be much tougher than it is today. ERP systems built for construction feature built-in tools that track material usage, analyse both past projects and help you evaluate future trends, and recommend cost-effective alternatives. This empowers housebuilders to negotiate bulk discounts, plan deliveries and reduce waste and overstocking through real-time inventory tracking and using forecasting to anticipate future needs. Integrated supplier portals can improve communication and collaboration with suppliers, fostering stronger relationships with key vendors. PLAN HOUSEBUILDING PROJECTS WITH PRECISION ERP systems transform project planning from an intuitive art to a data-driven science. By centralising project data, 16 January/February 2024
TECHNOLOGYfocus these systems can enable housebuilders to create accurate budgets, optimally allocate resources and track project progress in real-time. ERP financials provide detailed breakdowns of material and labour costs ensure realistic budget predictions, which prevents costly overruns and project delays. Instant access to project data also allows for proactive course correction. With real-time insights into budget adherence, material deliveries, and labour productivity, housebuilders can identify and address issues before they snowball into major roadblocks. UNLOCKING SMOOTH COLLABORATION Delays and miscommunications due to missed phone calls and lost emails can be left in the past. ERP systems act as central hubs for all project communications, ensuring seamless collaboration between teams and stakeholders. This translates to reduced rework and errors, improved subcontractor performance and increased customer satisfaction. Integrated document management ensures everyone involved in a house building project has access to the latest information, minimising misunderstandings and costly rework due to outdated plans or specifications. Real-time project updates and progress reports help keep subcontractors accountable and facilitate timely completion of tasks. Finally, construction-specific ERPs offer online portals for buyers to track their home's progress, which fosters transparency and builds trust, leading to a happier customer experience and a stellar reputation. FINANCIAL FORECASTING HELPS CONTROL COSTS An ERP system acts as a financial 'crystal ball', offering valuable insights into both past performance and future profitability, especially valuable as the industry evolves. Housebuilders can both identify cost drivers and improve their cashflow management and keep abreast of price and cost fluctuations as they occur. Granular expense tracking helps pinpoints areas where savings can be maximised. Builders can also analyse the cost-effectiveness of different materials, subcontractors, and construction methods, and make informed decisions to optimise future projects. Accurate project timelines and budget monitoring also leads to better cashflow forecasting. This allows builders to negotiate payment terms with suppliers and subcontractors, further maximising efficiency and profitability. BEYOND COST SAVINGS While cost-cutting is a major benefit, the advantages of ERP go beyond the bottom line. Improved project visibility leads to faster timelines, better quality control, and ultimately, happier customers. By streamlining processes and empowering employees with datadriven insights, ERP systems can unlock a competitive edge for housebuilders in a challenging and rapidly evolving market. AN INVESTMENT IN THE FUTURE Embracing an ERP system comes with its own set of challenges. Choosing the right software, integrating it with existing systems, and training employees require careful planning and investment. However, the long-term benefits of improved efficiency, cost savings, and increased profitability far outweigh the initial hurdles. For housebuilders facing a pricesensitive market and tight margins, an ERP system is not just a nice-to-have, it's a strategic weapon. By optimising processes, slashing costs, and boosting efficiency, ERP empowers builders to navigate the competitive landscape and build not just houses, but a foundation for sustainable success. ACCESS COINS IS CHOSEN BY THE UK'S LEADING HOUSEBUILDERS Access COINS is a powerful ERP system built for construction with supply chain management, project management and workforce management capabilities. It has helped the UK's leading housebuilders identify inefficiencies and keep control of their margins in a challenging landscape. Discover Access COINS. January/February 2024 17
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