What is main strength of our NAV4Construction vertical solution?

Absolute precision in cost control at the early start when you try to make bids. Cost and revenues control at full life cycle of project. We use all good things from NAV (we don’t need to make again good things) and make all what is miss.

Complete control of resource engagement and material consumption. When we say resources, we think on each vehicle, machine and employee. When we say material consumption, we think on complete purchase material, but we think on very complex half or finish goods production also.

Multiple reducing the time to produce documents for monthly billing. Avoiding the possibility of any error when creating billing documents.

Reducing the receivables payment time for 2-3 times. Improved cash flow and decreasing costs of funding and significantly higher profit. Only few percent savings with using NAV in combination with our construction vertical solution make full ROI in few months. They are results of research we made with our clients who implemented this vertical, regardless of company size and number of users.

Besides fast ROI, it is very important to discipline employees increasing the quality and standardization of processes as well as to enable inexperienced employees to perform tasks that were previously performed by employees with dozens of years of experience and many others. Real profit cannot be easily measured by money because the significant benefit is in each segment.

Standard NAV in Construction?

I got a lot of questions “Why you create vertical? Why standard NAV cannot do construction business?”…

These are very interesting questions. Especially because I am protector of standard NAV implementation with very little customization. So I’ll answer the questions carefully.

Is a standard NAV solution can handle construction business? Of course it can, but how?

First scenario:

Construction Company wants to have financial evidence for all construction projects. They work very little project activity by himself and the most of work doing subcontractors.

NAV can support the most of these activities. You have G/L Entries in NAV and G/L Budget for planning. All subcontractors work, company can post using standard Purchase Orders. If company has some own consumption, it can be posted by Item Journal. For partition on project activities, you can use Dimension “PROJECT” with Dimension Values for each project.

If company eventually has more own works, but don’t have many projects, the same scenario could be implemented. This means that the company does not want a detailed analytics by the project.

Using this scenario, company can know revenue, expense, gain, payables and receivables. If it is enough, you can use standard NAV (BE BRL license – NAV2009; Starter Pack – NAV2013).

Second scenario:

If you have the same model, but you have more projects and more own works but not too much construction position, situation is about the same. You need to use Job and Resources modules, because you need to monitor more items and more own resources (machines or persons) work per each project. All consumption of resources and items you will post using Job Journal. You can eventually use tasks for construction position. If you have subcontractors, you will post that using Purchase Order, but with Job code.

You will have all analysis as in first scenario, but you will have more advanced analysis using own resources statistic using Job Ledger Entry. Also, you will can to make Sales Invoice per jobs, but no as construction certificate. If it is enough, you can use standard NAV (AM BRL license – NAV2009; Extended Pack – NAV2013). But if you want to make calculation of contracting position, you will can this, but using MS Excel :).

Third scenario:

You have many complex projects. You have hundreds or even thousands construction positions per project. You make contract for projects and many annex and claims. You want to make calculation for each construction position or for the position group. You want to use your experience from old projects on own norms. You want to monitor each part of projects… You want automatically made construction documentation and automatic construction certificate/invoice…

Then, you cannot use standard NAV for your business. You have two choice:

  • Add vertical solution to NAV (I recommend NAV4Construction 🙂) with all functionality you need
  • Buy some specific construction software and make integration with NAV; I think this is bad solution, because you will not get all ERP functionality (many data you will not have) and the same experience.

We can make more scenarios, but if someone has some question, then ask me.

Mechanization Management (briefly)

Besides mechanization engagement posting and monitoring at number of different parameters at the same time (work hours, mileage, transported or excavated quantity…) using NAV Job Journal and Resource Journal and Construction Output Order, it is possible to manage the complete mechanization life cycle with many parameters (types, details, usage, replacement…).

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We can monitor at the same time for each mechanization resource:

  • total of all resource hours per day
  • total of working hours
  • total of deadlock and hours and reasons
  • what machine working in these hours
  • what is unit of measure and how much machine worked
  • if this is vehicle, how many tours and what mileage

Based on these information, we can make amazing analysis.

Of course, we have completely fuel consumption evidence, regardless we use our fuel or we buy fuel on gas station. We use standard NAV Item Journal functionality and modify into Fuel Journal with additional evidence about moment fueling (mileage, work hour, computer and EDM state). Based on these information, we can make analysis about fuel consumption in different working conditions.

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Each mechanization resource is connected to the fixed assets evidence and other postings in the system (GL, purchase, sale, service…). We have common evidence for all types of services, regardless it is internal or external service. Standard NAV Service Management can do only external service, but we change that and now it can posting internal service with automatic posting on Fixed Assets or FA Maintenance evidence. All costs (external by Purchase Invoice, internal by Internal Service Order) will be automatically posting to the FA with all NAV standard functions.

Besides regular service evidence, we add completely new functionality – Preventive Service. We can post and monitoring all minor activity on each Mechanization Resource, e.g. oil change, oil filter change, battery engagement, tire monitoring by each piece and serial number (installation, replacement, mending, repairing,…) per mileage and working hours, all sets greasing… System can tell us e.g. when we have to change oil and oil filter, based on combination of mileage, dates and work hours information.

System has information about vehicle registration, all types of insurance, technical inspection, MOT and it can inform us when we have to do these.

Construction Management (briefly)

By starting the project and quote acceptance, we start with work on new project. We need to add few specific characteristics: Contract Status (Accepted), Contract No. and Contract Date. We can add many preconfigured setup field (by the company, or by the project). Also, we have to define Job expected end date as the really end date (if we know that this date will be different of end date by the contract)L.

After that, it is possible to monitor effectively all project tasks. Executed works of mechanization or labor work could be entered for each project. Also, material or finish goods consumption could be added. A number of specific parameters in posting process could be added depending on the construction company. We can post all consumption (resources and/or items) and output (construction positions) by two different models. First model (Output Orders) is precise (monitoring all consumption per each position on date on task on project) but more complex for daily work in NAV. Second model (Project Journal and Position Journal) is more relax for posting, but we cannot get the most precise information. Regardless of posting model, we can add many parameters on each journal line. We can add specific monitoring of each resource (by specific mechanization resource no. and each employee if you want) with what is done (Work Type), how much is worked (Ongoing Quantity – different unit of measure), Stand By Time or Extremely Stagnation Time, Mileage (if this is a vehicle)…

When we have many subcontractors, we can post their invoice using Purchase Invoice or Purchase Order with specific Type – Position. When we post this invoice, we get automatically prepared constructing positions for invoice to investor.

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After construction output posting on the end of month, all construction lists (Book of Quantities) for all positions could be created with simple command that can be subsequently corrected by the project supervisor. System has multidimensions controls and prepare this constructing positions for invoice.

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After gathering signatures for construction lists by project supervisor, you can easily create invoices/certificates for investors without possibility of errors or data inconsistences (for all construction positions, subcontractors work and re-invoice). If invoice is still not accepted, it is possible to post WIP journal. So we can post income on different date, and we can look income per work period and income per invoice date (e.g. for VAT check).

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The user can monitor the subcontractor works on each individual position in the construction process if user does not work complete project alone. The user can monitor the subcontractors in complete collaboration life cycle, monitoring the receipt of offer and selection of the best offered deals and registering and posting complete work of subcontractors. Also, all of these tasks could be easily re-invoiced without repetitive entry typing.

Many others, but about that in some other post…

QUANTITY SURVEYOR – CONTRACTING (briefly)

We will use Construction positions from Quantity Surveyor to operational usage and analyzing. At any time we can check out how much work is done by position for the required period. It is possible to monitor the actual expenses incurred in order to perform the position. At the same position it is possible to see what has already been invoiced. It is also possible to monitor and get the real costs, both in amount and in percentage. This monitoring is possible for each specific position or for the entire position group.

One or more versions of normative and price analysis for each normative can be defined for each construction position. It is possible to make the selection of the best norms in the desired position on the actual costs basis. These data are calculated using an automated calculation of cost of materials, products and resources cost accounting. Beside the actual costs, the system can perform analysis and costs on vendor quotes or planed costs basis. Standard processing like “adjust cost of items” is fully applicable in this process.

Actual costs are calculated based on the direct and indirect material cost, as well as the calculation of the finished products cost based on the real material cost and actual consumption in manufacturing capacity. In a similar method, the system enables a calculation of the actual cost of engaged resources, based on the actual costs that are defined for each resource, as well as the total time of their engagement.

Based on the so-defined positions and norms, creating each project and monitoring its life cycle, it is possible to create a Bill of Quantities and follow it through all phases of contracting. In BoQ, we enter all construction position for project with their description and quantity, based on contract. Costs of construction position, we automatic calculate from linked norms and price analysis. On the other hand, actual cost of resources and items (material and goods) in price analysis, we get from integrated automatic cost accounting. From this document, we can make real analysis with cost, price and margin for complete project and for each position, and we can print Construction Quote.

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Besides defining all entities and Bill of Quantities as a single primary document, it is possible to create dynamic execution plans on these data basis. This dynamic execution plan reserves necessary inventories and resources, bearing in mind the availability of all resources. Complete inventory reserving is integrated with standard material planning in requisition and planning worksheets in NAV.

BEFORE CONTINUING…

Before I continue to write about the NAV vertical solution details, I need to give you some global picture of the system. First of all, I must to introduce you with the some new entities in NAV4Cosntruction. There are new categories, specific for construction business:

Project is potential or realized contract and this is the center of all activities. Project is entity based on NAV Jobs.

Construction position is single contract work and represent project WBS. This is a new NAV entity and it is the center of all evidences in the construction. We need to put some work of resources and item consumption to make some position.

Normative is specification of resources and item consumptions or consumption of sub-contractors on quantity basis.

Price analysis is part of Normative based on costs.

Bill of Quantity is the main document with construction position specification for project. This document determines quantities, actual costs, planed costs, prices, margins… From BoQ, we make Quote.

Mechanization is each machine or vehicle and mechanization is part of resource.

We have more new entities, but these are the most important ones to be used all the time.

In next few posts, I will explain the basics of modules, and after that I writte much more detaile…

True Story: NAV4Construction in Civil-engineering company

A.D. „Novi Pazar – put“ (eng. “Novi Pazar Road”) is a company with half a century long tradition in construction and maintenance of road and other civil engineering structures. Company owns a large and powerful fleet of vehicles and machinery, with own forces for their maintenance, as well as facilities for the production of asphalt, concrete, stone extraction and production of stone aggregates. AD “Novi Pazar – put” (eng. “Novi Pazar Road”) is a member of the “Putevi” group (eng. “Roads Group”)

You can find a case study:

http://www.nps.rs/fileadmin/Content/nps.rs/Dokumenti/Novi_Pazar_put_-_Case_Study__engl..pdf