NAV4Construction – SWOT Analysis

You can find information about main strength of NAVConstruction solution, I’ve already wrote here. Also, if you want to use standard NAV in construction business, you can find information about these implementation possibilities here. You can find more texts about reason for using ERP in construction business in my earlier blog posts.

Some construction workers want separate (specific) solutions for construction and rest processes (ERP). But, in my experience, the main strength of construction in ERP is exactly possibility of using all actual data on each part of ERP. When you use this solution, you can use:

  • actual cost from purchase or manufacturing in construction or when you make bids
  • actual cost from cost accounting, about goods and/or all other resources
  • automatic posting of invoice to G/L with any number of dimensions
  • managing with purchase process using construction requirements
  • using forecasting and other planning processes for construction, mechanization, subcontractors, manufacturing, purchase, sale, WMS in the same time

Otherwise, Microsoft Dynamics NAV is not real project planning software and someone says that this is weakness of this solution. But NAV4Construction is fully integrated with Microsoft Project Server using web-services. Now, you can use the best things of both solutions; e.g. you can use planning process in Project and Normative and Material requirement process from NAV. Maybe, bidding process is more complex in NAV, but this process is more precise.

On next picture, you can find a short SWOT analyses. If you have additional answers or comments, you can ask and start with discussion.

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Operational work – The bid evaluation – part 9

When we have some construction position we cannot do it, we need to find subcontractor. When we engage subcontractors, we usually have a less margin. Because of that, we need to find the subcontractor with the best condition for each position. Bid evaluation in NAV4Construction is based only on the lowest cost recommendation, but we have many other information in decision process (e.g. discounts, payment methods, due date, warranty period…).

Requirement for subcontractors we fill in Requisition Worksheet, with other requirements, as items. When we fill required positions, we need to fill Quote Query No. for all positions we want to purchase from one vendor (on one quote).

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From Requisition Worksheet, we can print Quote Requirement document or export requirement in Excel file.

When we get offers from potential vendors, we need to put them in Purchase Quote in NAV. We can do it manually or automatic using import from filled Excel files. We must to fill Quote Query No. on Purchase Quote Header. This is mandatory data if we want to use bid evaluation process.

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We can do bid evaluation process for complete quotes, or for each construction position individually.

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Individual                                   

We need to fill Quote Query No., type as Position and Position No. We can use Best quote windows for bid evaluation, not only for position; we can use it for item, resource… Because of that, we need to choose Type option as Position. System will make ranking based on Direct Unit Cost, with many other information.

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When we choose position for ordering, we need to run Apply and system will update Requisition Worksheet with data from this quote. After that, on Requisition Worksheet, we need to run Accept the action and we will get Purchase order with choosing positions.

Complete

If we want to make bid evaluation for complete offers, process is similar as individual process. We need to fill Quote Query No. and Row number. Row number is mandatory, because we cannot compare Quotes with different number of lines.

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System will make ranking based on Amount including discount (sum of Direct Unit Cost with discount), with many other information. Acceptation process is the same as in the previous example.

Posting operational work (Subcontractors) – part 7

In my previous six posts I described posting of own work on projects, using different models. The base characteristics of this models is that we have our own resources and items consumption. Now, we have once more model for posting, when we use Subcontractors work. Target is the same, we need to make some contracted Construction Positions, but now we do not use own consumption.

We have two types of subcontractor’s engagement in our construction projects:

  • First, we can engage subcontractor for do some minor work on our positions. That means, we will work some part of job, and some part of job will made by subcontractors.
  • Second, we can engage subcontractors for doing complete job by position. This is very often when we work on complex construction with very vary business processes, as construction of houses, buildings, etc., because the main constructor often perform only one or two types of works and engage subcontractors for all other works.

I describe how we can planning that in Construction Position Norms in my old post about Construction Position and Norms – Cost Analyze and Bill of Quantities – (Subcontractors), but now I will describe posting of subcontractor usage.

Subcontractor’s minor engagement

This is the simply process. We get invoice from subcontractors for their part of work. For posting, we will use the standard NAV purchase documents, Purchase Order or Purchase Invoice. We will post this as our cost using G/L Account, but we must to set Job No. and Job Task No. in Purchase Lines. When we post document, we will get Job Ledger Entries with G/L Account types. Our own part of job, we will post using Job and Position Journals or using Output Orders. We will invoice position we posting using Position Journals or Output Orders, with the same quantity.

We can use this model for all planned or unplanned costs on project. NAV will be classifies our own usage as resource cost or as item cost, and all other costs as G/L Costs.

As I said, this is very simply process. Other posting method need more customization or more manual work. We choose customizations, and we make automatic model of subcontractors posting in our solution NAV4Construction.

Subcontractor’s complete position engagement

In this example, we engage subcontractors for doing complete job by position. We get invoices/certificates from them for complete position engagement as we have this job in our Bill Of Quantities.

Doesn’t meter I said is too complex process, we mad it simply. For posting, we will also use the standard NAV purchase documents, Purchase Order or Purchase Invoice, but with some customizations. We will post this using Position types (new NAV4Construction type), and we also must to set Job No. and Job Task No. in Purchase Lines.

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When we post this document, we will get Job Ledger Entries with G/L Account types (G/L Account from Posting Groups) as cost, and also Position Ledger Entry with output quantity and price from BoQ, and posting type Subcontractor, as well. With only one posting, we will get complete posting process, and we can prepare our invoice to customer.

Posting operational work (resource costs/price calculation) – part 6

Using NAV4Construction, we can use specific resource cost or price models. When we post resources, we have next quantity fields:

  • Quantity – total time of resource engagement
  • Waiting time – time when resources do not make usage, because poor site organization
  • Extremely Stagnation Time – time when resources do not make usage, because force majeure
  • Effective Time – calculative field = Quantity – (Waiting time + Extremely Stagnation Time)

In NAV4Construction, we use Cost field for actual resource cost and Price form internal resource cost (transfer price for internal needs). Cost and Price are not calculate in the same way. Definition of them are placed on:

  • Quantity:
    • Cost – ‘Direct Unit Cost’ on Resource Card
    • Price – ‘Unit Price’ on Resource Card
  • Waiting time:
    • Cost – same as Quantity Cost
    • Price – ‘Standby Unit Price’ on Resource Card (using of this price depends of setup)
  • Extremely Stagnation Time:
    • Cost – no
    • Price – no

Cost Calculation

Cost Calculation is always the same. This calculation is based on resource usage and we calculate it by next pattern: Direct Unit Cost X ( Quantity – Extremely Stagnation Time )

If we want to use total quantity in calculation, we need to put ‘Extremely Stagnation Time’ blank.

Price Calculation

Price Calculation is more complex and depends of setup in ‘Res. Utilization Margin %’ field at Construction Setup. In this field we need to configure what is ‘acceptably utilization’ for us. In our example I will define that it is 70%. That means that if (Quantity-Waiting Time) is 70% or more in regard to total Quantity, this is good usage. Based on this, we have two different models of price calculation (we will use factor 0,7 instead of 70%):

Model 1: ( Quantity – Waiting Time ) >= 0,7 X Quantity

( Quantity – ( Waiting time + Extremely Stagnation Time ) ) X Unit Price

Model 1: ( Quantity – Waiting Time ) < 0,7 X Quantity

( ( Quantity – ( Waiting time + Extremely Stagnation Time ) ) X Unit Price ) + ( Waiting time X Standby Unit Price )

These Costs and Prices are the base of Construction Position cost and price calculation, based of their actual consumption.

Posting operational work (posting differences) – part 5

What is a main difference between using Output Order and Job & Position Journals?

As I wrote in my first post for this theme, we can post the operational work on next ways:

  • Using ‘Output Order’ – posting of Construction Position output work and Resource and Item consumption per Project in the same time;
  • Using ‘Position Journal’ – posting only Construction Position output work per Project; we need to post consumption separately;
  • Using ‘Job Journal’ (standard NAV functionality with some specific customizations) – posting only Resource and Item consumption per Project; we need to post output separately;

Advantage of the first method is that we can post all entries with the one document. We get posted document with ‘Navigate’ functionality. Also, this method enables us to have complete statistic of cost per every Construction Position for each Project.

As we look up in Construction Position Statistic for position posted using Output Orders, we can see Using (position cost), Sales (position revenue) and Profit:

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On previous picture we see position cost for each period.

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In previous example, I presented Construction Position Statistic from NAV, and this is shown only costs, revenue and profit, without analytics. Also, if we use Output Orders for posting, we can make deeper analysis with complete analytics of resources and items cost or quantities, as picture bellow (from BI4CONS):

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Failing of this method is that if we have many complex position works per day, it is too complicated to make evidence and post it.

If we choose posting without ‘Output Order’, we get simply procedure for posting. We use ‘Position Journal’ for evidence of work per all Construction Position we have and separately we use ‘Job Journal’ for evidence of consumption all Items and Resources, not linked with Construction Positions. On this way we get simpler method, but we lose connection of consumption with Construction Position output. Using this method of posting, we know revenue for each position on project, but we don’t know position cost and profit. We could know cost and profit only per complete project or combination project and project task, and of course we will know this data per required period. As we look up in Construction Position Statistic for position posted using Position and Job Journals, we can see only Using (quantity, not a position cost) and Sales (position revenue):

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On previous picture, we cannot see position cost.

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Position sales data (previous picture) are the same as when we use Output Orders. But when we try to see profit, we will get a wrong data with 100% margins.

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We cannot get all things and we must to decide what method we want. Good thing is that we can choose different method for each project, depend of complexity and project requirement. Good thing is also that we can set filter on Position Statistic and we can see complete data for position posted using Output Order on each project.

Bill of Quantities – (End of work) part 4

Let’s go further. When we finish all calculation in Bill of Quantities, quantity surveyors must to close deal. If quote is accepted and contract is signed, we need to “freeze” our document. We can do that when we change BoQ status to ‘Accepted’. When we confirm document, all changed are not possible any more. Also, on ‘Project Card’ this ‘BoQ No.’ is linked.

Certainly, sometimes we may have needs to change or add some data. If we need to change only contracted quantity or price (sometimes, we can change our price when contract be valid for many periods), we can ‘Reopen’ document. If we increase scope of the project (annexes, claims or something else), we can make new “sub-BoQ” with ‘Scope extending’ command.

Reopen

We can reopen document with ‘Reopen’ command on ribbon. When we start this command, status will be changed to ‘In progress’. Reopening can done only by users with specific rights on ‘User Setup’ page. This is not ‘New’ status and we cannot change all data.

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If we try to change some non-changing data, we will get the error message. We can change only quantity, position price and discount fields. For any other changing we must to change scope. These are data what we can usually change in standard contract. When we finish our changing, we can again change status to ‘Accepted’. In this moment, system will automatically start function ‘Adjust Position Price’.

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This function can enable changing positions price on next documents/entries:

  • Position Ledger Entries
  • Output Orders
  • Calculations

I will explain all of them documents in posts about operative work in construction management. It is important to know that we can change price in all documents before invoicing. If we make invoice with wrong price, first we need to correct them and after than make it again.

We can use ‘Adjust Position Price’ command manually, as well.

Change Scope

When we make additional work on project, we can make contract annex or just arange new claim. In NAV, we can do that with command ‘Scope extending’ on ribbon of document.

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When we start this command, we will get new document with the same document ‘No.’ and ‘Project No.’ as source document, but we can add new ‘Job Task’. We get many documents with the same number, but everyone for each annex or claim. In this document we can define new or old positions with same or different quantities, costs, normatives and prices.

Construction Position and Norms – cost analyze II (5/7)

In my last blog, I wrote about price analysis using actual item and resource costs in Construction Normatives. Bit, there are cases when Quantity Surveyors don’t want use actual costs. Sometimes, we need to make calculation several months in advance. In cases we have inflation, actual cost is not good enough. Sometimes we need to use item first time purchased. We have many cases when actual cost is not good for calculation of Construction Position cost. From these reasons, we have additional options to use.

When we calculate Price Analysis for Normatives, for each item or resource line we can choose specific option of Cost Source. There several types of Cost Sources: Cost, Quote, Direct and Planned.

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For each of these types, there are specific rules:

  • Cost – System will use actual cost (I describe that in my last post)
  • Quote – This option we can use only for Items (resources cannot used in purchase). If we choose this Cost Source, in ‘Quote No’ field we can choose all quote lines where this item is filled. When we choose desired quote, cost of item from quote will move to cost in price analysis,
  • Direct – If we want use cost form our head, we can simply put desired value in cost field.
  • Planned – This option is similar as ‘Direct’, but if we want to use cost from our head on more items or resources in many Normatives, we need choose this option. On Item and Resource card, we have field ‘Planned Cost’ and system will move this value to cost field on Normative. When we want to change ‘Planned Cost’, NAV will ask are we want change cost on all lines in normatives. We can choose at only one, at all, or we can choose to put some normatives filter.

All of these types can give us all variants of cost calculation in Quantity Surveyor business processes.