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 8

When we post purchase invoice from subcontractor with construction position works, we get standard Posted Purchase Invocie, but with Type = Position on Invoice Line:

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Next difference, we can see when look at Navigate:

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Besides all standard entries, we can see new entry type – Position Ledger Entry. Job Ledger Entry is different, as well.

When we look at Jov Ledger Entry, the most importabnt thing is that we get entry type as Usage and G/L Account as type. We got G/L Account No. from Posting Groups Setup.

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When we look at Position Ledger Entry, we have standard NAV4Construction entry table, but Document Type is Invoice (that mean, we get invoice from subcontractor). We don’t have to post usage a Position again. System enable us to prepare Certificate for Sales Invoice by automatic.

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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.

Bill of Quantities – (Subcontractors) part 6

As I wrote in my old posts, we can add subcontractor works in planned construction position normatives. We can plan in one normative, part of job works by ourself and part of job works by some subcontractor. When we prepare normative, we usually don’t know which subcontractor will work for us. Because of that, we make plan that job will work some subcontractor.

When we make Bill of Quantities, for all construction position lines where planed subcontractor in their normative is, NAV will be marked field ‘Subcontractor’. For this lines, we can fill ‘Quote Inquiry’ for potential subcontractors.

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For all this lines, we can start command to print documents for their tender competition. This command is ‘Query for Quote’ and it can print document or prepare Excel file to send to potential subcontractors. We can choose to print expected price or not (only lines).

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NAV will create as many request files (or documents) as we set different Quote Inquiries in Bill of Quantities lines.

When we get all quotes, we need to insert in NAV. If we get Excel quotes, we can use automatic function for import. After that, we can use functionalities for choosing the best quote, individual for each position, or as complete quote. More about choosing the best quote of Subcontractors, I will explain in some other posts.

Construction Position and Norms – norms creating (3/7)

…I forgot…there is function for massively creating of Construction Positions, but this function runs from Bill of Quantity page. We will discuss about this function in some later themes. Now, we will continue…

Normative is place where we make specification of planned consumption for Construction Position. If we compare construction with production, Normative is as BOM and Routing altogether. But construction is more complex than production. You can find Construction Positions on: Quantity Surveyor Section->Normatives->Normative List.

If you want to see existing Normative, you just need to double-click on some of them. If you want to create new, you have to press ‘New’ command. I will explain creating process.

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You need to set Normative No (manually or automatically using number series) and normative description if you want it (is not necessary).

After that you have to configure Unit of Measure. There are the specifics. You can choose only Unit of Measure which is configured on Construction Position. Does not matter is this this Unit of Measure the same as Base Unit of Measure on Construction Position. But it must be same as one of all Unit of Measures from Construction Position. If we use not-Base Unit of Measure, system will use ratio defined on Cons. Position for all quantities and costs.

When we fill Normative Header, we must define Normative Lines – Price Analysis Lines. We can use three types of line entries:

  • Work: It used for configure resource and/or item consumption. For this type, we must to configure precisely consumption and this will be explain in next posts.
  • Subcontractor: It used for subcontractor work. We can choose vendor number (if we know them, but is not necessary), but we must to fill cost. This cost is value from quote or expected cost from subcontractor contract.
  • Normative: It used if we have complex normative, combined from more different normatives. In this case, we have not repeat all consumption entries, but we need fill existed Normative Numbers.

Very important is we can use combination of all three types for each Normatives, because we often have case where partially use our resources and partially resources from subcontractors.

If we have minimum one line with Work type, we need to set Price Analyses for this work. In next post, we will explain this process. When we set all parameters, we must to change status to Released using Apply command and after that we must to connect this Normative with Construction Position.

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.

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…