What Should UK Construction Firms Look for When Choosing an ERP System?
At a Glance
Construction firms need ERP systems that can connect financial information with the realities of managing multiple projects, budgets, resources and subcontractor costs. Microsoft Dynamics 365 Business Central can support project costing, purchasing, resource management and reporting when configured appropriately, helping construction businesses improve visibility and reduce reliance on disconnected spreadsheets and systems.
Jargon Explainer
- Job costing: Tracking project costs including labour, raw materials, equipment and subcontractor charges. These are tracked in real time against specific job codes to monitor operational margins.
- General ledger: A central financial record where a business records and categorises its financial transactions.
- Power BI: A data visualisation and business intelligence tool from Microsoft that connects to Microsoft Dynamics 365 Business Central to create detailed reports and financial analysis.
- Committed costs: Costs your business has committed but may not have incurred or paid, such as outstanding purchase orders.
Why Construction Firms Have Different ERP Requirements
Construction businesses function differently than retail or wholesale businesses, where operations involve selling products and services and processing transactions. These firms work on projects that often run simultaneously, each with its own materials, labour, subcontractors, budgets and deadlines. Controlling all these variables at once adds another layer of challenge.
A project may start out as planned, but rising costs, delays and additional labour can quickly change the final margins. Before sending monthly reports, finance and project managers need to spot these changes and act before it’s too late.
One of the best ways to keep track of these financial and operational changes is through an ERP system. Your teams can gain better visibility into projects, costs, purchasing and resources. But not all ERPs suit construction projects.
Our guide explains how to choose an ERP for construction and the top features to look for. We also explore when Microsoft Dynamics 365 Business Central could suit construction firms.
Management Challenges Construction Businesses Often Face
Construction firms often face a mix of operational, financial and administrative challenges that can be difficult to manage.
A construction firm may need to manage:
- Multiple projects at different stages
- Budgets and forecasts for individual jobs
- Labour, material, plant, equipment and subcontractor costs
- Changes to the original scope
- Cash flow and payment schedules
- Compliance and documentation requirements
- Communication between site teams, project managers and finance
When information for these tasks sits across separate accounting systems, spreadsheets, emails and project management tools, it can be difficult to know which figures are accurate. Your project manager may not have access to financial information in real time and your finance teams may not have the operational context to understand why costs are changing. This incomplete and delayed information can lead to delayed reporting, duplicate data entry and limited clarity into committed costs.
Balancing short-term demands with broader commercial goals is another challenge for construction firms. A job that looks profitable on paper and is progressing well may still risk exceeding its projected budget.
An ERP system can give your construction business a clearer view of project progress, help teams spot issues faster, and manage resources more effectively.
Core Features to Look for When Choosing an ERP for Construction
Before looking for features in any business software, it helps to know that they can vary between ERP systems. However, some capabilities are essential for construction firms.
- Project and job costing: This capability associates revenue and costs with individual projects, helping managers understand financial performance.
- Purchasing: Connects purchase orders and supplier expenditure with relevant jobs, giving your business visibility into order history.
- Budgeting and cost control: Compare what was originally planned with what is actually being spent.
- Resource management: Understand how labour and other resources are being allocated across multiple projects.
- Financial management: Connect project activity across wider areas, including the general ledger, accounts payable, accounts receivable and cash flow.
- Reporting and analytics: Make project and business data accessible to your teams without manual effort.
If your construction company uses specialist software for estimating, document management or payroll, an ERP does not directly replace them. It can help you consider which applications to keep and whether important data can move between the systems without creating unnecessary manual work.
UK Construction Compliance
When evaluating ERP solutions built for international markets, UK-based contractors must ensure they comply with local legislation. Make sure any platform you shortlist can support UK-specific regulatory requirements relevant to your business. This may include Construction Industry Scheme (CIS), Domestic Reverse Charge VAT rules and automated HMRC Making Tax Digital (MTD) submissions. Check whether these requirements are handled through standard functionality, configuration, extensions or integrations.
Is Microsoft Dynamics 365 Business Central Suitable for Your Construction Firm?
Microsoft Dynamics 365 Business Central is not an ERP solely for construction businesses. It’s a business management solution designed for SMEs that brings together finance, purchasing, sales, projects, inventory and reporting in one system. This flexibility makes Business Central a useful option for construction businesses when it’s configured correctly to meet their requirements.
Business Central includes project management functionality to create and manage projects, plan resources, track project-related costs and manage billing. It can reduce the need for finance teams and project managers to hold two versions of project cost data.
Business Central also fits within the wider Microsoft environment. If your organisation already uses Microsoft 365, Outlook and Excel, Business Central can work with Power BI to support more detailed project reporting and analysis.
If your needs extend beyond standard functionality, Business Central can support specific requirements through integrations, extensions or specialist functionality.
Questions to Ask an ERP Partner Before You Commit
- How will you determine what our business needs?
- How will the system handle our project and job costing?
- Can out-of-the-box Business Central handle our requirements?
- How will you migrate our existing data?
- What systems will we still need to keep?
- What training will our teams receive?
- How will the ERP accommodate our business growth?
Asking these questions is a good starting point. It can also help reveal whether a prospective partner is focused on fitting the software to your business or vice versa.
How Brookland Solutions Helps Construction Businesses Get More From Business Central
Introducing an ERP system in your construction business is an opportunity to understand how data moves through your organisation and the processes behind the numbers.
As your ERP partner, Brookland can help you answer questions such as:
- How are project costs currently captured?
- How are purchase orders allocated?
- What information do project managers need?
- Which existing systems need to remain connected?
- Where does finance currently spend time reconciling data?
From there, we can configure Business Central to meet your organisation’s requirements, adding functionality or integrations as needed.
If your current system can’t handle construction business management challenges or increasingly relies on outdated construction software, it may be time to review whether your ERP setup still suits your business.
Before choosing an ERP for your construction business, speak to Brookland Solutions today and make an informed decision. Book a consultation.
FAQs
Isn’t Microsoft Business Central too general for specialist construction needs?
Business Central acts as a core system and works best when configured by an experienced partner such as Brookland Solutions. We can also help with construction-specific extensions or integrations, if required.
Will implementing a new ERP interrupt our active site projects and daily operations?
ERP implementation may create some operational interruptions. But a careful phased migration approach, with parallel testing and scheduled go-live timelines, can minimise disruption and ensure your active job sites, purchase orders and valuations continue as planned.
How long does a Business Central ERP implementation usually take for a UK construction firm?
The implementation timelines vary depending on the scale and complexity of your systems.
Can Business Central integrate with our existing estimating, payroll or document management tools?
Business Central provides flexible open API connectors and other integration options to connect compatible external applications. Whether it can let you keep specialised software while unifying other processes, such as general ledger reporting or a payroll system, depends on the software and the extent of integration required.
