Keywords: enterprise resource planning, ERP, business process, construction characteristics, cost, schedule, data, information, implementation, IT.

Enterprise Resource Planning (ERP) evolves from Material Requirement Planning (MRP) in the manufacturing industry. With the help of information technology (IT), ERP integrates different functions of an enterprise such as purchase orders, manufacturing, scheduling, delivery, inventory, etc. [1]. Because their data and information can be accounting directly coded, ERP is an accounting based information system in manufacturing [2].

Studies indicate that ERP implementations have yielded more failures than successes in construction [3]. For the construction industry to implement an ERP system, the information needs would be different from those of manufacturing because the characteristics of construction differ greatly from those of manufacturing [4]. Construction starts after receiving an order, so is free from the problems of selling and inventory [5]. In the construction process, material supply at the input stage is usually not a problem and not of high priority as it is in manufacturing. For accounting, payment information is sent to corporate headquarters from the jobsite based on work progress data. It would be questionable to rely on accounting information to make operation decisions because of the indirect project cost data and unfamiliar financial presentation to engineers.

The pattern of couplings or interdependence in construction is tight in projects and loose in the company while in most other industries interdependence is managed through tight couplings among firms [6]. This implies that coordination of the jobsite activities is much more important than that of company operations. Manufacturing oriented ERP focuses on cross-function integration at the company level by designing communication instrument [7]. In construction, the common ground at the project level needs to be established first and then transferred to the corporate level.

This study argues that developing ERP for construction should be based on the cost and schedule information system at the project level. ERP integrates different functions of an enterprise as well as customers, suppliers, and subcontractors. The cost and schedule information generated from the jobsite activities is required by all: company departments of sales, estimating, procurement, construction administration, accounting, etc., and project participants in the supply chain. The common ground is cost and schedule information for these functions and parties.

It can be further inferred by using the major tools that construction ERP should be based on project cost and schedule information. First, lying in the core of the MRP is a tool called "bill of material" (BOM). BOM enables communication between disparate production groups into a single entity with a common understanding of the product to be produced [8]. In construction, the bill of quantity (BOQ) serves the similar function between project participants. Second, in a typical manufacturing environment, the master production schedule (MPS) specifies the quantity of each product required in each planning period [9]. Being similar to MPS, the construction schedule is a production planning and control technique.

A cost and schedule information system and flow linkage was established to direct the ERP development. The four units of schedule activities, contract line items, cost accounts, and work in progress and their linkage flow must exist and their data needs to be well designed. To provide a better understanding, a construction firm running an ERP system successfully was chosen and interviewed to verify these data issues during s system implementation. It is found that project scheduling, cost and financial are the core out of eight modules running on the system. However, data planning, feedback and maintenance constitutes a heavy burden for running an ERP.

This study also proposed a cost/schedule information system and flow to guide the ERP development. In order to reap the potential benefits and avoid pitfalls, companies must truly understand and address planning issues. Information needs is one planning issue and critical in ERP implementation.

1

Davenport, T.H., "Mission Critical: Realizing the Promise of Enterprise Systems", Harvard Business School Press, 2000.

2

Carr, N.G., "Does IT Matter? Information Technology and the Corrosion of Competitive Advantage", Harvard Business School Publishing Corp., 2004.

3

Voordijk, H., Van Leuven, A. and Laan, A., "Enterprise Resource Planning in a large construction firm: implementation analysis", Construction Management and Economics, 21, 511-521, 2003. doi:10.1080/0144619032000072155

4

Shi, J.J. and Halpin, D.W., "Enterprise resource planning for Construction Business Management", Journal of Construction Engineering and Management, 129(2), 214-221, 2003. doi:10.1061/(ASCE)0733-9364(2003)129:2(214)

5

Chang, A.S. and Lee, K.P., "Nature of Construction Technology", Proceedings of IGLC-12, August, Copenhagen, Denmark, 2004.

6

Dubois, A. and Gadde, L., "The construction industry as a loosely coupled system: implications for productivity and innovation", Construction Management and Economics, 20, 621-631, 2002. doi:10.1080/01446190210163543

7

Norris, G., Hurley, J.R., Hartley, K.M., Dunleavy, J.R., and Balls, J.D., "E-business and ERP: Transforming the Enterprise", John Wiley & Sons, Inc., NY, 2000.

8

Okrent, M.D. and Vokurka, R.F., "Process mapping in successful ERP implementations", Industrial Management & Data Systems, 104 (8), 637-643, 2004. doi:10.1108/02635570410561618

9

Chen, I.J., "Planning for ERP systems: analysis and future trend", Business Process Management Journal, 7 (5), 374-386, 2001. doi:10.1108/14637150110406768

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