Construction ERP Vs Generic ERP: What's The Difference?

ERP (Enterprise Resource Planning) and Construction ERP are two distinct types of software designed to manage and integrate business processes.  

Whilst sharing core functionalities such as financial management, HR, and supply chain operations, construction-specific ERP offers specialized features tailored to the needs and demands of the construction industry.  

These unique features address the specific challenges faced in construction projects, such as project management, job costing, and compliance with industry and local regulations. 

Standalone or Generic ERP 

At its core, generic ERP software is designed to streamline and integrate a variety of business processes across different industries.  

Key features typically include financial management, inventory control, human resources, customer relationship management (CRM), and supply chain management.  

In today’s businesses, generic ERP systems are typically used by mid- to larger-sized businesses across various sectors in an effort to improve efficiency, enhance data accuracy, and provide comprehensive visibility into operations.  

As a rule, most ERP software is highly versatile, which has resulted in many offshoots of ERP being formed to serve specific industry or service needs. This in turn, led to the development of construction ERP, a more specialized tool that is targeted towards a specific market.  

Examples of standalone ERP systems include Microsoft Dynamics 365, Acumatica and IFS. Read our article 'Best Construction ERP' to learn more about these solutions.

Construction ERP 

Construction ERP has been specifically developed for the construction industry over recent years, offering unique features that address the complexities of construction projects.  

These include project management tools, job costing, equipment management, contract management, and compliance tracking, to name but a few. 

Construction ERP systems are primarily used by mid- to larger-sized construction firms, contractors, project managers, and engineering companies, but have seen regular use throughout the entirety of the building sector. 

By integrating these specialized functionalities, construction ERP helps streamline project workflows, ensure accurate cost tracking, and improve overall project delivery and profitability. 

Examples of Construction ERP systems include Access Coins, CMiC and Penta.  

Before we jump into more detail on how generic ERP differs to construction ERP, it’s important that we take a minute to explain how they are similar.  

As two forms of an ERP software, there remains crossover in some of the service offerings each of the two provide. After all, both systems aim to enhance business operations by integrating various processes into a unified platform.  

Some common features found in both generic ERP and construction ERP include: 

• Financial Management:

Both types of ERP systems provide varying levels of financial management capabilities, including accounting, budgeting, and financial reporting. 

• Human Resources (HR):

ERP systems, whether generic or construction-specific, usually offer HR modules to manage payroll, recruitment, employee records, and performance tracking.  

• Inventory Control:

Typically, both ERPs include inventory management tools that help track inventory levels, and manage stock, with the main variations being in how comprehensive these features are.

• Customer Relationship Management (CRM):

Both generic and construction ERPs may provide CRM features to manage customer interactions, track sales leads, and enhance customer service. 

• Reporting and Analytics:

Finally, both systems offer powerful reporting and analytics tools that provide insights into various aspects of the business. These tools help monitor performance, track key metrics, and support strategic planning.

While both generic ERP (Enterprise Resource Planning) and construction ERP systems share foundational functionalities, they diverge significantly in terms of specialized features tailored to meet the unique demands of the construction industry.  

Understanding these distinctions is crucial for you to choose a software solutions that can effectively manage complex project workflows, regulatory compliance, and specific industry challenges. 

Project Management Features 

Construction ERP systems offer project management capabilities tailored to construction. These include tools such as resource scheduling, subcontractor management, and daily progress reports. There is also a focus on scheduling projects across labor, materials and equipment.   

These features are essential for construction companies to manage multiple projects simultaneously, track progress, allocate resources efficiently, and ensure projects are completed on time and within budget. 

Job Costing and Cost Value Reconciliation (CVR) 

Unlike generic ERP systems, construction ERP includes robust job costing functionalities that allow detailed tracking of costs associated with each project phase.  

This can include labor costs, material expenses, equipment usage, and overheads specific to construction projects. 

Additionally, construction-specific tools such as Cost Value Reconciliation (CVR) provide real-time visibility into project profitability by comparing actual costs against estimated values throughout your project’s lifecycle.

Compliance and Regulatory Requirements 

Construction ERP systems incorporate features tailored to manage industry-specific compliance and regulatory requirements, such as safety standards, building codes, and environmental regulations.  

These systems automate compliance tracking, manage documentation related to permits and certifications, and ensure adherence to legal requirements throughout project execution. This specialized functionality helps construction companies mitigate risks associated with non-compliance and maintain regulatory transparency. 

Equipment and Resource Management 

Construction-specific ERP systems include tools for comprehensive equipment and resource management, which are essential for optimizing resource utilization and minimizing downtime.  

These features enable construction firms to track equipment usage, schedule maintenance tasks, monitor availability, and ensure that resources are allocated efficiently across various projects.  

Project and Change Order Management 

Another key difference lies in contract and change order management capabilities. Construction ERP systems include functionalities to manage complex construction contracts, track change orders, manage variations in project scope, and handle billing and invoicing based on contractual terms.  

These features streamline contract administration processes, enhance communication with clients and subcontractors, and ensure that contractual obligations are met effectively. 

For construction companies seeking digital transformation, using a construction ERP system designed specifically for the industry offers several distinct advantages over traditional ERP systems: 

Reduce Costs 

Construction ERP systems streamline project costing and resource management, optimizing budget allocation and reducing wastage.  

Unlike generic ERPs, they include features like real-time cost tracking and predictive analytics that enable proactive cost management, ultimately leading to lower project costs and improved profitability. 

Teams Can Collaborate On-the-Go 

Construction ERPs facilitate seamless collaboration among dispersed teams through mobile access and cloud-based platforms.  

This capability enhances communication, accelerates decision-making, and ensures that stakeholders have real-time access to project data, fostering agility and efficiency in project execution. 

Avoid Mistakes, Delays, and Rework 

With integrated project management and scheduling tools, construction ERPs help mitigate risks of errors, delays, and rework. These systems enable accurate planning, scheduling, and resource allocation, ensuring projects stay on track and within schedule.  

Unlike generic ERPs, they incorporate industry-specific workflows and compliance checks that minimize project setbacks and improve overall project delivery. 

Helps Your Construction Company Scale Up 

Construction ERPs support scalability by offering flexible modules that can adapt to the growing needs of construction firms. They automate repetitive tasks, standardize processes, and provide scalability in managing multiple projects simultaneously. 

This scalability is crucial for expanding operations efficiently and maintaining competitiveness in a dynamic market environment. 

Gives Managers the Power to Make Data-Driven Decisions 

Construction ERPs provide comprehensive data analytics and reporting functionalities tailored to construction metrics and KPIs. This empowers managers with actionable insights into project performance, financial health, and resource utilization.  

Unlike generic ERPs, which may lack industry-specific analytics, construction ERPs enable informed decision-making based on real-time data, improving strategic planning and operational efficiency.