Download as PDF, PPTX
Uploaded byMohammad Rabay'ah
A systematic approach for ERP implementation in the construction industry
This document presents a case study on implementing ERP systems in the construction industry in Saudi Arabia. It proposes a four-step methodology: 1) Identifying common ERP modules, 2) Validating benefit evaluation criteria, 3) Evaluating modules against benefits, and 4) Ranking modules based on total weights. Experts were interviewed to identify 13 key modules and validate 6 benefit criteria. Modules were then evaluated and ranked for each criterion. The highest ranked modules were procurement, project finance/accounting, and project management/budgeting.
More Related Content
A systematic approach for ERP implementation in the construction industry
- 1. A SYSTEMATIC APPROACHFOR ERP IMPLEMENTATION IN THE CONSTRUCTION INDUSTRY Authors: Assaf, Sadi A KFUPM, KSA Hadidi, Laith A KFUPM, KSA Presented By: Mohammad Rabay’ah ByM oham m ad Rabay'ah
- 2. Outline • Abstract • Introduction •Research Methodology • Case Study • Conclusion • Critique By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 3. Abstract • This paperprovides a Decision support tool that helps in prioritizing ERP modules’ implementation. • A “case study approach” is conducted with experts in ERP implementation at construction field. • This research develop a four steps methodology to sequence the ERP module implementation. By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 4. • What isEnterprise Resource Planning (ERP)? ▫ An integral software. ▫ spanning to cover all organization functions with one shared database. ▫ Which increase information sharing and integrity of business processes Introduction By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 5. • ERP isseen as an expensive investment for architectural and construction companies. • ERP is deployed in a form of internal company project usually with multi-years delivery plan: ▫ Size of company ▫ Number of selected ERP modules. • ERP is noticeably deployed successfully in manufacturing and trading firms. Introduction By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 6. • ERP inConstruction field: ▫ Time and cost required to deploy a full scale ERP projects are higher than other fields. ▫ Higher Failure rate in reported deployment projects. ▫ ERP implementations within large scale construction organizations have yielded more failures than successes. Introduction By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 7. • Assessing therisk of ERP implementation failures is encouraged to be assessed prior to deployment. • Better risk management will help organizations to increase the likelihood for ERP implementation success. Introduction By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 8. • This researchproposes the case study methodology approach. • This approach fits in situation when “how” and “why” questions are being posed, and the researcher has little control over events. • paper propose a decision model developed in four steps as follows: Research Methodology By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 9. ▫ First step: Identifycommon-used ERP Modules in construction and validate it by experts. ▫ Second step: Identify benefit evaluation criteria and validate it by expert. Research Methodology By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 10. Six benefitevaluation criteria of ERP modules are validated by the same ERP expert; namely: 1 cost reduction. 2 increased efficiency. 3 improved decision making. 4 improved information quality. 5 improved user satisfaction. 6 improved organizational flexibility. Research Methodology By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 11. ▫ Third step: Evaluatethe ERP Modules against each benefit criteria. ▫ Fourth step: The overall ranking of ERP Modules is found by calculating the total weight for ERP modules. Research Methodology By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 12. • This Studyconducted in Eastern Province of Saudi Arabia . • The data collection was done using face to face interviews with ERP managers: ▫ interview started with introduction of the subject. ▫ questionnaire is presented and explained to interviewee. Case Study By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 13. • This researchapproached grade 1 building contracting companies in Saudi Arabia as classified by MOMRA (ministry of municipality and rural affairs, Saudi Arabia). • The grade 1 contractors in the eastern province, Saudi Arabia are twenty three, Only 13 had an ERP systems. • Seven valid responses (out of thirteen) were received Case Study By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 14. • The validresponses were only seven which compose 53% of the population in eastern province, Saudi Arabia. Case Study By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 15. Step 1: Identify common-usedERP Modules in construction Case Study By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 16. ▫ The researchstarted with a twelve ERP modules defined by Chung et al. (2007) as a possible ERP modules for construction companies, namely: 1. change management. 2. project data management. 3. project contract management. 4. project collaboration. 5. resources management. 6. subcontract management. 7. project costing, project billing. 8. inventory control. 9. Purchasing. 10. human resources. 11. Time. 12. Labor. Case Study, Step 1 By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 17. ▫ Previous ERPmodules were reviewed by the research team and ERP expert and revised into thirteen modules, namely: 1. Sales and Marketing. 2. Human Resources. 3. Tendering/bid management. 4. Resource management. 5. Data/document management. 6. Collaboration. 7. Contract and Change management. 8. Project management and Budgeting. 9. Subcontractor management. 10. Time, expenses & invoicing. 11. Project Finance and accounting. 12. Procurement. 13. Inventory control and logistics. Case Study, Step 1 By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 18. Step 2: Benefit Sub-CriteriaWeights Case Study By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 19. ▫ The rankingof EPR modules is based on scoring inputs of respondents as shown in figure 1 (Next slide). ▫ Each respondent will evaluate the importance of each benefit criteria on a scale from 1 to 9 (highest score). Case Study, Step 2 By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 20. Figure 1: Criteriaevaluation. Case Study, Step 2 By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 21. ▫ The collecteddata was analysed using an importance index. The importance index (I) was computed by equation below (Assaf et al., 1995) where: I = importance index i = response category index where i = 1,2,…, 9. ai = constant expressing the weight of the ith response, , where ai = 0,1,2,…,9 for i = 1,2,3,…,9 respectively. xi = frequency of the ith response given as a percentage of the total responses for each ERP module. sixty three is the highest count can be achieved if all the respondents (seven) scored the highest possible weight which is (nine). Case Study, Step 2 By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 22. ▫ Respondents’ scoreinputs for benefit sub-criteria are used to calculate their weights using importance index (I) equation. In table 1, the weight distribution for every benefit sub-criteria for the seven respondents is given. Table 1: Criteria Index. Case Study, Step 2 1 2 3 4 5 6 7 8 9 Cost Reduction 1 2 2 1 1 Increased efficiency 1 3 1 2 Improved decision making 1 1 1 4 Improved information quality 1 1 1 1 3 improved user's satisfaction 1 1 1 1 1 1 1 improved organizational flexibility 1 2 1 2 1 Rank Count Importance Index 74.60% 79.37% 90.48% 79.37% 63.49% 74.60% By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 23. Step 3: Evaluate ERPModules on benefit criteria Case Study By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 24. ▫ The questionnaireproceeds to collect the ranking of the thirteen modules for each benefit ▫ For each benefit criteria, the thirteen module will be ranked similar to the way the benefits were ranked. ▫ Figure 2 (next slide) shows the modules evaluation against each criteria. Case Study, Step 3 By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 25. Figure 2: Modulesevaluation for each benefit. Case Study, Step 3 By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 26. ▫ Tables 2and 3 in the next two slides shows the weighted count for ERP modules under the six benefits criteria. ▫ Higher ranking number means higher benefit of the module compared to others. Case Study, Step 3 By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 27. Table 2: Modules'index for benefits cost reduction, increased efficiency and improved decision making. Case Study, Step 3 1 2 3 4 5 6 7 8 9 Index 1 2 3 4 5 6 7 8 9 Index 1 2 3 4 5 6 7 8 9 Index Sales and Marketing 0 2 0 0 1 0 2 1 1 63.49% 0 0 1 0 2 0 3 0 1 68.25% 1 0 0 0 2 1 1 1 1 65.08% Human Resources 0 0 0 1 0 0 2 1 3 84.13% 0 0 1 0 0 1 2 0 3 79.37% 0 0 0 1 0 0 2 2 2 82.54% Tendering/Bid Management 0 0 0 0 1 3 0 1 2 77.78% 0 1 1 0 0 1 1 1 2 69.84% 0 1 0 0 0 0 2 2 2 79.37% Resource Management 0 0 0 1 1 1 1 1 2 76.19% 0 0 0 0 0 0 2 3 2 88.89% 0 0 0 0 1 0 3 1 2 82.54% Data/Document Management 0 0 0 2 0 2 1 1 1 69.84% 0 1 0 0 0 0 4 0 2 76.19% 0 0 0 0 1 3 2 0 1 73.02% Collaboration 0 0 3 0 0 1 1 1 1 61.90% 0 0 0 0 1 1 1 2 2 82.54% 1 0 0 0 2 0 1 2 1 68.25% Contract and Change Management 0 0 0 1 1 0 1 2 2 79.37% 0 0 0 0 1 0 3 2 1 80.95% 0 0 0 0 1 2 1 2 1 77.78% Project Management and Budgeting 0 0 1 0 0 0 1 2 3 84.13% 0 0 0 0 0 1 1 4 1 85.71% 0 0 0 0 1 0 3 1 2 82.54% Sub-Contractor Management 0 0 0 1 0 2 2 0 2 76.19% 0 0 1 0 0 1 2 2 1 76.19% 0 0 0 1 0 1 2 1 2 79.37% Time, Expenses & Invoicing 0 0 0 1 0 2 1 1 2 77.78% 0 0 0 0 0 0 3 1 3 88.89% 0 0 1 0 0 1 2 1 2 77.78% Project Finance and Accounting 0 0 0 0 0 1 2 1 3 87.30% 1 0 0 0 0 0 1 4 1 77.78% 0 0 0 0 0 1 2 2 2 85.71% Procurement 0 0 0 0 1 0 0 2 4 90.48% 0 0 0 0 0 1 2 1 3 87.30% 0 0 0 0 0 1 1 2 3 88.89% Inventory Control and Logistics 0 0 0 0 0 0 0 1 6 98.41% 0 0 0 0 0 1 1 1 4 90.48% 0 0 0 0 0 1 2 1 3 87.30% Improved Decision MakingCost Reduction Ranking Increased Efficiency By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 28. Table 3: Modules'index for benefits: improved information quality, users' satisfaction, and organizational flexibility. Case Study, Step 3 1 2 3 4 5 6 7 8 9 Index 1 2 3 4 5 6 7 8 9 Index 1 2 3 4 5 6 7 8 9 Index Sales and Marketing 0 0 1 0 2 0 3 0 1 68.25% 0 2 0 0 3 0 1 0 1 55.56% 0 1 0 0 3 0 2 0 1 63.49% Human Resources 0 0 0 0 1 0 2 2 2 84.13% 0 1 0 0 2 0 1 1 2 71.43% 0 1 0 0 1 2 1 1 1 68.25% Tendering/Bid Management 0 0 0 0 2 0 2 1 2 79.37% 0 1 0 2 1 1 1 0 1 58.73% 1 1 0 0 2 0 2 0 1 57.14% Resource Management 0 0 0 1 3 0 1 0 2 69.84% 0 1 0 0 3 1 1 0 1 61.90% 0 0 0 0 1 1 4 0 1 76.19% Data/Document Management 0 0 0 1 1 1 2 1 1 73.02% 0 0 1 0 1 2 1 0 2 71.43% 0 0 1 1 1 1 2 0 1 65.08% Collaboration 1 0 0 0 1 0 2 1 2 73.02% 0 0 0 0 2 1 2 0 2 76.19% 0 0 0 0 2 1 2 1 1 74.60% Contract and Change Management 0 0 0 1 0 1 1 1 3 82.54% 0 0 0 1 3 1 0 1 1 66.67% 0 0 1 0 2 0 3 0 1 68.25% Project Management and Budgeting 0 0 0 0 0 1 3 1 2 84.13% 0 0 0 1 1 1 1 2 1 74.60% 0 0 0 1 1 1 2 0 2 74.60% Sub-Contractor Management 0 0 0 0 0 1 3 1 2 84.13% 0 0 0 0 2 2 1 1 1 73.02% 0 0 0 1 1 2 2 0 1 69.84% Time, Expenses & Invoicing 0 0 1 0 0 0 2 2 2 80.95% 0 0 0 0 3 1 0 2 1 73.02% 0 0 0 0 1 0 1 4 1 84.13% Project Finance and Accounting 0 0 0 0 0 0 2 3 2 88.89% 0 0 0 0 3 0 1 2 1 74.60% 0 0 0 1 1 0 1 3 1 77.78% Procurement 0 0 0 0 2 0 1 1 3 82.54% 0 0 0 1 2 0 1 2 1 73.02% 0 0 0 0 1 1 1 2 2 82.54% Inventory Control and Logistics 0 0 0 0 2 0 1 1 3 82.54% 0 0 0 0 2 2 0 2 1 74.60% 0 0 0 0 0 2 1 2 2 84.13% Improved Information Quality Improved User Satisfaction Improved Organizatiuonal Flexibility By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 29. Step 4: Find theoverall ranking of ERP Modules Case Study By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 30. ▫ The overallrank of the ERP module will be found as shown in Global Index equation below: ▫ Table 4 (Next Slide) shows the final ranking of ERP modules based on their overall weight. Case Study, Step 4 6 1i IndexCriteriaIndexModuleIndexGlobal By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 31. Table 4: ModulesGlobal Index. Case Study, Step 3 Rank ERP Module Global Index 1 Inventory Control and Logistics 3.99848828 2 Procurement 3.90652557 3 Project Finance and Accounting 3.80347695 4 Project Management and Budgeting 3.75258251 5 Time, Expenses & Invoicing 3.72310406 6 Human Resources 3.63466868 7 Sub-Contractor Management 3.54346183 8 Resource Management 3.53640716 9 Contract and Change Management 3.52582514 10 Collaboration 3.3542454 11 Data/Document Management 3.30486269 12 Tendering/Bid Management 3.28168304 13 Sales and Marketing 2.97228521 By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 32. Conclusion • A newlydefined four step methodology is followed in this paper to sequence the ERP module implementation for construction firms. • The approach includes Four steps. • The collected data were based on seven of the largest construction companies in eastern province in Saudi Arabia. By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 33. Conclusion • Out ofthirteen modules, the top ranked modules were ▫ Inventory control and Logistics ▫ Procurement ▫ Project finance and Accounting. • The findings of the paper would help construction firms to prioritize the acquisition of different ERP modules and can be easily adjusted to their specific needs. By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 34. Critiques • The titleof the article is appropriate and clear. • Abstract specific, representative of the article. • The purpose of the article made clear in the introduction. • All related details are explained within the paper By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 35. Critiques • Referring tomore than 30 paper most of it with a recent Publish date • More solved examples is required, at least one in each step. • Make a summary of formulas and tables at the end Article to ease calculation follow up. By Mohammad Rabay'ah ByM oham m ad Rabay'ah
- 36.