ATCO Engineering - Process Evaluation
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This document evaluates current systems and processes at ATCO Engineering & Contracting's engineering division and provides recommendations. It finds that key processes like estimation, planning, procurement, payroll, inventory management, and job costing are mostly done manually with redundant data entry, lacking integration between functions. The recommendations include implementing an ERP system to integrate processes, automate data entry and workflows, and capture more project data for analysis to improve project management. A phased implementation plan is proposed starting with shorter term wins in procurement, budgeting, and payroll, followed by longer term changes to estimation and planning.
ATCO Engineering - Process Evaluation
- 1. ATCO Engineering & Contracting Current Systems and Processes Evaluation and Recommendations By Ahmed Rami Elsherif 03/11/2007
- 2. Introduction • Engineering is the biggest division of ATCO group as for revenues and number of employees. • Importance of information systems (IS) implementation in construction management has grown rapidly. • ERP Implementation project is a Business Project. Information Technology is a supplier and facilitator for such a project but it needs the full support and guidance from management. • ATCO-ENGINEERING In Numbers……..
- 3. Management !!!!!: Is the process of coordinating the available resources to achieve the goals of the Organizational Unit and, by extension of the whole organization.
- 4. Engineering Departments or Processes Evaluated • Estimation • Planning. • Procurement. • Payroll and Time sheet control and distribution. • Inventory. • Fixed Assets and Equipment control. • Job Costing and cost control. • Billing. • Budgeting.
- 5. Construction Project Lifecycle Estimation Planning Execution Excel Based. Lacks controls and retro alimentation from executed data. Done in Primavera but it lacks integration with Estimation and Execution Done in Accpac and Atco menu. It suffers from redundant work.
- 6. Estimation Client’s BOQ ATCO BOQ Allocation of Costs Margin Evaluation Approval of BID Presentation to Client Client’s Project Plans Manual Take Off
- 7. Estimation - Observations & Recommendations • Databases for Codes, unit cost items such as worker wage rates, equipment rental or material prices, and productivity rates. These databases can be used for any cost estimate required. • Import utilities from computer aided design software for automatic quantity-take-off of components. • Consider outsourcing take-off. • Integration between estimates, cost control and scheduling software. This is very helpful to begin the management of costs during construction. • Workflow for estimate approval and revisions. • Human Resources Evaluation and Recruitment.
- 8. Planning Construction Planning Costs - BOQ Direct Costs Scheduling - TIME Indirect Costs Time Oriented CPM Resource Oriented 1. Planned Cash Flow 2. Purchasing Plan 3. Project Time Plan 4. Resource Requirement Plan
- 9. Procurement Purchase Requisition Approval PR Offer Evaluation Purchase Order Approval PO Reception of Goods ERP Budget Accounting & Finance Purchasing Limit Material Management
- 10. Procurement - Observations & Recommendations • Relate Procurement to BOQ and Job Costing. No PO should be processed without reference to BOQ. • PO should be approved by cost controller. • Map procurement process and workflow to ERP. • Revise purchasing competency levels structure. • Revise fixed assets purchasing process for projects. • Revise petty cash reimbursement process. • Supplier invoice should be received by accounting. • Don’t receive supplier invoice if there is no reception of material or acceptance of service note from the site.
- 11. Payroll and Timesheet Manual Time sheets in Site Re entry of same data in payroll forms Process by Personnel Dept. Manual Preparation of cash envelopes Manual Entry in Accpac Manual Entry in ATCO Menu
- 12. Payroll - Observations & Recommendations • A time consuming and redundant process (5 Work Days from Accounting Dept.) • Use time management system; Like card and/or fingerprint system to collect attendance and extra hours. • Prepare a formatted Excel Sheet for data submittal from project site. • Prepare an import – export interface to the payroll system. • Prepare a Payroll – Accpac interface for journal entry generation. • Study the possibility of paying payroll by Bank Money transfer.
- 13. Inventory IN OUT ATCO PO Supplier Delivery Note ATCO Reception Note Material Request Availability Check Delivery Confirmation
- 14. Inventory – Observations & Recommendations • Currently all inventory receptions are charged to project cost and annual adjustment is being done based on physical count. Advantage: A practical Solution given the current Situation. Disadvantage: Waste is implicit in consumption. • Define inventory items and cost items if necessary. Do stock control only on inventory items.
- 15. Fixed Assets & Equipment. Equipment Time Sheet Depreciation Applied To Projects
- 16. Equipment – Observations & Recommendations • Depreciation is distributed based on other costs per project. • If we have a time sheet for work done by machines we could distribute based on work done for each project.
- 17. Job Costing Procurement Inventory Equipments Payroll Other Costs Job Costing Estimate Planning Billing
- 18. Job Costing – Definition Percentage-Of-Completion Method Method that recognizes profit on a long-term construction contract as it is earned gradually during the construction period. This approach is preferred over the Completed Contract Method because it does a better job of matching revenue and expense in the period of benefit. It should be used when reliable estimates of the degree of completion are possible. It is more realistic and levels out the earnings. Under the method, the measure of revenue to be recognized each year is equal to percentage completed x contract price. One approach to estimate the percentage completed is based on the following relationship: Any revenue that had been recognized in a prior period is subtracted from the cumulative total in arriving at the current period's income.
- 19. Job Costing – Observations & Recommendations • Any change to the revenue formula variables must be approved and supported with proper documentation such as: o Change Orders. o Estimate Changes. o Certified Percentage of Completion. • Cost assignation should be done by operational people. • Total Revenue must be less than or equal to contract value. • Integration between job costing and other processes (e.g. Procurement, Payroll, Inventory, Billing, others).
- 20. Billing Plans or BOQ Manual Billing
- 21. Billing – Observations & Recommendations • Billing is done manual in the site. No control over billed/unbilled. • Billing should be based on progress registered in planning application (Primavera).
- 22. Budget Budget Estimate Planning Execution-Accounts
- 23. Budget – Observations & Recommendations • Is done by project managers based on their site estimations and projections for next year. • It should be based on BOQ-Plan versus execution.
- 24. Proposed Plan 3-9 Month • Procurement and link to BOQ. • Budgeting. • Payroll and Time sheet control and distribution. • Fixed Assets and Equipment control. • Inventory. • Job Costing and cost control. 6-18 Month • Estimation. • Planning. • Billing.
- 25. Conclusion A proposed formula to estimate the value of information in the enterprise is: The Value of Information ~ Users2 X Business Area Our first objective is to increase both variables of the formula so that we create an iterative cycle of interaction between the IS and users to improve the quality of information and processes.