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5 Areas Where You Absolutely Should Not Use Point Systems

Increase Project Efficiency with Subcontractor Management Software

“When a Good Mobility Idea Becomes a Management Nightmare” reads the title of a blog posted by SAP in 2013. Fast forward to today, and it accurately describes the case for the over-enthusiastic application of point solutions in the EPC industry.

Given the rise and rise of mobile apps, we are starting to see more and more EPC companies embed point system applications into their operations. In doing so, they unknowingly create organizational silos and risk eroding their competitive advantage.

It’s not that point systems are inherently bad. Let’s be clear: Point systems can be useful in supporting specific workflows and application areas. They can help streamline certain operations and be a valuable precursor to the digital workplace. However, they can only do so much when it comes to unifying the data flow across the organizational departments and allowing the processes (like timekeeping, resource management, payroll) to be integrated across multiple lines of business.

In an industry where time is money, resources are limited, complexity is rife, and competition is fierce, it’s time to begin:

  • Divorcing ourselves from point systems
  • Integrating applications with systems, and more importantly,
  • Connecting them to people.

In that light, what follows is a list of five critical areas where you absolutely should not use point systems to deliver better outcomes in the EPC industry.

1. Project Management and Project Costing

Centralization of field data is critical to driving higher asset visibility and transparency, which is the only way to gain complete control over a complex EPC project. After all, executives do not want the potential risk of project budget and completion overruns to escalate. They rely on accurate field data to make financial and strategic decisions. However, the proliferation of point systems fails to provide enough integrated functionality to link field data with main office applications.

For instance, the standalone nature of point solutions provides no direction to consolidate the field data from multiple suppliers and subcontractors, assign work packages, and streamline the project costing. To make matters worse, point systems are not up to the task of providing a centralized view of all PPM resources in real-time.

As such, the manpower required to resolve project-related issues at the very moment of actualization can become just too much. Requiring field personnel to compile and analyze project data from several different systems multiplies the human effort burden and increases the probability of errors. Not to mention the additional costs associated with system maintenance and redundant data entry.

2. Daily Log 

Another common scenario in which an EPC organization turns to point solutions is the daily logging process. While the plug-and-play functionality of point systems makes them excellent for maintaining and ensuring the quality of engineering hours, it can be challenging to manage the workflow of a daily logging process from multiple systems.

Ideally, the daily log software should be connected to the ERP system to help facilitate the on-time replenishment of materials, especially if the organization relies on just-in-time methods. However, the lack of reliable connectivity to the main office systems prevents such automation of material replenishment. This essentially creates a lag, which leads to higher inventory holding costs and, in turn, impacts the bottom line.

Not to forget the delayed billing, which results in an inconsistent cash flow and, thus, compromises the organization’s ability to deliver ROI on a timely and consistent basis. Indeed, it is a vicious cycle.

3. Timekeeping 

Even with the best point solutions, timekeeping is hard because of the complexity of project and supply chain workflows. For instance, it is not uncommon to find vendors who do not use company-specific time software, which makes it challenging to accurately track labor costs and maintain accurate cycle times.

In the end, companies lose visibility over the true cost of their labor and end up overpaying for or overestimating labor resources. This leads to higher labor hours, unplanned downtime, inventory holding costs, and potentially incomplete schedules.

Given the importance, timekeeping should be connected to the company’s ERP system to help automate data entry and automate the labor invoice process. Plus, there should be a real-time connection with the daily logging process to help mitigate the risks of errors.

4. Recruiting and Onboarding

It is super hard to find and retain qualified labor. And point solutions certainly don’t help the case. For instance, the already demanding selection process becomes even more intricate when resume-matching with the company-specific requirements is not easy. In addition to that, the selection process isn’t integrated with the onboarding solutions, which makes it even more labor-intensive to onboard new team members.

The same scenario is seen throughout the recruiting and onboarding cycle courtesy of non-integration with the timekeeping systems, HRIS and payroll systems, and the company-specific tools. As a result, companies lose billability when hiring new talent, which leads to a loss of productivity. And that’s not good news. On the other hand, a good Applicant Tracking System with the potential for system-wide integration can prove a major boon in addressing the hiring challenge.

5. Purchasing

Point solutions force organizations to stick to paper or excel, which limits holistic visibility into the granularities of the project under consideration.

Purchasing for jobs is a common dilemma. To effectively manage the workflow of a process, point solutions often lock decision-makers into artificial tiers. As a result, they are unnecessarily forced to outsource decisions regarding the procurement of labor materials, equipment, and services in order to maintain their ROI targets in real-time. However, this limits the organization’s ability to control on-time replenishment for projects by not connecting it with other systems.

This means higher inventory holding costs and losses due to unplanned downtimes and incomplete schedules — all factors that can impact an organization’s bottom line by lowering efficiency.

Conclusion

The synchronization of data across multiple lines of business and suppliers is a common hole with point systems, which often results in a loss of productivity — not to mention the increased administrative burdens and costs.