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ATCO Engineering - Process Evaluation
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ATCO Engineering & ContractingCurrent Systems and ProcessesEvaluation and RecommendationsBy Ahmed Rami Elsherif03/11/2007
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……..
Is the process of coordinating the available resources to achieve the goals of the Organizational Unit and, by extension of the whole organization.
Management !!!!!:
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.
Construction Project Lifecycle
Execution
PlanningEstimation
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.
EstimationClient’s BOQ
ATCO BOQ
Allocation of Costs
Margin Evaluation
Approval of BID
Presentation to Client
Client’s Project Plans
Manual Take Off
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.
PlanningConstruction Planning
Costs - BOQ
DirectCosts
Scheduling - TIME
Indirect Costs
TimeOriented
CPM
ResourceOriented
1. Planned Cash Flow2. Purchasing Plan3. Project Time Plan4. Resource Requirement Plan
ProcurementPurchase Requisition
Approval PR
Offer Evaluation
Purchase Order
Approval PO
Reception of Goods
ERP
Material Management
Accounting & Finance
Budget
Purchasing Limit
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.
Payroll and TimesheetManual Time sheets in
Site
Re entry of same datain payroll forms
Process by Personnel Dept.
Manual Preparation of cash envelopes
Manual Entry in Accpac
Manual Entry inATCO Menu
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.
Inventory
ATCO PO
Supplier Delivery Note
ATCO Reception Note
Material Request
Availability Check
Delivery Confirmation
IN OUT
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.
Fixed Assets & Equipment.
Equipment Time Sheet
Depreciation AppliedTo Projects
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.
Job CostingProcurement
Inventory
Equipments
Payroll
Other Costs
Job Costing
Billing
Estimate
Planning
Job Costing – DefinitionPercentage-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.
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).
Billing
Plans or BOQ
Manual Billing
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).
Budget
Budget
Execution-Accounts
Estimate
Planning
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.
Proposed Plan3-9 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.
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.