atco engineering - process evaluation

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.