Steel prices are increasing. Can we still control construction costs?

In the monthly review of my Real Estate client recently, we observed that steel prices have increased by almost 50% in the last two months. As evident from the following article, this factor will certainly increase construction costs and reduce profitability.

Realty firms may witness margin shrink by 4-6 due to steel price rise – https://m.hindustantimes.com/real-estate/realty-firms-may-witness-margin-shrink-by-4-6-due-to-steel-price-rise/story-PPEx9nfHItzxzar3idWc6O.html

But can we still control the construction cost at the desirable levels? The answer is Yes.

We can control cost using following 3 ways,

  1. Do detail estimation & budgeting & then monitor cost using technological solutions – If construction budget is available then monitoring & controlling construction cost is easier using products such as ERP, Dashboard, or advance Excel. Budget preparation and cost controlling is a specialised job.
  2. Control project delays – A single day delay can cause a loss in lakhs and crores. We should be able to control delays due to reasons within our control – timely availability of material, manpower, drawings, etc. By making smart use of technological products such as Microsoft Project or Primavera, we can certainly avoid delays. Few monitoring techniques can be useful.
  3. Avoid Rework – The cost of quality can increase substantially if construction is not up to proper quality standards. Use preventive techniques OR Quality Assurance Techniques, to prevent or reduce defects and hence rework.

Magic Of Timely payment to vendors

Can a company become the fastest growing and most profitable organization by making timely payments to vendors?

Read this amazing story to understand and copy interesting concepts in your own respective industry.

This is the amazing story of Balrampur Chini Mills (BCM), India’s largest integrated sugar manufacturing company.

BCM is India’s most valuable sugar company by 100% over its nearest rival. The company reported a cash profit of 609 crores in 2019-20 (the next highest was 327 crore). It reported a profit after tax (PAT) of 509 crores in 2019-20. No agro company in India has attempted a share buyback. Balrampur has completed four in the last four years.

They used a simple trick. Make farmers more productive by paying them on time. A simple formula ‘Pay in 14 days.’  Pay farmers quicker, strengthen their cash flows, enhance their profitability — and get them to plant more cane.  This process helped in increasing sugar production substantially by getting more cane from farmers.

Meenakshi Saraogi, the owner of this company & pioneer of the sugar industry, introduced this formula and made this company highly successful.

So what is the learning and can we emulate it? Yes of course.

In the construction industry, often contractor & vendor payments are delayed. Most of the time payments are delayed due to inefficiency built into the system. E.g. contractor bills are not validated or submitted on time, bills are lost, etc. Just by ensuring timely payment to contractors and vendors on time or sometime earlier than the payment period contractors can be encouraged to improve productivity. This will also help in retaining a contractor to work with the organization for a very long time.

Read this article to know more. From The Economic Times: https://epaper.timesgroup.com/Olive/ODN/TheEconomicTimes/shared/ShowArticle.aspx?doc=ETM%2F2020%2F12%2F12&entity=Ar00800&sk=19516D48&mode=text

50 Most Influential Projects Globally

https://www.linkedin.com/posts/project-management-institute_50-most-influential-projects-activity-6673284504670502912-KmXn

Whenever a product, service or result is delivered through series of activities in time bound manner then it’s called as a Project.

Watch this Linkedin post from Project Management Institute with 50 most influential projects across the world. It has covered influential projects from Aadhar Card, Apollo 11, International Space Station, Intel microprocessor, hybrid car Prius, movie Harry Potter, Polio eradication, IVF Baby, Chernobyl Cleanup, Supercollider, Operation Flood, Sydney Opera House etc

Thes 5 Indicators of China vs India comparison can motivate Indians

40 Years back India and China was almost at same stage in terms of income. In fact India was richer than China by 40% on per capita income. Chinese President Deng initiated economic reforms from year 1980. Today China is world’s largest economy and trying to become superpower.

Check the 5 parameters mentioned in this article in Times Of India,

  1. GDP –  India 2.7 Trillion USD vs  13.6 Trillion USD
  2. Education & Urbanization –
  3. Poverty headcount
  4. Health of people
  5. Industrial power

Currently we are struggling economically due to pandemic and lockdown.  However history has shown that most of the countries have shown improved performed after any such calamities.  LAC situation has triggered wave against China. The indicators mentioned should motivate us to do far better than what we are doing till now. 

What we need is clear targets, infrastructure and most important favourable Government policies.

Thanks Times Of India for publishing this article on 28th June 2020.

Coronavirus vs Force Majeure clause

Coronavirushttps://www.paulweiss.com/practices/litigation/litigation/publications/update-force-majeure-under-the-coronavirus-covid-19-pandemic?id=30881

https://www.shearman.com/perspectives/2020/03/covid-19–force-majeure-event

We often read the clause ‘Force Majeure’ in the project contract but really never bother to understand it. But in view of the current Coronavirus situation Force Majeure clause can play important role. I am a Project Management professional but not an expert on this subject but sharing two articles and highlights from the article.

What is Force Majeure as per the law?

Its unforeseeable circumstances that prevent someone from fulfilling a contract.

Few important highlights,

  • The World Health Organization (“WHO”) declared COVID-19 a pandemic and governments imposed unprecedented travel, movement, and large-gathering restrictions
  • The coronavirus pandemic has impacted the ability of businesses around the globe to maintain operations and fulfill existing contractual obligations.
  • The applicability of a force majeure provision is contract-specific, and there is a high bar for invocation of such a clause.
  • The implementation of travel, movement, and large-gathering restrictions, have altered the force majeure landscape in a manner that may impact the availability of such provisions to nonperforming parties.
  • The “test” for force majeure usually requires the satisfaction of three distinct criteria:
  1. the event must be beyond the reasonable control of the affected party;
  2. the affected party’s ability to perform its obligations under the contract must have been prevented, impeded or hindered by the event; and
  3. the affected party must have taken all reasonable steps to seek to avoid or mitigate the event or its consequences.

 

 

 

 

 

 

Am I eligible for PMP?

Blog_Am I eligible for PMP

I often get this query from students interested in PMP Certfication.

Let me explain as how you yourself can check whether you are eligible for PMP.

As per PMI requirement, person with a graduate degree and with minimum 3 years of experience equivalent to 4500 hours and Diploma holder with 5 years experience equivalent to 7500 hours is eligible for PMP examination.

Now next doubt is for the person who was not involved in any green field project for the 3 or 5 years. Doubt is ‘Am I still eligible?’

Friends, remember definition of project – ‘Its temporary endeavor undertaken to create a unique product, service or result’.

So are you involved in any time bound unique output with series of tasks and multiple stakeholders?

Few examples are:

  • You are working on a support project and you are given task to reduce any particular repetitive issue or ticket on time bound manner
  • You are given task of cost reduction in a given targeted time
  • Are you given task of completing particular construction target on time bound manner

Well, all these are projects. If you have completed such time bound targets and time spent is 3 years or more then you can certainly apply for PMP.

If not, you can always apply for CAPM examination, which is also based on same curriculum – PMBOK Book.

+91 9321327575 | sales@bigbangconsultancy.com | http://www.bigbangconsultancy.com


 

ERP & Beyond – Part 1

erp & beyond

Should we stay happy forever after successful implementation of ERP?

Yes successful ERP implementation is essential for any business user to take day-to-day operational decisions. E.g. real time information of inventory, bank balances, sales booking, recovery etc can help decision makers to take quick decisions especially if those figures are not as per the expectations.

But decision makers should also be able to take strategic decisions with the help of ERP data. E.g. reduce cost, improve profitability, decide product price etc.

Recently I got the opportunity to handle an interesting project of a very large, well known Indian company where management is now able to save crores of rupees in a short span of time through effective usage of SAP data.

Isn’t it amazing?

Stay tuned for the next blog to know how….


+91 9321327575 | sales@bigbangconsultancy.com | http://www.bigbangconsultancy.com

Select ERP wisely through these 6 Golden Steps to ERP selection:

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Buying ERP is a common trend with small and medium businesses. However decision makers are often confused as to which ERP they should buy, what is the difference between SAP and ERP, should we build our own ERP, buy branded ERP or local ERP etc.

This topic has many dimensions and is difficult to answer for any particular industry. However you cannot go wrong if you follow these 6 Golden Steps during decision making:

1. Budgeting – ERP or a white elephant?

ERP can become a white elephant or extremely expensive if not budgeted properly. Budget should consider two components – One time buying cost such as hardware, license, implementation etc and another is recurring cost such as customisation, report development, additional licenses etc. One should consider these two costs and not just one time cost. This can help in deciding options such as on-premise server bases ERP vs cloud based ERP etc.

2. SAP vs other ERP

SAP is world’s no 1 ERP product. It is the most popular ERP among all top global and Indian companies with largest functionalities. But in spite of all good things, SAP is not for everyone. Explanation for this is too lengthy to write here. In short, it needs skilled human and financial resources to implement and maintain it. I would strongly recommend to take this decision with the help of SAP professionals.

3. Are branded ERP not for SMEs?

Are Branded low priced ERP available? – the answer is Yes. E.g. SAP has another ERP product SAP B1. This is much more cost effective and a useful SAP product specially designed for SMEs. Similarly Microsoft has an ERP called Navision specifically designed for SMEs.

4. Are Indian ERPs not good enough?

Are local good Indian ERPs available? – Yes. This is the area where one should be really careful. There are many ERPs available and most local ERP products are developed for niche markets such as Manufacturing, Real Estate, Infrastructure etc. Most important part is to check credibility of such ERPs from their existing clients on various parameters – coverage of functionality, tax compliance, post implementation support, customer base, customer testimonial, background of the company, etc. There are good Indian IT companies having ERP products for SMEs such as TCS, Ramco etc.

5. Confused with ERP features?

In recent years ERP has evolved into a feature rich product such as dashboard, workflow approval system, document management system etc. Hence compare all features while deciding ERP. Take help of neutral Subject matter experts who are not selling any ERP.

6. Let’s build our own ERP

Should we create our own ERP?

NO – avoid creating your own ERP if your core business is something else. Creating ERP is a very intense process and can divert your attention from core business. Instead buy time tested ERP and if necessary integrate it with products, such as Microsoft’s SharePoint, to make it really useful.

There is much more than these 6 Golden Steps before making the final choice of the perfect ERP system.

Call us on ‭+91 93213 27575‬ or mail us on sales@bigbangconsultancy.com to get detailed advice on ERP selection.


 

To keep Tally or ERP or both?

blog creative 1 copy@2x-100

Tally is one of the most popular accounting softwares in India. Small and medium enterprises (SME)s just can’t think accounting without Tally.

Whenever organisations are deciding to buy ERP, common doubt is whether to keep Tally after ERP Or keep both ERP and Tally?

Straight answer to this question is ‘keep either ERP or Tally but not both. Avoid running two systems’.

However this answer is not sufficient to address anxiety of Tally users.

So let’s analyse as to why this answer is no and what are the alternatives if anyone still insists on Tally along with ERP?

Try to understand the main real purpose of any ERP. ERP is a decision making system based on a single database. For business owners, the most important decisions often are related to finance.

E.g. most important information is cash inflow and outflow. Inflow is triggered mainly through Sales and outflow through purchasing of material or services.

In Tally the data feeding for Voluminous transactions for Sales and Purchase, such as invoices/cheques, Vendor bills etc, are entered manually and hence its time consuming. It affects decision making.

Whereas ERP has the capability to automate this complex process from its original source of transaction and thus MIS gets generated instantly. This can help management to take important business decisions quickly.

So the best option is to have ERP with built-in Accouting system.

So what if, someone still requires Tally with ERP. There are few ERP systems, which are tightly integrated with Tally. But in such ERP systems one should ensure no direct access to Tally. Data should flow to Tally only through ERP and use Tally for MIS purpose.

Don’t buy ERP randomly and never try to build ERP.

Why so and what are the guidelines to buy ERP? Read my next blog to get these answers.


 

How to avoid ERP failure?


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After implementing large number of ERP projects, including SAP, I can confidently say that ERP is the most misunderstood technology in India. Hence ERP failures in India are very high. Thus business owners are either afraid of buying new ERP or are frustrated with existing ERP.

So can we avoid ERP failures or revive existing ERP?
Answer is ‘Yes’.

Let’s try to understand as to why decision makers need ERP. Is the purpose of ERP is to act as a single database for entire organisation or is it just another fad?

Objective to have ERP is different. ERP system should be able to help business owners to take important business decisions quickly. Word ‘quickly’ is important. After ERP implementation, if MIS team is taking too long time to download data in spreadsheets and then do data massaging then ERP implementation can be considered as a failure.

So how to avoid ERP failure?

Use following 5 steps to ensure successful ERP

  1. First decide as which few but important information can help you in taking routine business decisions e.g. how much cash outflow is expected in next one month and against it how much inflow is required, how much is cumulative sales as on today, how much is value of inventory etc.
  2. Ensure that ERP is able to give answers to identified questions
  3. Get ERP system configure to get those answers
  4. Test system thoroughly before Go Live
  5. After Go Live of ERP, use only this system data to take decisions, avoid running any other systems simultaneously

All the best for successful ERP