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.