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Measuring and Maximizing your ROI

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There are many reasons, of varying degrees of legitimacy, why some construction companies have been reticent to adopt the latest technologies. You read a lot about things like a general discomfort with the idea of change or technology itself, not wanting to lay out the initial cash for implementation, or the hassle and time involved in retraining workers in new methods or systems.

Of course, uncertainty whether there will be an eventual return on the required work and investment is also a major concern. Logically, construction executives are more likely to adopt a new technology if it helps them improve efficiency and boost profitability. According to a recent Vistage CEO Confidence Index survey, 73% of CEOs at small to-mid-sized construction firms believe that company success depends on creating operational efficiencies that result in reduction of time and/or cost.

Every jobsite has a tablet or laptop, and every worker has a cell phone in their pocket, so it makes sense to add tools that work with those ubiquitous devices.

Given their comparatively low cost of entry, mobility solutions and apps have been a good first step for many companies looking to dip their toes in the technology waters. Every jobsite has a tablet or laptop, and every worker has a cell phone in their pocket, so it makes sense to add tools that work with those ubiquitous devices, especially if it makes workers’ jobs easier and improves the information flow to and from the field.

Lacking those tools, companies waste time and money on downtime spent waiting for the latest project updates or drawings, hoofing it back to the office to retrieve forgotten paperwork or site plans, or making endless copies of information gathered by hand in the field. The return on the investment in mobile tools that eliminate such time-consuming tasks is immediately apparent.

According to digital construction consulting firm Telos, a major contributor to construction’s low productivity is staff at all levels spending too much time on such non value-added tasks. They cite a study conducted by a major US-based general contractor that showed by using digital mobility tools instead of analog, paper-based methods, workers saved one full day per week of non value-adding work, a productivity gain of 15-20%.

A Procore client with $50 million in annual construction volume surveyed a handful of project managers and team members to figure out how much the company would save each year by using Procore. Between drawings and documents, project management and collaboration, the firm found it would save $215,700 annually, not to mention thousands of hours.

Data plays a big role internally in measuring ROI and determining inefficiencies, and it's important to establish benchmarks and expectations. What sort of ROI are you anticipating? Over how long a period of time? Is improving profitability or productivity your top concern? ROI can be measured in many ways: happier, safer workers, time saved, less waste. It won’t always immediately translate to actual cash. But it’s not hard to draw a line between the non-monetary returns on an investment and their reciprocal eventual cost savings.

Data plays a big role internally in measuring ROI and determining inefficiencies, and it's important to establish benchmarks and expectations.

Another benefit of running more daily processes through software or mobile solutions is that historic data becomes available for analysis, precisely tracking missed deadlines (or projects completed early), budget overruns (or savings), and efficiency losses (or gains). Those figures can be graphed out, using your own numbers. Assuming no other major changes to the business, if the months and years following an implementation show noticeable improvements in cash flow and time expenditure, you’ve got hard numbers to show that investment is paying off.

The next step up in terms of initial investment is hardware. Hardware can be expensive, requiring care and regular maintenance. Maintaining those assets is key to their longevity, and to unlocking their time- and money-saving potential. It’s also important that workers understand how to use the technology and how it will be incorporated into their day-to-day. Spending big bucks for a piece of equipment that will fall into disrepair and be used incorrectly is counterproductive if the end goal is to improve your bottom line.

One way to ensure you aren’t biting off more than you can chew with your upfront technology investment is to do it modularly, gradually adding more elements as you get comfortable with the previous ones and ensure they're providing satisfactory ROI. This applies to suites of construction software tools as well as physical hardware. You also lessen the chance of a culture shock (or outright revolt) if you introduce things to employees gradually, rather than pulling the rug out from under them by completely changing their job overnight.

If you liked this article, here are a few eBooks and webinars you may enjoy: 

Construction ROI – Make Your Projects More Profitable

Construction Technology As a Solution for the Field

Construction Software Buyer's Guide

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