How to Cost-Justify Heavy Civil Construction Operations Software

Here are some tips for doing due diligence before selecting software with out-of-control costs.

Contractors will generally not spend the money and bandwidth to adopt an enterprise software product without good reason. Defining those reasons may be difficult though. For contractors executing against heavy civil work in the field, the pain points may be many, and hard to quantify.  

For large, expensive and risk-intensive software like enterprise resource planning (ERP), a construction company may want to hire a consultant to help them build a business case and select software that is a fit. For construction operations software, which is primarily non-financial and rooted in project execution with crews and equipment, the cost is lower, and the level of due diligence may be lower as well. Most contractors will be able to come up with a clear enough picture of where they will benefit based on a few straightforward calculations.

Non-Value-Added Work

Because each project is unique, different crews and equipment need to be deployed to different sites for each project. This means that the efficiencies that have come to other industries like manufacturing are harder to achieve in construction, at least without modern software solutions designed to eliminate the non-value-added work created by the one-off nature of construction work.  

Maybe superintendents are spending extensive phone and email time chasing after equipment that should be on site, or directing employees where they should be at a given time. But how much time? What is the cost? Some round, back-of-the-napkin math can yield a range of values (8-12 hours per day lost) multiplied by the number of affected professionals and a pro-rated salary.

What are some common sources of non-value –added work in heavy civil construction operations?
- Continuity with employees to communicate the schedule and work assignments
- Coordination with the yard on availability of equipment
- Finding information on the current location or project assignment of equipment
- Duplicate data entry or managing duplicate systems
- Paradoxically, following inefficient or redundant steps required by legacy construction software for basic processes like equipment moves

This last point may seem counterintuitive, but some software sold for construction operations is really an extension of back-office financial software. Users of these systems have often complained that these applications are designed around the needs of finance, and force other users to jump through additional hoops and follow additional steps to complete basic functions performed every day. A superintendent knows a piece of equipment must be on a new site the next day and has it towed there if a company vehicle is headed there anyway. Some applications will make it very difficult, for instance, to accurately reflect that move in the system, causing non-value-added work.

‍Equipment Maintenance and Operations

Today, contractors can choose from many software and internet of things (IoT) or telematics products designed to capture construction equipment performance data. They may have other systems used to capture data from on-road vehicles.  

Replacing these software and IoT products with a single product that can capture data from both off-road and on-road vehicles and equipment can drive measurable value by:
- Streamlining scheduling of equipment and vehicles not only on projects, but for maintenance
- Reducing spend on software
- Consolidating maintenance and inspection activities in a single application

An underappreciated element of this equipment performance data is the fact that it cannot add much value without context from other parts of the business. A contractor may want to track idle time of heavy equipment, for instance. Idle time can reduce profitability by wasting equipment time, fuel and through wear and tear. Equipment is usually billed by the hour to a project, so running time not associated with productivity either hurts the bottom line or makes a contractor less competitive. Idle time is also just as costly as productive running time when it comes time to trade or sell equipment, because total hours of operation will affect the market value.  

But what is considered high idle time on one job may be low or par for the course on an application like laying pipe. What this means is that contractors benefit from construction operations software that aggregates equipment data with the schedule, so a fleet manager can determine if idle time was appropriate for a given use case.  

One more way construction operations software can improve equipment reliability is by streamlining preventive maintenance. Software should ideally enable calendar-based, hour meter-based or odometer-based preventive maintenance. Construction operations software can also ensure all stakeholders have visibility into not only what preventive maintenance is completed, but what equipment on a given site is due in the immediate future. If a technician is on site performing a calendar-based maintenance activity and another machine on that site is due for maintenance the following week, it may be desirable to make the most of the trip and work ahead.  

Democratizing equipment data also means a superintendent, or an operator may be able to see that equipment they are using may be overdue for maintenance and take the initiative to get it done. Strong functionality for daily inspections will drive consistency into this process, ensuring and documenting that inspections are done, preventing equipment failures caused by preventable factors.

Considering the cost of a single preventable equipment failure in terms of repair cost, parts and lost productivity may cover the subscription price for software like IVO Systems just by itself. On top of this, better organization may reduce the number of trips to sites to perform urgent maintenance, lowering out-of-pocket spending and maintenance technician staffing costs.

‍Reducing Total Software Spend Based on Pricing Model

Construction operations software may replace broader construction software products that while powerful, force a contractor to subscribe to features they are not using.  If a contractor is focused on earthwork, a construction operations software product aimed at heavy civil contractors may meet all or certainly most functional requirements while costing a lot less.  

Sometimes, the cost of software is driven not just by its functional breadth and depth, but by the pricing model. Large enterprise software companies have long tried to price their product based on the return on investment they project a customer will realize. Whether or not some of those measurable benefits are ever realized is debatable, and because contractors are a practical and frugal lot, we don’t see this much in the industry right now.  

What we see a great deal of though is construction software companies that charge for their product based on the annual revenue of their construction contractor customers. This may be appealing to the vendor and by offering an unlimited number of users at no additional charge, it may be one way to capture more revenue from larger customers that will have not only internal but external users of the software including subcontractors, owners/customers, suppliers and others.  

This model may make more sense too for general contractors, who have a broader network of external collaborators, than it makes for self-performing contractors.    

For self-performing heavy civil contractors, avoiding or migrating off products with this revenue-based subscription pricing model and onto a more focused solution priced based on measures like the size of telematics-equipped fleet, number of field employees, the number of modules or a combination of these makes much more sense.