The uncertainty and risk involved in complex construction projects can typically lead to cost overruns, delays and quality issues which, in turn, lead to the low profit margins the sector is notorious for, with net profit margins often hovering between 2% and 10%.

RIB software vice president, Peter Damhuis, says the need to invest in construction software is almost non-negotiable as companies compete for the upper hand in potentially lucrative contracts.

“As construction software becomes increasingly sophisticated and offers ever-greater efficiencies, it is a key differentiator in ensuring construction companies are well positioned to win business and complete projects profitably.”

When choosing software, construction companies need to consider upfront costs, as well as how much the system will cost on an ongoing basis.

“Too often, particularly if the decision-making process does not involve the key stakeholders who will feel its benefit, the selection can be based on price alone without a full understanding of its true cost and real ROI,” says Damhuis.

There is a lot to take into account when looking at the true cost of the software and some of the factors that need to be considered include existing hardware and services; software fees and charges; embedding; upgrades, maintenance and admin; and product training and ongoing support.

“For example, will your company need to make changes to its existing infrastructure to accommodate the software; what do the licensing or subscription fees look like or will it be a once-off purchase; will your business be looking to customise the software; or do you need ongoing maintenance, training and support? All of these are critical considerations,” adds Damhuis.

Beyond these more obvious ROI elements, there are other factors that should be contemplated.

The wisdom of choosing an enterprise resource planning system

“Many construction companies choose a host of software programmes to handle different aspects of the business. If, however, they choose a fully integrated construction enterprise resource planning (ERP) system, the application will span the entire business and provide a centralised data base function linking everything. Data pertaining to the entire business can then be handled by the system, with far-reaching impacts,” explains Damhuis.

Redundant and duplicated data will largely be eradicated, freeing server and storage space. Licensing costs could be slashed as the business won’t need to run multiple autonomous software packages for individual departments.

There will also be a reduction in downtime due to software upgrades across multiple platforms as the system is set up to cover all departments with upgrades and enhancements being planned for and built in to the software architecture.

In addition, construction ERP software incorporates business intelligence and reporting functions that is able to pull data from all departments across every business function. This will identify areas that are succeeding above and beyond expectations, while highlighting any areas that might be bleeding costs.

Anticipating challenges before they cripple margins

Construction companies often wish they’d identified an issue much earlier as it would have saved significant time and or money to have done so.

Damhuis says there are many stories in the construction industry operations that have seen their entire margin all but wiped out by a simple error in estimating or cost assessment.

“One function of a truly comprehensive construction software package is estimating software that removes calculation errors and reduces human error from the process. Construction ERP software integrates information from every element of your business and provides up to the minute real time data and reporting. This can predict or catch things such as cost over runs and enable you to do something about it before margins are crippled.”

Understanding how construction ERP and construction management software can positively impact the business is more complex than it might at first appear. “It’s important for construction companies to speak to professionals who specialise in software designed and built exclusively for the industry and find the best solutions for them.”