Justifying the cost of a hammer for a construction job is easy. But justifying the cost of software? While it’s not as straightforward as buying a piece of equipment, your return on investment (ROI) for the right software is likely to be many times greater. Here’s how to calculate the ROI of your current or potential contech service.
ROI is a measurement of the benefits of an investment divided by the cost of the investment, usually expressed as a percentage or ratio. A simple ROI calculation looks like this:
ROI = (current value of investment — cost of investment) / cost of investment
In finance, this calculation is simple — buy $1,000 worth of stock and it’s worth $1,500 a year later then the ROI is:
($1,500 - $1,000) / $1,000 = .5, or 50%
With a software solution, the math isn’t quite so basic, but it’s still easy to do.
ROI for construction tech
In a January 2019 survey of active Fieldwire users, more than 500 construction professionals reported that they save an average of six hours a week. Users who checked Fieldwire three or more times per day — typically supers, foremen, and PM/PEs — reported an average of 6.6 hours saved per week.
Given that the average construction manager salary is $110,000 per year, or $55 per hour, six hours of a construction manager’s time is worth $330. That’s more than $1,400 per month and approximately $17,000 for the year — for one CM.
A team with an additional nine subcontractors making an average of $35 per hour saving six hours each would net a return of $1,890 per week thanks to Fieldwire — or $8,190 per month, $98,280 per year.
This combined team of 10 users gets a return of $9,590 per month on an investment of $290 for Fieldwire Pro ($29 per user/month). The ROI:
($9,950 - $290) / $290 = 32, or 3,200%
Your particular project team will likely look different from this example. But it’s unlikely you’ll find many other tools that can save everyone on your team an average of an hour per day. And given that a monthly subscription costs less than an hour of a construction manager or specialist’s time, it’s worth more than a couple hammers.
Other considerations for ROI
More and more tech services are cloud-based; Fieldwire hosts your files and documents, so local storage of your data isn’t a necessary expense. Same for maintenance, security, and monitoring — there are no additional costs associated with data storage. And if you’re moving from a paper-based system, you’ll be saving on printing and drawer space.
Deployment fees are another potential cost for new tech. Fieldwire, for one, is designed to be easy to use, so training costs are minimal. Still, as with any tool, software’s effectiveness is limited if no one uses it, so getting everyone on the team to download and sign in to the app is critical. Luckily, everybody already has a smartphone or tablet (or both), so buying new devices isn’t necessary.
Other benefits may be less obvious for ROI calculations but will still impact your bottom line. Reduced overtime, better compliance, and improved communication are all significant benefits of a construction management platform like Fieldwire.
Even better, the more of your team you get up and running with the software, and the more they use it, the more benefits you’ll see. And not just in terms of ROI, but with better collaboration, increased knowledge sharing, and reduced rework.
The case for Fieldwire
Building a case for contech? Let us help you measure and communicate how Fieldwire will save you money, keep you ahead of schedule, and minimize risks on your next project.