Construction Software Buying Guide
Last update: January 2018
Just as a building needs a solid foundation, a construction business does, too. Part of laying the foundation of a construction business involves technology, including construction management software.
But while there’s not a lot of leeway in terms of how the foundation of a building is constructed, there’s a ton of leeway in terms of buying construction management software. For instance, different kinds of construction management software come with different functionalities. Then, of course, each software product comes with a different price tag.
Let’s just say that it’s not simple to nail down what a business needs in the way of construction management software. That’s why Software Connect created this Construction Software Buying Guide—to help build knowledge and confidence about construction management software so the right technology decisions can be made.
This guide offers direction on figuring out:
- What a business wants to achieve with construction management software.
- Which software functions a business really needs (and which ones a business just really wants).
- How much to spend on construction management software.
- Who’s going to be using the software and how they’ll learn to use it.
- How QuickBooks fits into the software mix.
Before we dig deeply into the specifics, let’s get one thing out of the way: What is construction management software? The term might mean different things to different people, but generally speaking this software enables a construction business to set up a one-stop shop for an array of functions, including project tracking and cost estimating. It’s similar to the hub of a job site.
What should be accomplished with construction management software? What problems are being solved?
Simply put, construction management software can improve the efficiency and effectiveness of a business. Construction management software puts a lot of functionality in one place, rather than having several disjointed software products that may or may not communicate well with each other.
Fifty-six percent of construction businesses responding to a 2017 Software Connect survey said they use construction management software. The remainder (44 percent) don’t use construction management software and, as a result, might be wasting time and money.
Of the construction businesses surveyed, 80 percent at least sometimes rely on manual methods to carry out basic business functions. Manually tracking projects in a spreadsheet or jotting down cost estimates with paper and pencil might be the most comfortable way of running a business, but it’s definitely not the most efficient.
Construction management software helps keep expenses and projects in line with functionality such as job costing, project tracking, project estimating, material take off, time and materials billing, bid management, and purchasing.
A survey by Software Connect shows job costing and project tracking are the top two functionalities sought by construction businesses (72 percent each), with project estimating in third place (67 percent). While this ranking of functionalities should not dictate the software needs of a construction business, it does offer some guidance.
Above all, a construction business should look at how construction management software can ease or eliminate pain points:
Disorganization: One of the worst pain points for a construction business is disorganization. It’s no wonder: A single construction project has many moving parts. Multiply that by five or 10, and you’ve got a blueprint for chaos.
Construction management software can take a construction business from disorganization to organization by offering a broad, consolidated view of the business in one spot. This can help a business make more effective use of its time through project tracking, reduce expenses through job costing, and collect timelier payments through simplified billing.
- Document management: With construction management software, paper shuffling can become a thing of the past. By using construction management software, “teams can immediately collaborate by creating, sharing and archiving documents while adding quality to the process and providing greater job satisfaction,” according to Construction Executive magazine. “As a result, the contractor will learn to better manage day-to-day tasks, time and risks.”
Freedom from the office: Construction management software also can release a contractor from the shackles of the office.
“To get a contractor mobile and away from the desk, construction management software can provide collaboration in real time so users can access and upload project contacts, plans, drawings, and photos at any time,” writes Construction Executive magazine.
When shopping for construction management software, a construction business should try to solve several pain points, such as organizational oversight and document management, and not just one pain point. Having one software product to address each pain point is an expensive pain.
Which software functions are a must? Which software functions are a want, not a need?
When shopping for construction management software, a business should concentrate on software functionalities that will boost efficiency and effectiveness—and not be dazzled by the bells and whistles.
In other words, buy the software that fits your business’ needs. Put a different way, a low-cost Chevy Colorado gets you from Point A to Point B just as well as a pricey Nissan Titan XD Platinum Reserve does. Sure, the ride in the Chevy Colorado isn’t as fancy, but it gets the job done. Construction businesses should be honest with themselves when assessing the functionalities of construction management software: Will the features be useful or wasteful?
As you do this, make sure you also keep your eye trained on the future: what functionalities will you need in the coming five years? You want to select a tool that will accommodate you now, and have the capacity to scale with you as you expand. Construction management software isn’t one-size-fits-all, so whatever product is chosen should be tailored to the business’ specific needs.
How much money should be spent on construction management software?
In the Software Connect survey, 43 percent of construction businesses indicate they spend one percent to two percent of their revenue on software. That range is right in line with what partners of Software Connect say a construction business should expect to spend on software. Therefore, as a rule of thumb, a construction business might want to apply the one percent to two percent spectrum to software spending.
While that might sound like a lot of money, spending on construction management software should be considered an investment. This is particularly critical as the price of doing business in the construction industry keeps going up.
With rising material and labor costs, firms will likely struggle to maintain their margins in the coming year,” Construction Dive said in a review of construction industry trends for 2017.
Construction management software can help a business trim those costs and ensure profit margins aren’t squeezed.
By the way, it’s important for a construction business to keep an eye on how much money it’s spending on software. In the Software Connect survey, 30 percent of construction businesses were unaware of the amount of money they’re earmarking for software. How can a construction business truly measure the effectiveness of its software if it doesn’t have a complete picture of its related expenditures?
Who’s going to be using the software? How much time should be spent on learning how to use the software?
When a construction business is looking at adding or replacing construction management software, consideration should be given to who’s going to be using the software and how much training will be required.
In the Software Connect survey, 37 percent of construction businesses identified ease of use as the most important consideration when buying construction management software. That ranks as the top consideration.
Given that ease of use is vital, a construction business should pay close attention to whether any red flags pop up when construction management software is being demonstrated. Is the software overcomplicated? It is clunky? Does it cause pull-your-hair-out frustration?
If the answer is “yes” to any of those questions, then the product isn’t the right one. Construction management software makes life easier, not harder.
Also, a construction business should be clear about who’ll be using the software and, as such, who’ll need to be trained on how to operate it. Before a business buys the software, it should inquire about the availability of training and customer support from the vendor.
Taking a DIY approach to construction management software rather than depending on professional guidance could be a costly mistake, even though help from the pros likely will add to the price tag. Foregoing professional training and customer support is a lot like driving a backhoe while blindfolded—it’s very risky.
Should construction management software be hosted in the cloud?
“Cloud computing” is a common buzzword in today’s technology environment. But what does it actually mean? IBM offers this simple definition: It’s the delivery of hosted, on-demand computing resources—such as software—over the internet on a pay-for-use basis.
Whereas in the past “people would run applications or programs from software downloaded on a physical computer or server in their building, cloud computing allows people access to the same kinds of applications through the internet,” according to Salesforce.com.
In the construction industry, the adoption of cloud-based software is a big trend, just as it is in other business sectors. In the Software Connect survey, 35 percent of construction businesses said they host or plan to host construction management software through a cloud platform, with 38 percent saying they don’t have such plans and 28 percent saying they aren’t sure.
Among other benefits, cloud-based software provides easy access to documents.
“With cloud storage, files remain in one place, allowing contractors to pull them up on the job without having to manage physical files,” according to Construction Executive magazine. “This prevents unnecessary loss of important paperwork, reducing stress, saving time, and improving project delivery overall.”
As cloud computing advances, it’s high likely that more and more construction businesses will host software in the cloud. Those construction businesses that fail to do so will be at a competitive disadvantage compared with their cloud-dependent peers.
Should you move beyond QuickBooks?
QuickBooks isn’t an inherently bad product; it just may be limiting what a construction business can do technologically. Fortunately, a number of software options are available for a construction business that has outgrown QuickBooks.
Software Connect research shows that over the past three years, more than 35 percent of construction businesses have been looking to upgrade from QuickBooks in some way.
“Many QuickBooks users fall for the seductive marketing messages that boast ‘easy to set up, easy to learn to use’ and fall prey to the myth of do-it-yourself accounting,” says Nancy Smyth, author of the QuickBooks for Contractors blog.
For a construction business considering a shift away from QuickBooks, it’s important to ask this question: Is QuickBooks serving the company’s needs? If the answer is “no,” it’s time to contemplate another software product that’s more robust and geared more toward construction management.
Whatever the reason a construction business is weighing a purchase of construction management software, it’s not a decision that should be made hastily. Relying on this guide and other research, a construction business can make a smarter choice about the purchase of construction management software, enabling the company to increase efficiency, competitiveness, and profitability.
As noted in a report published in February 2017 by the World Economic Forum and the Boston Consulting Group, the construction industry has been slow to adopt new technology and has undergone “no fundamental change” over the past 50 years.
In line with that, just eight percent of construction and engineering professionals surveyed in 2016 by professional services firm KPMG classified themselves as “cutting-edge visionaries.” Meanwhile, 41 percent said their companies had numerous software platforms in place that are monitored manually, and just 20 percent had one fully integrated project management information system across the entire organization.
“Without fully integrated automation, the effectiveness of these tools is severely compromised,” KPMG points out.
The World Economic Forum report declared that construction businesses have largely failed to embrace new technologies, “and the gap between the innovation leaders and laggards is widening,” according to the report.
Construction management software is one key advancement that’s separating the leaders from the laggards.