Estimating Construction Software
Construction Software and the True Cost to Implement
Purchasing new construction software for your business likely involves more costs than you are planning for. Beyond the price of the actual software itself, there are a number of hidden costs that many businesses do not plan for that become a part of the “true cost” to implement the new software. If you do not account for these costs prior to purchasing software, you may be in for a rude awakening when you go to implement the new package and realize that you do not have enough money to move forward.
The five most common additional costs incurred when implementing new Construction Management Software are:
The Cost to Train New Staff and Properly Implement the Software: Many buyers understand that some money will be tied up in training staff and actually installing the software, but this number is often underestimated. In most cases, it costs at least as much to properly train staff and implement the software as it does to purchase the software. This 1:1 ratio can grow even higher for more complex systems. Some companies try to limit this cost by skimping on training, but this never pays off. Your best bet is to figure this number in to your budget from the get-go to prevent problems down the road. The last thing you want to do is have a great piece of software that nobody can use properly.
Cost of Hiring Staff with More Experience or Different Skill Sets: In most cases, your current staff should be able to learn the new software and operate it well. However, in certain cases where the software or company does highly specialized work, it may be necessary to hire a few new people to run the system. This will obviously result in higher payroll costs. Even if the new staff replaces old staff, since they have better skills, chances are that you will have to pay them more. Before purchasing new software, consider whether or not new software will require new people to operate it and make sure that you figure this number in to your budget.
The Cost to Maintain the Software: Most construction software vendors charge an annual fee to maintain the software. Generally, these costs are between 18 and 24 percent of the cost of the software and are paid every year. Beyond the annual fees, you also need to account for the additional costs for things like custom reports that you may have to have one of your vendor reps complete for you.
The Cost of Purchasing the Wrong Software: Some may argue that this cost should not be considered here, but the truth is that it is a real cost. If you purchase the wrong software and using the software takes more time than it should, that extra time is lost time that could be spent on value-added activities. This extra cost can add up over time, eventually making the true cost of the software more than the value that the software is delivering.
The Cost of Inferior Software: This cost is slightly different from the one above in that this applies to companies that buy software that is right for their company but that does not do all of the features that they require. As a result, employees will resort to using things like spreadsheets to manage the data that the software doesn’t. This creates issues with integration and also adds time to tasks that can be avoided by purchasing the right software up front.
To avoid any surprises down the road, make sure you look at all of the above and estimate the true cost that acquiring new construction software will have. Training will pay for itself over time if it is done properly and maintenance costs will protect your investment, so neither should be avoided – just accounted for up front.
About the Author
David Kraft is a freelance author that writes about numerous subjects. He is very knowledgeable about
Construction Accounting
software and writes tips for business owners looking for advice in selecting their next
construction management software
package.
how much time should be spent on software design as a percent of the entire construction phase?
We are estimating the design phase and overall construction phase of an IT software (j2EE) project. Is there any industry “standard” as to how much time should be spent designing , compared with total construction. I have seen figures ranging from 10-30 % . Would like to hear from some experts. Thank you!
It would depend on the nature of the project. It could be 10-30%. Here are some factors to consider:
* What kind of system are you building? Web or Desktop, which both have lots of user interaction scenarios? Or a processing system, with relatively few user scenarios.
* Are you building something that’s bleeding edge with completely new features? Or are you customizing an off-the-shelf package?
* Are you adopting an existing framework (for J2EE, Hibernate and Spring come to mind)?
* How good is your team? Experienced teams won’t need as much time.
* How large and distributed is your team? Larger teams with lots of remote developers will need more time.
* How integrated is your software design process into your system design process? Are you following waterfall, UP, Agile? Depending on those answers, how integrated your system designers are with requirements gathering and how you’re defining “design phase” your answer will vary. For example, because we do web development, we combine graphical design and system design in one task because they’re pretty closely related.
* What are the testing and validation requirements? Applications subject to audit industry, client or government audit will take more time.
* What’s the lifetime of the application? Obviously there’s a balance to strike between “straight line development” and “designing for every eventuality.”
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