Part 1: Going Paperless

Taking the guesswork out of profitability is becoming increasingly difficult within the ever-evolving construction industry. There are just too many moving parts that exist beyond the control of any one firm.

First, we all better hope the economy continues to flourish, even though the latest studies predict a slight downturn in 2019 construction job starts. Next, containing expenses and reducing waste is an ongoing battle for companies constantly confronted with rising material costs, a lack of skilled labor, and the demands of owners and developers for quicker and cheaper results – without sacrificing quality.

As a result, every construction business owner is on the lookout for a better way. This includes best methods for enhancing efficiencies across every work area.

Unfortunately, these sentiments often conflict with reality. The truth is construction operations nationwide are often besieged with a wide range of inefficient and wasteful procedures, activities, and behaviors.

According to Fortune, “construction projects regularly lose up to a third of their value to waste.” This represents a phenomenal loss for a $10 trillion global industry that McKinsey & Co., a leading international management consulting firm, says has only increased its productivity by “1% each year over the past two decades, compared with a 2.8% growth rate for the global economy as a whole.”

While strides have been made, the construction industry has been one of the last to embrace the benefits of the electronic revolution – including the shift from the “paper” world and filing cabinets filled with blueprints, invoices, change orders and every other form of business documentation. This was recently confirmed by the 2016 Construction Technology Report, which found that more than 32 percent of employees and 28 percent of managers in the construction industry were still reluctant to adopt technology. As Construction Business Owner reports, “The global engineering and construction sector holds the dual distinctions of being one of the world’s largest industries—yet one of its least efficient.”

The cost benefits of going paperless

The problem is that many contractors are still reluctant to comfortably make the transition from paper to digital.

Construction is an industry clearly delineated by outcomes. There is a direct correlation between process and the quality of the finished product. Yet for many, there is no detour from the tried and true. Their very incomes depend on projects completed on time, within budget and without costly delays. Unfortunately, this leaves little time for change, especially in an industry that relies so heavily on construction methods that have withstood the test of time. Why change if it works? Why invest in new technology unless it’s needed?

The answer is that the time to move forward is long past. The continued reliance on paper is just flat-out wasteful. It not only kills trees from an environmental standpoint, but stagnates business productivity. From storage and filing to distribution and information sharing, paper offers an exceptionally limited vehicle for ensuring timely results in an industry so dependent on expedience. Another McKinsey report found that “employees spend 1.8 hours every day – 9.3 hours per week, on average – searching and gathering information.”

In contrast, moving from a paper to digital business economy offers numerous advantages. First, let’s look at some basic costs. Construction expert Houston Neal once calculated that the construction industry prints an average of 37 million blueprints every year. At a price of about 50 cents for every black-and-white document printed on 20#, 18×24 paper, this translates into about $18.5 million and the death of approximately 42,000 trees.

Further, how much money does your firm spend on paper every year? What do you pay for toner and copying? Do you still mail invoices to clients? If so, have you ever stopped to think about what you pay each year for the postage and envelopes used to complete this simple task?

When taking into account the totality of the material costs in addition to the time spent on the process, paper invoicing can generally cost $12 and up for a single mailing. These costs don’t even take into consideration the amount of time and money involved in the manual filing and storage of all these paper documents.

In contrast, what are the cost benefits of going paperless? As an example, the United States Treasury recently estimated that by implementing e-invoicing across all federal government agencies, it could help cut costs by 50% for an annual savings of $450 million.

Next up: Real-time data access