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Why are construction companies looking for software?

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Why are construction companies looking for software?

There are many reasons why a business starts searching for software. According to Software Advice, which talks to thousands of software buyers each year, improving estimating and bidding currently tops the list for construction.

This is just one tidbit from a recent random sampling of conversations Software Advice has had with construction professionals. Two-thirds of prospective buyers in the sample represented firms with less than $5 million in annual revenue. The resulting Construction Software Buyerview report is an interesting overview of the challenges small to medium construction firms are facing and the features they are looking for in today’s software.  Here’s a few highlights from the Software Advice findings:

Pen and paper aren’t cutting it

There are plenty of contractors who have done a quick conceptual estimate on the back of a napkin. And many more who use pen and paper to perform takeoff, create full-blown estimates, and prepare bids. In fact 52% of those in the Software Advice report indicated that they currently use pen and paper to conduct day-to-day processes such as estimating. Thirty-two percent said they currently use spreadsheets.

“While many construction professionals can easily whip up an accurate estimate on pen and paper, it inevitably becomes an issue of scale and maintaining organization as their business grows,” says Forrest Burnson, market research associate with Software Advice. “Competition is fierce in the rebounding construction industry, so prospective buyers need every edge they can get to maximize the number of bids they’re sending out and ultimately winning.”


Materials list and job costing is in demand

Nothing surprising here. In the report, the top functionality 47% of buyers request is a materials list. Our own Sage 2015 construction technology survey confirms this need. Cost of materials was among the top three issues contractors say they will face in 2015. With wildly fluctuating material prices, the ability to generate a materials list automatically from an estimate helps speed up the buyout process and lock down bid prices.

Job costing was the second most popular feature with 40% of buyers requesting relief in this area. I use the term “relief” because I’ve talked with a lot of construction accounting professionals whose current financial software can’t handle job costing, forcing them to re-enter information into a spreadsheet to track costs by job. This process is doable when you have only a few projects to keep track of. But today a lot more money is flowing in and out of construction businesses. This makes it a painful struggle to maintain job cost spreadsheets, not to mention obtain daily reports indicating whether money is being made or lost on a project.


Growing pains

I think it’s safe to say that many construction firms today are in growth mode. That’s great news but business growth can also put a strain on existing processes, software systems, and the people who manage them. It’s encouraging to see from the Software Advice report that contractors are looking for better ways to do things, opening up greater opportunity for their companies.

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