CONSTRUCTION TECHNOLOGY: CLOSE-UP ON COSTS
As heavy equipment manufacturers talk technology with contractors, there’s always a temptation to go straight to the benefits. The subject of costs, which is top-of-mind for most buyers, can get pushed aside fairly quickly, replaced by discussions about the gains you can realize—in productivity, utilization, fuel efficiency, safety and more.
Be assured: we’re big believers in the benefits of construction technology. But costs are critical too and must be looked at carefully when assessing future purchases. As you estimate the return on a potential technology investment, here are major cost categories to consider.
This is the starting point—the actual purchase price or lease payment for the technology you expect to procure. For a more complete picture of acquisition costs, add in the labor costs associated with evaluating products, reviewing vendor proposals and making a final selection. And don’t overlook the costs you’ll incur to enable the technology you’re acquiring. For example, if you have to upgrade an operating system to support new software, that cost should be rolled into your calculation.
These are costs you rack up as you roll the technology out to users. They consist of installation, configuration and training expenses, including consultants’ fees. Some companies also factor in costs related to temporary productivity declines that may happen when new processes and systems are introduced.
Maintenance and support costs
This category captures the costs of keeping new technology running, adding functionality or scaling up to accommodate more users. It includes the cost of warranties, support contracts, licensing agreements and future upgrades. The cost of IT support staff is also part of this calculation.
Risk management costs
As companies grow increasingly dependent on connectivity, new risks emerge relative to internet disruptions, data security breaches and other incidents that could compromise the ability to do business. The cost of mitigating these risks is one more factor you may want to consider.
These costs, which are closely aligned with benefits, attempt to quantify the impact of not investing in new tools and systems. For example, if some combination of technologies could allow you to do 15 percent more work with your existing fleet, failure to invest in those technologies “costs” you a 15 percent increase in revenue.
Speaking of benefits
You’re smart to consider all the costs associated with an IT investment, but a full accounting of benefits is also in order. Work with your equipment supplier to quantify the impact of construction technology on safety, productivity and cost reduction. Consider how an investment could help you:
- Use assets more efficiently
- Optimize fleet size and reduce rental expenses
- Finish jobs faster with less fuel, materials and rework
- Keep people out of harm’s way
- Identify training opportunities
- Prevent abuse of equipment
- Reduce theft
- Cut maintenance and repair time and costs
- Lower insurance premiums
- Develop more competitive bids
- Boost the resale value of your assets
- Simplify compliance reporting
When considering a technology investment, run the numbers—on both sides of the equation—so you can make the best possible decision for your business and your future.