You may not think about it much, but most of the information you receive and use in your personal and professional life is digital. Think about the articles you read, your bills, your communication with other people (co-workers, friends, and family alike)—how much of it still involves actual pieces of paper?
And yet, in the construction industry—where there’s a growing number of useful technology tools—most information exists primarily in paper form. The McKinsey Global Institute recently found that construction is one of the least digitized of all industries—second only to agriculture and hunting.
If your company is like most in the industry, your information is probably sitting in paper file folders, in rows of filing cabinets, in some office that’s rarely visited. Except, of course, to add more files to the mix after a new project wraps up.
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Change Can Be Hard, But Not Changing Comes at a Cost
The reasons so many still rely on paper files is understandable. Your firm has been using paper for as long as you’ve been doing business. Because it’s second nature, you’ve probably never really thought about the costs related to printing and storing your paper files, but they add up.
Plus, taking the time to digitize those old files and create an all new system takes time and requires a significant change in how you do things. And change is a hard sell for people who have been doing things the same way for years.
While it’s easy to imagine how hard a full-scale digitization project might be, you also must consider the costs of maintaining the status quo. Here are five ways your paper-based files are costing you.
1. Document Management
Paper isn’t actually that expensive. You can get 1,500 sheets on Amazon for less than $15. But between the reams of paper you buy and the cost of managing all your documents, the amount adds up.
One study found that companies spend as much as $27,000 per year to print and manage an average of 5,000 pages per month. Making matters worse, an estimated 50% of all pages printed are never even looked at—and that number may be even higher when it comes to old construction project files.
You may not realize it, but printer ink is one of the most expensive liquids you can buy. At more than $50 an ounce, it costs more than Dom Pérignon Champagne. All those papers sitting in file cabinets at your office hold a small fortune on their pages. And every day your firm continues to print out all your project documents, you’re spending more to get those words and numbers on the page.
Commercial printer costs average from $1,500 to $35,000 to buy and $85 to $900 a month to lease. You may be thinking you spend that money once, and you’re done paying for the printer, right?
Wrong. You also have to consider maintenance costs on top of the price of the printer itself—like those hefty ink costs. Maintenance also includes the time employees spend addressing printer problems. Every time the printer jams or runs low on ink, someone has to take time to fix it. Your IT team has better ways to spend their time, and you have better places to put your budget.
This doesn’t even account for the space those rows of file cabinets occupy. Your office itself is probably one of the biggest line items in your budget. While costs vary based on geography, in cities like San Francisco and New York City, the average is over $5 per square foot.
Even if your occupancy costs are less, every square foot of your office is still costing you money every month. So utilizing the space to its best advantage isn’t just being responsible, it’s being smart. Said another way, those file cabinets are taking up valuable office real estate that could no doubt be put to better use. And here you thought those file cabinets were just a harmless eyesore.
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How often do you really go back to those paper files in their current state? Your lack of access to the information buried away may seem like no big deal. But it actually comes at a cost. The National Technical Information Service took it upon themselves to put a price tag on paper files, finding that every five-drawer file cabinet is actually costing you $880 per year.
When your old project files are locked away in boxes or filing cabinets, your team has to spend hours trying to find the right document at the moment it could be useful to them. Or more likely, they simply make do without accessing old documents at all.
That would be fine if there wasn’t much there. But your paper files can hold a wealth of valuable data. If your file cabinets house your actual, as-built project costs, they hold the key to producing faster, more accurate estimates.
Cost Benchmarking: How Digitizing Records Pays Off
It’s bad enough that your paper project files are costing you money, but they may be hurting your ability to make more money, too. If you’re unable to access the information they hold, you’re missing a big opportunity.
Right now, it’s a pretty safe bet that your estimators rarely tap into your old project files to produce estimates. They’ve probably developed their own methodology for estimating costs, based on their tribal knowledge or educated guesses. If that’s the way they’ve always done it, it may seem good enough. But that’s only because they haven’t experienced how much better their estimates could be with cost benchmarking.
Cost benchmarking allows you to develop and compare your estimates, using the costs of similar projects to guide you. By producing your estimates this way, you’re able to create a greater level of assurance in the competitiveness of your pricing.
Some rely on industry averages for cost benchmarking. But developing cost benchmarks based on your own as-built costs is a far more accurate and efficient way. If you think about it, it makes perfect sense that using your own data would allow you to be more precise in your estimates, because they’re based on the way your company actually does the work.
Get Started with Cost Benchmarking
When your as-built costs are stored away in file folders, using that data to inform your estimates is a herculean task. But when you digitize your project data, you can use it to build a historical cost database for cost benchmarking.
The day your estimators can easily access data-backed cost benchmarks is the day they start producing more accurate estimates—and in a fraction of the time. More precise estimates translate into more competitive bids and more profitable projects.
When your projects play out as expected, the owners you work with are more likely to be satisfied with the results. That’s good for your reputation and increases future business opportunities.
To learn about how cost benchmarking can help you produce faster, more precise estimates, get the FREE eBook!